Volkswagen has decided to freeze merger talks that could bailout its majority owner Porsche SE. The move has left indebted Porsche scrambling to reassure investors that a deal to unite the two was still alive.

According to the IG Metall union, Porsche's supervisory board met near Stuttgart in Germany on Monday. The meeting came one day after VW's decision. Porsche insists that negotiations to create a sweeping automotive empire were still on, and that it faced no short-term financing issues. But the standoff still heightened concerns about how the German luxury sports car maker would fund its 9-billion euro debt. A source from Porsche confirmed a report that it had sounded out state bank K-f-W on whether it could qualify for loans totaling 1-billion euros. Yet, Porsche assured investors it had not asked for bailout money from the government.

(CCTV May 20, 2009)