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Continental Successfully Completes First Steps of Refinancing Package
- Automotive supplier achieved forward start facility in an amount of €2.5 billion
- Capital increase as the second pillar of the refinancing concept can now be undertaken / Preparations are well underway
- Project expected to be completed in first quarter of 2010 as already announced
Continental AG, Hanover, has already successfully completed the first key steps of its overall plan to improve the current financing structure as well as its capital structure. Important amendments were made to the existing loan agreements, allowing for the repayment of the tranche in the amount of €3.5 billion due in August 2010 inter alia by a forward start facility (FSF) while providing further flexibility as well. At the same time, the company has received commitments in excess of the requested €2.5 billion in the FSF and therefore an over-subscription of the request by their bank group, the international automotive supplier announced after the signing of the related loan agreements in Hanover on Saturday.
Now that the negotiations with the banks have been successfully concluded, the integrally related capital increase with anticipated gross proceeds of at least one billion euros can be undertaken as the next step of the refinancing concept. The ability of Continental to draw under the FSF is conditional upon the successful implementation of such a capital increase. As already announced, the capital increase is intended to be implemented in the first quarter of 2010. Subsequently, the company intends to asses and - if appropriate - to implement further measures on the financial markets with a view to further optimize maturity terms.
"Although Continental has done a very good job reacting to the global crisis, especially in generating and maintaining liquidity, as a direct consequence we still needed to address the maturity in 2010 as well as the financial covenants related to the maturity structure. Our overall refinancing concept gives Continental the needed flexibility to emerge strongly from this crisis and therefore we are pleased to see the confidence shared in our company by our bank group in clearly supporting these very important first steps," said Continental Executive Board chairman Dr. Elmar Degenhart. "Now comes the next stage with the capital increase, which we are tackling in the same structured and rigorous manner. An experienced team of internal and external specialists is fully concentrated on preparing the capital increase, and the preparations are well underway. We are confident that the further planned steps in this program will be successfully implemented and we appreciate the support of our banks in this process. In the beginning of the New Year, we anticipate making further announcements as we implement further steps to successfully recapitalize Continental."
The Continental Corporation had taken a syndicated loan to finance the acquisition of Siemens VDO in the summer of 2007. After the repayment of tranche A in an amount of €800 million in August 2009, tranche B in an amount €3.5 billion will be up for repayment in August 2010. Tranche C totaling €5.0 billion will fall due in 2012. On September 30, 2009, Continental had at its disposal liquidity reserves from unused credit lines, cash and cash equivalents totaling €3.3 billion. The corporation's net indebtedness was approximately €9.5 billion on September 30, 2009, approximately €1.3 billion lower than on September 30, 2008.
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