Schaeffler Negotiates 1 billion euros of Credit

On 7 April Schaeffler Group finalised a 1 billion euro loan agreement with its banks. “With the 1 billion euro credit line we have gained further flexibility for Schaeffler Group,” said Klaus Rosenfeld, group CFO at the automotive supplier, adding: “The conclusion of the loan agreement is an important sign of trust from our banks.” According to a statement issued by Schaeffler’s press office, all parties involved have agreed on strict confidentiality regarding further details of the loan agreement.

While the new financing is likely to help the company shore up its financial position, last year Schaeffler borrowed 16 billion euros to finance the takeover of Continental AG, but when the automotive markets spirally and the company’s share price nosedived Schaeffler was left with high debt service payments in the midst of an automotive industry crisis. This led the company to request support from the German state and federal government. In February co-owner Georg Schaeffler said the group needed up to 6 billion euros in fresh financing.

Meanwhile, Schaeffler’s creditors are facing problems of their own. On 7 April Commerzbank received word that it is facing a potential downgrade of its credit score by ratings agency Moody’s. According to a Reuters news report, a credit rating downgrade would cast a further cloud over the bank, which is already grappling with…a 5 billion euro loan to…Schaeffler.”