Billion Euro Rights Issue Another Refinancing ‘Milestone’ for Conti

The issuance of 31 million new Continental AG shares, valued at 35 euros apiece, is anticipated to increase the company’s capital by approximately 18 per cent. This rights issue, approved by Conti’s Supervisory Board on the evening of January 6, has been described by Continental as “another significant milestone” in its plan to improve its capital and financing structure, and the capital raised along with the 2.5 billion euro loan announced last month will be used to repay the company’s 3.5 billion euro Tranche B debt, which is due in August.

“Continental AG will receive gross proceeds from the rights issue of 1.085 billion euros,” the company said in a statement. The share sale is being underwritten by a group of banks led by Deutsche Bank, Goldman Sachs Group and JPMorgan Chase & Co., and investors willing to subscribe to around three-quarters of the placement have already been found. The remaining shares will be offered in an ‘accelerated book-building offer’, and delivery and settlement of the new shares is scheduled to take place on January 28. Existing shareholders will receive the option of buying two new shares for every eleven they already own.

The 35 euros per share price represents a figure that is 14 per cent less than the stock’s January 6 closing price and less than half the 75 euros per share paid by Schaeffler in late 2008. Commenting on the agreed price, Continental Executive Board chairman Dr. Elmar Degenhart said “the guaranteed subscription price does reflect the great confidence that the banks that are involved have in our company and its outlook for the future.”

Schaeffler KG reports that, following the capital increase it will, along with German private banks M.M. Warburg & Co and B. Metzler seel. Sohn & Co, will hold more than 75 per cent of the total shares in Continental AG. “We welcome the successful and fast implementation of the Continental AG capital increase, which takes the interests of all parties involved equally into consideration,” commented Schaeffler Group owner Maria-Elisabeth Schaeffler. “This also shows the trust the investors place in us. Therefore we are on track for the next step in creating a successful common future for both companies.” 

Related links:

• Continental Completes ‘First Step’ of Refinancing Package

• Reports: Continental Refinancing ‘Will Be Done By Christmas’

• Continental to Launch 1 billion euro Share Offer in January