Conti Shares Up 10% After Rights Issue
Continental AG shares rose over 10 per cent yesterday, following the start of a widely expected 1.1 billion euro rights issue. About three quarters of the new shares are said to have been placed with investors already. The offer also has the dual effect of diluting Schaeffler’s stake in the company to just over 75 per cent. Strategically, this is something Schaeffler (which previously indirectly controlled 90 per cent of Conti) shares is likely to be happy with as it is still firmly in control of the company’s stock.
The underwritten rights issue, follows a recent 2.5 billion euro debt restructuring agreement with banks and is said to have relieved some of doubts surrounding the Hanover-based tyre and automotive parts supplier’s 9.5 billion euro debt mountain. The issue should now allow the company to pay off 3.5 billion euros of debt due in August. The next obstacle is a 5 billion euro debt cheque due in 2012.
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