Volkswagen has agreed the terms of a 20 billion euro ($21 billion) bridging loan with banks to help shoulder the costs of its emissions scandal, three people familiar with the matter told Reuters on Wednesday.
Europe's largest automaker is under pressure to strengthen its finances, with analysts expecting it will have to pay out tens of billions of euros to cover fines, lawsuits and vehicle refits after it admitted to cheating U.S. diesel emissions tests and to falsifying carbon dioxide emissions.
The biggest corporate scandal in the German company's 78 year history has forced out its long-time CEO, wiped billions of euros off its stock market value and hammered its bonds - making it much more expensive for the company to borrow money through its traditionally preferred route of the debt market.
The sources said Volkswagen (VW) hoped its bonds would have returned to more normal levels by next spring, allowing it to issue debt and repay the bridging loan.
The loan and subsequent bond placements will likely cost VW about 150 million euros in coupon payments and fees, one of the sources said, adding to the company's financial burden as a result of the scandal.
More than two months after VW's cheating became public, the company is still trying to identify those responsible and organise refits for around 11 million vehicles worldwide.