DBRS Comments on Volkswagen AG and Related Entities
Dominion Bond Rating Service (“DBRS”) notes that Volkswagen AG (“VW” or the “Company”) announced on March 9, 2006, the sale of its wholly owned subsidiary, Europcar, to the French investment group Eurozeo for gross proceeds of approximately €3.32 billion (€1.26 billion after deducting net debt). The sale is expected to close by the end of the first half of 2006 subjected to approvals by the Supervisory Board of Volkswagen and anti-trust authorities.
DBRS notes that the sale of Europcar, a short-term car hire (rental) company, is not unexpected. The Company has been reviewing its strategic options regarding the future of Europcar. DBRS deems the transaction to be positive to VW strengthening its cash position and freeing up capital to invest in its core businesses. However, the sale only has a modest net impact on the financial profile of VW and is not material enough to affect the Company’s ratings [A (low) and R-1 (low) with Stable trends].
Europar had revenue of €1.3 billion and profit after tax of €66.9 million in 2005. Europar currently operates over 2,900 vehicle hire offices in more than 145 countries and has a workforce of 5,200.
DBRS's rating definitions and the terms of use of such ratings are available at www.dbrs.com.