Conti outlines new loan agreement

German tyre maker and automotive supplier Continental has improved its debt maturity profile through the signing of a new syndicated loan agreement. Committed to by approximately 30 domestic and international banks, the credit amount has been reduced slightly. It now totals 4.5 billion euros and is split up into two tranches of differing duration – a 1.5 billion euro loan with a term of three years, and a five-year, 3 billion euro revolving credit line. For the new syndicated loan, Continental has been able to obtain the release of the asset collateral previously put up for financing and has also implemented “further simplifications” with regards to the documentation.

“The new loan agreement not only improves our financing and debt maturity profile but also puts our financing on a geographically broader footing,” reported Continental CFO Wolfgang Schäfer following the signing of the new agreement, adding: “This will enable us to better absorb regional fluctuations in the global capital market environment in the future and generally respond more flexibly to volatile markets. The great trust that the banks have again demonstrated gives us renewed confidence that with our long-term strategy, we are pursuing the right path for Continental.”

The company has managed to reduce the 13.5 billion euro syndicated loan it agreed to in 2007 by almost 9 billion euros; this was mainly achieved through the launching of five bonds and the generation of free cash flow (FCF). In the last three years alone, Continental’s net indebtedness has dropped by more than 2.5 billion euros. At the end of the 3rd quarter of 2012, it stood at 6.8 billion euros. The gearing ratio (net indebtedness divided by total equity) amounted to 78 per cent at that point in time. Continental closed the third quarter of 2012 with unused credit line commitments of just under 2.6 billion euros. Up until then, the company had availed a mere 602 million euros of the 2.5 billion euro revolving credit line under the terms of the previous syndicated loan.

On March 7, 2013, Continental will present preliminary figures for the 2012 fiscal year 2012 at its annual press conference.