The woes of Volkswagen just do not seem to end since the defeat device emission scandal it had gotten itself into. The automaker will now take out a loan of $21B to cover the subsequent costs after it acknowledged cheating the U.S emission standard tests by designing special software fitted in its vehicles to falsify carbon dioxide output from its vehicles. The company hopes to issue its bonds by Spring 2016 which will enable it to repay bridging loan and issue debt as of now.
The Volkswagen had applied for loans to further strengthen the finances and cover the cost of upcoming vehicle refittings, law suits and fines after the defeat device emission scandal. Further investigations related to possible tax evasions may also be opened. Adding further to this, California Air Resources Board has also asked Volkswagen to fix around 15,000 vehicles equipped with V6 TDI 3-cylinder engines which contain the defeat diesel device.
The bond placements and loan will put a further financial pressure of 150 million Euros on the company. VW workers are experiencing a growing uncertainty since the vehicle orders have slowed down in Europe and sales have taken a huge plunge in the US. However, the company is not planning any lay-offs as a part of its cost cutting. As of now, the company will reduce its R&D budget of around $1.1 billion in 2016 and may shut down the operations of its factory located in Dresden, Germany. Sources claim that 13 banks have offered to issue this loan to Volkswagen. Keep watching this space for updates on Volkswagen emission scandal.