European car giant Volkswagen AG (VKW.L,VLKAF.PK,VOW.BE) intends to recall around 26,000 cars in Australia, citing problems related to their gearbox. The recall comes after similar moves in China, Singapore and Japan.
Separately, the company announced the issuance of new mandatory convertible notes with an aggregate principal amount of up to 1.2 billion euros.
Volkswagen Australia will call back 25,928 vehicles that have a seven-speed DQ200 direct-shift gearbox. It is said to experience transmission and engine failures leading to losing power on the road.
The company will replace the gearbox units free of cost. The affected models include Golf, Jetta, Polo, Passat and Caddy manufactured between June 2008 and September 2011.
"In isolated cases, an electronic malfunction in the control unit inside the gearbox mechatronics may result in a power interruption," a statement from the carmaker said.
The company said separately that it has resolved to issue new mandatory convertible notes with similar terms and conditions as the mandatory convertible notes issued on November 9, 2012 with a coupon of 5.5 percent and maturity on November 9, 2015.
It will be offered at an issue price of 105.64 percent of their principal amount. The aggregate principal amount of the new mandatory convertible notes will be up to 1.2 billion euros.
Proceeds will be used to strengthen the capital base of Volkswagen and to finance further growth, while maintaining the favourable liquidity position and the good rating in comparison with the automaker's competitors.
The stock fell 2.7 percent on Tuesday to settle at 159.50 euros.
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