Schaeffler reduces debts, increases direct Conti stake to 49.9%

Schaeffler Group has confirmed a series of measures re-financing the company by reducing detbs by around 2.8 billion euros and re-positioning itself in relationship to Continental AG. Following a string of news reports suggesting the moves were on the horizon, the company issued a statement on 28 March confirming it is selling approximately 29.7 million indirectly owned shares in Continental AG, increasing its directly owned stake from 42.2 to 49.9 per cent and is converting into a stock corporation (from Schaeffler GmbH to Schaeffler AG) this year. Continental shares reportedly rose 1.6 per cent during trading on Monday 28 March in response to the news.

As a result Schaeffler Holding has reduced its debt from 7.4 billion euros to 4.6 billion euros. The reduction results from the sale of Continental shares by M.M.Warburg and Bankhaus Metzler to “a broad range of international investors.” The 29.7 million shares were sold at 60 euros per share, yielding net proceeds of around 1.8 billion euros. Following the placement, the free float in shares of Continental AG will increase from 24.9 per cent to 39.7 per cent. According to the company, the increased free float and improved liquidity in the stock positions Continental AG as a candidate for a re-entry into the DAX 30.

In addition, Schaeffler GmbH will be converted into a stock corporation (Aktiengesellschaft) in the course of 2011. With the conversion, Schaeffler reports that it will take “a further important step towards capital markets readiness and gain additional financial and strategic flexibility.”

Georg Schaeffler, chairman of the supervisory board and shareholder of the Schaeffler Group said: “These measures will give us the flexibility required for the further successful strategic development of the Schaeffler Group. In addition, it increases the attractiveness of Continental shares for investors. On this basis, the Schaeffler Group will continue to examine all strategic options to further intensify the cooperation with Continental.”

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