Porsche pays symbolic dividend after massive loss

FRANKFURT (Reuters) - Indebted German automotive holding Porsche SE drastically slashed its dividend after posting a massive pretax loss, marred by writedowns on stock options for heavily inflated Volkswagen shares.

The company said on Thursday it suffered a 4.4 billion euro ($6.60 billion) loss before tax, confirming a profit warning it issued just days before its 2008/09 fiscal year ended on July 31.

In the previous year, its cash-settled VW stock options gave Porsche windfall gains of 8.57 billion euros.

Porsche SE proposed a symbolic dividend of 0.05 euros per preferred share that it will distribute after taking 1 billion euros from earnings retained in the past to post a tiny 8.2 million euro net profit based on German accounting standards.

Qatar's sovereign wealth fund freed up much-needed cash for Porsche by agreeing in August to take over a derivatives package at a substantial discount to book value that gives the Gulf state access to nearly a fifth of VW's votes.

Volkswagen shares slid 5.1 percent on Thursday, falling below the 100 euro mark for the first time since March 2007, as the air came out of the stock that had seen shares rise to 1,000 euros at the end of October 2008.

The Porsche and Piech clans that control Porsche SE put aside their differences and sacked CEO Wendelin Wiedeking, Germany's highest paid manager, along with his discredited finance chief in July after their bold attempt to swallow Volkswagen backfired.

Porsche SE amassed more than 10 billion euros in net debt just when credit markets froze and Wiedeking needed to refinance, forcing VW to extend it an emergency loan and opening the door for a reverse takeover.

Porsche SE plans to raise at least 5 billion euros in fresh equity to bolster its shaky finances ahead of a merger with its 51 percent-owned unit Volkswagen, a deal set to be completed in 2011.

(Reporting by Christiaan Hetzner and Edward Taylor, Editing by Michael Shields)