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Schaeffler, Employee Representatives Agree Upon Cost Cuts

Schaeffler reports a “successful reconciliation” of its interests has been achieved. The company’s Executive Management Board and plant management representatives, in talks with labour representatives, have agreed upon a package of measures to reduce personnel costs at Schaeffler’s German locations. The total adjustment volume, required due to slack demand, amounts to €250 euros per annum. Schaeffler now reports these savings can be achieved through natural fluctuation, voluntary redundancies and partial retirement along with the continued use of short time work and reduced working hours including adjustment of salaries and wages.

6th August 2009/by Tyrepress Editors

Schaeffler, Employees Reach Agreement on Cost Cutting Measures

Company management and employee representatives at Schaeffler KG’s facility in Schweinfurt, Germany have reached an understanding on a package of staff cost cutting measures. According to Schaeffler, this
measure has been taken due to weaker demand creating the necessity to make adjustments amounting to a total of 50 million euros. The savings will be generated through naturally occuring labour turnover, voluntary redundancy and part time work for older employees, plus a shortening of working hours and an extension of government subsidised short-time work. Apprentices at the site will be retained.

28th July 2009/by Tyrepress Editors

Schaeffler Accused of Blocking Continental Merger

Continental AG chief executive, Dr Karl-Thomas Neumann, has reportedly written to the Schaeffler Group’s family owners alleging Schaeffler has tried to block the two companies’ merger with “incorrect assumptions about the company’s value and a reluctance to agree to key points.” According to the Financial Times, the letter alleged that Schaeffler’s banks had “communicated an unrealistic value of 12 billion euros (£10.325 billion; $17 billion) for the automotive supplier.

FT reports that Dr Neumann is now “heading for a showdown with Schaeffler at [the] supervisory board meeting next week, when he will push for a decision on several key points as a basis for a merger of the companies.” The financial newspaper described a proposal document Dr Neumann has presented to supervisory board members ahead of the meeting. In it he demands that the combined group strive toward an investment grade rating as quickly as possible: “From 2010, the group should have a maximum net debt of three times operating profit (earnings before interest, tax, depreciation and amortisation) and equity ratio of 25 per cent, the document says.”

23rd July 2009/by Tyrepress Editors

Reports: Continental Considers 1 billion euro Capital Increase

Continental AG is reportedly considering a 1 billion euro (£865 million; $1.4 billion) capital increase. According to an article published in the Financial Times, Conti CEO Dr Karl-Thomas Neumann is to make the proposal at a supervisory board meeting next week scheduled in advance of the company’s combination solution announcement, expected at the end of July. Neumann’s suggested capital raising is being described as “an alternative to a merger with Schaeffler,” FT said.

According to the newspaper recent plans for Continental to regain control of the merger through a reverse takeover of its 90 per cent shareholder have been “torpedoed” by Schaeffler Group. Schaeffler is reportedly negotiating with its backs to delay loan payments for two years. Under current terms it would have had begin repaying a first 500 million euro debt tranche in January 2010. Meanwhile, Continental is said to need a “quick merger or a capital increase” owing to the fact that it has 800 million euros in debt maturing in August and a further 3.5 billion euros maturing in 2010.

21st July 2009/by Tyrepress Editors

Analysts Hail ‘10x Better Than Expected’ Continental Results

Morgan Stanley has raised its estimates for Continental AG shares following what the analysts described as “much stronger than expected second quarter results” According to Morgan Stanley the pre-announced second quarter results reveal an adjusted group EBIT figure “10 times higher than…expected.” The 5.9 per cent EBIT margin therefore compares very favourable with the analysts’ 0.6 per cent forecast.

Furthermore, this positive surprise appears to be split 50 per cent between the Auto and Rubber groups, where sales in the Chassis & Safety division and “strong winter tyre sell-in won the quarter.” However, the analysts also warn that while the company has obviously benefited from “early winter tyre sell-in…this cannot be extrapolated into the third quarter where we think profit will certainly be lower.”

20th July 2009/by Tyrepress Editors

Conti to Receive Kuwaiti Investment?

According to an article that appeared German business newspaper WirtschaftsWoche on July 18, Continental AG may soon be the recipient of Kuwaiti investment. The paper reported that investors from the Persian Gulf State entered into talks with Continental Executive Board chairman Dr. Karl-Thomas Neumann several days earlier. This meeting followed one the investors conducted with Christian Wulff, the premier of the state of Lower Saxony, where Continental is headquartered.

20th July 2009/by Tyrepress Editors

Conti/Schaeffler Solution ‘May Take Months’

Finding a permanent solution to the Continental AG/Schaeffler Group combination stalemate may take months, according to a Reuters report. The news agency quotes “sources familiar with the matter” as saying: “There is a chance that the companies and their banks will decide on key points by the end of this year…but it is rather unlikely that this will happen this month."

10th July 2009/by Tyrepress Editors

Schaeffler Mechatronics Head Awarded for Innovations

A cause for celebration within the Schaeffler Group came on July 8 when the company’s head of Mechatronics, Bernd Gombert, was awarded the Federal Republic of Germany’s Federal Cross of Merit with Ribbon. Gombert earned this impressive sounding award for being, as the Bavarian State Ministry of Sciences, Research and the Arts, Martin, Zeil noted, amongst the “recognised top performers of our country and [is] among those who set a standard in terms of enthusiasm, motivation and cooperativeness.”

8th July 2009/by Tyrepress Editors

Schaeffler Taps Houlihan Lokey to Advise on Restructuring

Schaeffler Group, which holds a 90 per cent shareholding in Continental AG, has recruited investment bank Houlihan Lokey to advise it on restructuring its finances. “To restructure its finances along with finding a long-term overall solution the Schaeffler group is seeking the advice of a number of experts and has appointed investment bank Houlihan Lokey,” a company spokesman told Financial Times Deutschland.

8th July 2009/by Tyrepress Editors

Schaeffler Seeks Chinese Investors

Chinese state and private firms may take on a partial shareholding in debt laden Schaeffler AG. According to an article printed by German business magazine WirtschaftsWoche on June 27, the company has engaged in talks with several parties, including the Beijing city administration, regarding a share sale in order to bolster its short-term finances. Such a deal would give the Chinese access to the company’s know-how, technology and distribution channels, the magazine reported.

“We have always said that we would speak to potential investors,” a Schaeffler spokesman was quoted as saying.

29th June 2009/by Tyrepress Editors

Conti’s Neumann ