Porsche’s family owners are poised to settle their feud over a rescue of the manufacturer with a compromise deal that would wipe out almost all of its debt.

The Porsche and Piech families, who co-own the carmaker, are working on a package of measures to reduce the company’s debt of more than 10 billion ‘as completely as possible’.

The combination of a sale of half of the business for as much as 4billion Euro to Volkswagen, a 5billion Euro capital raising exercise, and the sale of options that can be converted into Volkswagen shares was seen as a possible solution to the debt problems.

The Qatar Investment Authority, a Middle East sovereign wealth fund with whom investment talks have been held, and the two families, could inject cash and assets to further strengthen the balance sheet.

The deal could be followed by a merger of both Porsche and Volkswagen.

Both companies are holding supervisory board meetings next week to decide on the Porsche bail-out.