To shoulder the massive costs that will come from the diesel emission scandal, Volkswagen has agreed to terms to take out a 20 billion euro (about $21 billion) bridging loan with a number of banks. Sources tell Reuters the decision to go with a number of banks allows Volkswagen to spread the debt out and that the company hopes to start paying back the loans next year by issuing bonds in the company.
A few weeks ago, we heard rumors that Volkswagen was planning to take out 20 billion Euros in short-term loans to act as a buffer for upcoming fines. But since that report, the news has only gotten worse. Volkswagen has admitted that 430,000 vehicles in Europe have "implausible" CO2 figures and prosecutors have opened an investigation into possible tax evasion in connection with the problem (CO2 emissions are taxed in Europe). Then Volkswagen admitted that the 3.0L TDI V6 used in a number of vehicles in U.S. had illegal software that wasn't revealed to the EPA. Finally this week, the German Transport Authority deemed the software Volkswagen uses in their diesel vehicles is illegal.
Along with the loans, Volkswagen is considering all options of raising funds internally. Such items include cutting back on their development budget and possibly closing the Dresden factory where the Phaeton. But there is also the possibility of Volkswagen selling off some its assets to bring in more money.
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