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Schaeffler Confirms Hetmann Has Resigned

Schaeffler Group has confirmed that the company’s chief financial officer, Thomas Hetmann, has left due to “differences of opinion regarding the future strategic concept of the Schaeffler Group.” According to an official statement released by the company, Hetmann has left by “mutual agreement” and will be replaced by Mary Jo Gresens, who will act as a consultant. Gresens was previously CFO at the automotive supplier between 1999 and 2006.

Meanwhile, Forbes has reported that Schaeffler is to present a revised restructuring plan to the German government in the next two week. A source “familiar with the matter” told the business magazine that the move, a requirement for receiving state aid, follows a 20 per cent drop in new orders at the company.

18th February 2009/by Tyrepress Editors

SPD May Support Schaeffler State Aid

Germany’s Social Democratic party (SPD) is reportedly “open in principle” Continental AG major shareholder Schaeffler Group with state aid, SPD chairman Franz Muentefering told reporters in Berlin. “Situations can arise in which you need to help many, many families in order to prevent a catastrophe…Then you need to do it,” Muentefering added. The politician didn’t give any details of how government discussions on how the government’s discussions with Schaeffler could work out.

16th February 2009/by Tyrepress Editors

Reports: Schaeffler Could Now Get State Aid

According to Reuters, Conti shares grew 6.7 per cent on Friday (13 February 2009) after Renate Schmidt, member for the SPD in the German Bundestag, reportedly declared that state aid for Schaeffler may be possible under certain conditions. The news follows potential investor Abu Dhabi-owned IPIC denying it was interested. Pirelli also ruled itself out of any possible deal earlier in the week.

13th February 2009/by Tyrepress Editors

Michelin May Still Be Interested in Conti

Michelin joint-head Michel Rollier, may have said that the company is facing market challenges head-on by cutting capital expenditure to 700 million euros, but that doesn’t mean it has ruled itself out of buying economically priced competitors. Speaking at a press conference on Friday 13 February, Rollier said the French tyre manufacturer would consider Continental AG again, if the company ever comes back on the market. Coming just days after Continental AG’s major shareholder appealed for investors and state support, commentators are speculating that Michelin has an acquisition strategy.

Asked what Michelin would do if Schaeffler were to look for a buyer for Continental, Rollier told journalists: “Obviously Michelin wouldn’t be absent. I can’t tell you more than that.” Rollier’s interest appears to stretch beyond Continental alone to any other strategic advantageous tyre marker: “There are many smaller tyre companies in the world, and it’s not impossible that the crisis can lead to mergers. Here too, we certainly won’t absent.”

13th February 2009/by Tyrepress Editors

IPIC Refutes Schaeffler/Conti Acquisition News

The Abu Dhabi government-owned International Petroleum Investment Company (IPIC) denied on February 12 it was negotiating to acquire a share in Schaeffler or its 49.9 per cent owned subsidiary Continental. In a statement, IPIC managing director Khadem al-Qubaisi said “this speculation has surfaced recently in the German media. We are quite surprised that this has arisen at all.”

12th February 2009/by Tyrepress Editors

German Government to Restart Talks With Schaeffler

The German government is about to reopen support negotiations Schaeffler Group if, according to news reports, the company agrees to reorganise its financing with lenders. “When there is such a plan, there will be further negotiations,” Economy Ministry spokesperson Steffen Moritz told Bloomberg in an email.

Meanwhile, Abu Dhabi’s International Petroleum Investment Company (IPIC) sovereign wealth fund is reportedly considering taking a stake in either Schaeffler Group or Continental AG, according to Financial Times Deutschland. The unconfirmed reports suggest a stake of no less than 20 per cent and “probably” more than 25 per cent in one of the two companies is being considered.

10th February 2009/by Tyrepress Editors

Schaeffler Appeals for Investment

Schaeffler Group is reportedly fighting against the possibility of a company breakup, as the automotive supplier struggles under the weight of 11 billion euros of debt it acquired when buying Continental AG. Over the weekend the owners of the Schaeffler Group, Maria-Elisabeth Schaeffler and her son Georg Schaeffler, commented on the situation in a public statement which saw them deny the company gambled on the purchase of Continental AG and appeal for outside support.

