September 27, 2016 / 10:06 AM / 3 years ago

VW says finances robust after media report knocks shares

A U.S. flag flutters in the wind above a Volkswagen dealership in Carlsbad, California, U.S. May 2, 2016. REUTERS/Mike Blake/File Photo

FRANKFURT (Reuters) - Volkswagen (VOWG_p.DE) said on Tuesday its finances remained robust as it sought to allay concerns after a share fall which some traders linked to a media report which said the U.S. Justice Department was assessing whether fines could put the automaker out of business.

“The financial strength of Volkswagen Group is still quite robust. Today, the total special items relating to the diesel issue amount to 17.8 billion euros ($20 billion) and all consequences of the diesel topic known so far are covered,” the company said in a statement.

Volkswagen shares fell 4.6 percent with some traders citing a Bloomberg sourced to two people familiar with the negotiations as saying that the U.S. Justice Department was assessing the automaker’s financial strength before imposing a fine.

The shares were down 4 percent at 111.60 euros at 1112 GMT.

VW has already agreed to spend up to $16.5 billion to address environmental, state and owner claims in the United States related to emissions from its diesel engines.

It still faces billions in potential fines and must resolve the fate of 85,000 polluting 3.0-litre vehicles.

Volkswagen said in its statement that it could only comment on the size of penalty payments once ongoing procedures and investigations conclude.

“While the headlines should be taken seriously, we believe the language being reported infers a certain degree of ‘showboating’. No one wants to be seen to be ‘going light’ on VW,” said a note from analysts at Evercore ISI who hold a buy rating on the stock and a target price of 160 euros.

Reporting by Patricia Uhlig and Jan Schwartz; writing by Edward Taylor; editing by Jason Neely

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