VW hedges give Porsche 6.8 billion euro windfall

The European automotive group said on Tuesday that earnings before tax rose to 7.3 billion euros in the six months to end-January, easily surpassing the average estimate of 3.65 billion euros from a Reuters poll of 11 analysts.

Volkswagen's pro-rata earnings contribution to Porsche fell to 444 million euros from 484 million euros a year ago.

Late in October, news that Porsche had secured access to about 74 percent of VW ordinary shares -- draining the company of almost its entire freefloat -- led the stock to quintuple within 48 hours to 1,000 euros per share, briefly making the Wolfsburg carmaker the most valuable company in the world.

Porsche then sold a small package of VW cash-settled call options to relieve buying pressure, sparking outcries from investors such as Deutsche Bank's German retail fund business DWS that the carmaker had manipulated the market and broken securities trading laws.

Although the German securities regulator Bafin began an official investigation, no findings have been published, and Porsche has repeatedly protested its innocence. Porsche, which last reported early in January that it had increased its direct stake in VW votes to over 50 percent, encountered problems last week rolling over a 10 billion euro credit line and had to increase its pool of lenders to clinch enough commitments.

Porsche said last Wednesday it would seek its first ever rating from a credit rating agency, which could reduce any reliance on syndicated debt, in a process that could take until May.

Shares in VW spiked after banks granted the loan on market speculation Porsche would be able to move forward with its plan to gain a 75 percent interest in Volkswagen this year.

The state of Lower Saxony holds another 20 percent of the VW votes and has opposed Porsche's aim to transfer full financial and managerial control over Volkswagen to Porsche's SE holding company.

(Reporting by Christiaan Hetzner)