“…Schaeffler Group requires support for a limited period of time. Our talks with politicians are about securing interim financial aid in a special exceptional situation for a company that is sound at the core,” the statement read, adding: “The Schaeffler Group will present a viable concept to the federal government and the states. We are well aware that the viability of this concept will be scrutinized by the responsible public authorities to ensure that an interim financial aid package will not burden the taxpayers, and we realize that the Schaeffler Group must pay the statutory interest and fees incurred due to the bridgeover.”

9th February 2009/by Tyrepress Editors

Fitch Ratings Downgrades Continental AG

On 4 February Fitch Ratings downgraded Continental AG’s Long-term Issuer Default (IDR) and senior unsecured credit ratings to ‘BB’ from ‘BB+’. The Short-term IDR was affirmed at ‘B’. At the same time the Long-term IDR and senior unsecured ratings have been removed from Rating Watch Negative (RWN). According to a release issued by the agency, “the Outlook on the long-term IDR is negative” and the downgrade reflects “rapidly weakening auto markets amid the severe global recession which could further negatively impact Continental’s…plan for swift de-leveraging.”

The rating action also reportedly takes into account Fitch’s “increasing concerns” about the deteriorating credit quality of the group’s major shareholder, Schaeffler Group KG. Fitch also noted Continental’s plan to separate its rubber business, including the relatively stable and cash-generative tyre business, into a separate entity.

4th February 2009/by Tyrepress Editors

Schaeffler Employees to Start Short-Time Working

German news sources are reporting that Schaeffler Group is planning seems for most of its 25 German locations to work on short-time schedules for half a year. According to Tyres & Accessories’ German sister publication, Neue ReifenZeitung, the reports were confirmed by Schaeffler spokesman Detlef Sieverdingbeck on 2 February. The specific terms reportedly differ depending on location. The news mainly affects employees in the Automotive division, according to the Financial Times.

Meanwhile, at the end of last week Chancellor Angela Merkel reportedly turned down Schaeffler Group’s application for federal loan support. Schaeffler, the majority shareholder of Continental AG, is currently carrying around 22 billion euros of debt after taking over Conti. In an interview with Germany’s Bild newspaper, Merkel said: “We won’t pay the bill for risky company decisions.” For his part, Christian Wulff, prime minister of Lower Saxony, said the Schaeffler family and banks need to act before the government does anything. So while the chances of federal loan support are slim, the possibility of the regional government guaranteeing the 3 to 5 billion euros of new capital the company is said to be asking for, is not completely out of the question.

2nd February 2009/by Tyrepress Editors

Schaeffler Walks Away Without State Aid After Initial Talks

Schaeffler Group and Continental AG walked away empty handed from financial support talks with federal ministers. They also received this advice: a “viable and forward-looking” plan, agreed on with creditors, is “a prerequisite for further negotiations.” According to an earlier Reuters report, Schaeffler Group had “sounded out” the German government about the possibility of 4 billion euros ($5.23 billion) in capital. The Federal talks came after talks with German states, including Bavaria, Lower Saxony and Baden-Wuerttemberg were unsuccessful. For its part Bavaria’s government said only loan guarantees would be considered.

The delegation will have to rethink its approach after German Finance Minister Peer Steinbrueck said taxpayers wouldn’t be funding Schaeffler: “It’s not the job of the state to intervene in cases in which business decisions were possibly not thought through enough,” Steinbrueck Berliner Zeitung.

30th January 2009/by Tyrepress Editors

Could Part Nationalisation Be an Option for Conti?

German media reports, supposedly quoting industry sources suggest Schaeffler Group is discussing the possibility of either the federal or state governments taking a direct stake in Continental AG. So far, the federal government has clearly rejected such an idea and has only indicated the possibility of potential loans or loan guarantees. Whichever way it goes, we are likely to see the outcome tomorrow 30 January as after the summit meeting between state prime ministers Christian Wulff (Lower Saxony) and Horst Seehofer (Bayern) and German Economics Minister Michael Glos in Berlin.

Meanwhile Reuters reported that Continental AG posted a full-year operating profit margin of 8 per cent in 2008, quoting “several people familiar with the matter.” The sources also said that Continental manager Gerard Cordonnier would be appointed as new Chief Financial Officer of the company.

28th January 2009/by Tyrepress Editors

Continental AG in State Aid Negotiations

Continental AG and its controlling shareholder, Schaeffler Group, are reportedly seeking aid from two German state governments. According to a Bloomberg report, German federal government isn’t directly involved in the “advanced talks” with the Lower Saxony and Bavaria state authorities. On 27 January representatives of the IG Metall trade union told reports that any state aid should be used to help save jobs and “not the private wealth of company owners Maria-Elisabeth Schaeffler and her son Georg.” The union, which represents a total of 2.3 million employees, said workers should also get a say in running the company.

Meanwhile, credit rating agency, Standard & Poor’s, has lowered Continental AG’s creditworthiness two levels to ‘BB’ from ‘BBB-‘. According to an S&P statement the decision was made following an analysis of Continental’s revised business plan and the renegotiation of financial covenants. Continental AG is currently responsible for servicing an estimated 22 billion euros of debts.

27th January 2009/by Tyrepress Editors

Schaeffler Seizes Control of Conti Board

Schaeffler Group seized control of Continental AG’s supervisory board on 24 January. The Emergency General Meeting (EGM) held at the weekend concluded with chairman Hubertus von Gruenberg stepping down, reportedly to be replaced by Rolf Koerfer, a long-term Schaeffler Group legal aid and partner at Dusseldorf- based law firm Allen & Overy. At the same time, the ball bearing maker was able to negotiate the nomination of group owners Maria-Elisabeth Schaeffler and Georg Schaeffler, not to mention company CEO Dr. Jürgen M. Geißinger to the Conti board.

This shift in the balance of power led to the supervisory board “taking note” of Conti executives’ suggestion to “initiate a process to create an organizationally and legally independent Rubber Group.” In Schaeffler’s words, to “carve out” the rubber group into a separate entity. According to the company, this process will be overseen by the current (but apparently outgoing) chairman of the supervisory board, Hubertus von Grünberg. So while von Grünberg “wants to make his chairmanship available at short notice” he will continue to be a member of the supervisory board.

26th January 2009/by Tyrepress Editors

Is Schaeffler Seeking Complete Control of Conti?

Speculation is mounting that Schaeffler Group executives are positioning themselves for a complete takeover of Continental AG. Following the ball-bearing maker’s successful bid for just under half the company, Schaeffler Group, is now responsible for 11 billion euros ($14.3 billion) of debt relating to the deal. However, the increasing negative global economic climate, especially with relation to the automotive supply business has led some observers to characterise Schaeffler as being backed into a corner. According to Bloomberg, “Schaeffler has one way out: gaining full control of Europe’s second-largest car-parts maker.”

Continental will now hold an emergency supervisory board meeting on 24 January (tomorrow), a gathering that has been arranged in the wake of Schaeffler’s reported demands for the resignation of Continental supervisory board chairman Hubertus von Gruenberg. According to the Financial Times this threat was delivered alongside an ultimatum – either Continental forces out von Gruenberg and gives Schaeffler representatives four seats on the board or the ball bearing member will push for the replacement of all 20 investor representatives on the 20-member board.

23rd January 2009/by Tyrepress Editors

Reports: Schaeffler Wants Conti Chairman Out or New Board

The ongoing struggle between Continental AG and its major shareholder, Schaeffler Group, took a new twist yesterday when the Financial Times (FT) reported that Schaeffler wanted to force our Conti’s supervisory board chairman, Hubertus von Grünberg. According to FT, Schaeffler executives have fallen out with von Grünberg over his “systematic sabotage” of their plans.

FT reported that von Grünberg was told he should resign and make way for Schaeffler to be given four board seats, or the ball bearing maker would force an extraordinary shareholders’ meeting to replace all 10 members. Neither side has commented publicly about the reports.

21st January 2009/by Tyrepress Editors