* Wants to be attractive investment in its own right
* Subscribers to 5 bln eur cap hike get payout in June
* Net debt to sink to around 1.5 bln eur after cap hike
* To be profitable in 2011 before any one-off effects
(Adds details, background)
By Christiaan Hetzner
STUTTGART, Germany, March 17 (Reuters) - Debt-laden Porsche SE wooed prospective investors in its mammoth rights issue with a cash payout in June as its merger with Volkswagen hung in the balance, stalled by the threat of more lawsuits.
Volkswagen and Porsche had agreed to merge in the second half of 2011 but a raft of legal and tax issues have put the timetable on hold, forcing Porsche SE to consider its options as a standalone company.
"We cannot say with certainty which approach Porsche SE will take," Porsche SE's finance chief Hans Dieter Poetsch said on Thursday.
Porsche SE turned to Volkswagen for help after running up billions in debt, and was forced to sell a stake in its sports car unit Porsche AG, sack its management and relinquish operating control to executives from VW.
Until it merges with VW, if ever, it exists as a pure holding company, living entirely off annual dividend payments from its two stakes -- a construct penalised by investors that explains why it trades at a discount to its net asset value, according to analysts.
Legal and tax risks have reduced the probability of the merger with Volkswagen this year to just about 50 percent, Porsche SE said last month.
"We can underscore that Porsche SE's executive board assumes that it will be possible to successfully clarify the current uncertainties and that the merger will be able to go ahead, even if this is after 2011," Poetsch said on Thursday.
Since the two companies can achieve their planned synergies of at least 700 million euros simply by exercising options that would give VW control over Porsche's sports car business, analysts question the need for any merger in the first place.
"I don't see the advantage for Volkswagen preferred shareholders, and they need to approve the deal with an 80 percent majority," said one based in Frankfurt, who attended Thursday's news conference.
For the moment, there is still the risk of a billion-euro tax payment should the options be exercised before the start of 2015, but Porsche said this burden drops every year by a about 14 percent going forward.
"We need to weigh the lost synergies of a good 100 million euros every year against the tax costs of exercising the put-call option," Poetsch explained, adding that the second half of 2014 would be a time point when the two offset each other.
STRONG BACKING
Poetsch said Porsche SE wants to be an attractive investment itself and will tempt shareholders subscribing to its 5 billion euro ($6.97 billion) capital increase with a payout in June already, since the new shares will have full dividend rights to its shortened fiscal year that ended in December.
He acknowledged events in Japan and the Middle East meant the time was not ideal to tap equity markets for a fresh infusion of cash in the next month or two.
"If we could choose, we probably would not pick the current environment. Nevertheless there is no reason at all to hesitate," said the CFO of both Porsche SE and Volkswagen, who plans to use the funding to pay down the 6.34 billion in net debt on its books.
Poetsch also forecast a profitable year, excluding any one-off effects including possible writedowns on its put and call options connected to its 50.1 percent stake in Porsche AG.
Instead of resorting to a straight disposal of the remaining stake in its sports car business via the options, though, he emphasised the still considerable support for a merger at the two companies.
"We know that we have the backing of important parties involved: Volkswagen, Porsche, the Porsche and Piech families as well as the employee representatives of both companies," he continued, later adding key VW shareholder Lower Saxony to the list. (Reporting by Christiaan Hetzner, additional reporting by Edward Taylor)