The Volkswagen Group is reportedly seeking up to $21.5 billion worth of short-term loans to deal with the ongoing dieselgate emissions scandal.
It is reported that the German conglomerate is seeking the loans as a financial cushion for when it is inevitably fined in the near future for cheating diesel emissions testing. Volkswagen is discussing the loans with about a dozen banks.
Having the loans will protect the company’s rating by showing that it won’t have liquidity issues in the future, even when fines start being applied. At the end of September 2015, Volkswagen had 27.8 billion euros in net liquidity, of which about 10 million euros will be used to support credit ratings.
News about Volkswagen cheating emissions testing software in the United States emerged in late September. The company’s 2.0-litre four-cylinder EA189 diesel engine uses this software and will lead the company to recall over 11 billion vehicles. The Environmental Protection Agency in the U.S also claims that Volkswagen’s 3.0-litre TDI V6 also uses such emissions cheating software but VW has denied these claims.