VW to Take Large Loans to Handle Emissions Fallout

Volkswagen is reeling heavily from the emissions scandal. The company is set to face heavy penalties from regulatory authorities across the globe and possibly class action suits from end users.

According to a Reuters, in anticipation of future payouts, Volkswagen has plans to take loans to the tune of 20 billion euros or USD 21 billion. The loans will be taken from several banks. The company is also mulling the possibility of issuing bonds by spring of next year in order to cover the costs of the scandal. The fees for arranging the loans alone could be as high as USD 160 million.

In tandem with the loans, the company plans to reduce costs by streamlining operations and reducing the research and development budget by USD 1.1 billion in 2016. There is also the possibility that it might close its Dresden factory for making Phaetons.

The loans are meant to cover the expenses relating to recalling and fixing the Audi models fitted with the 3.0-liter V6 TDI engine, penalties and fines and any payouts relating to class action suits by customers. According to an estimate by Credit Suisse, the total costs for the emissions scandal could go as high as USD 82.5 billion.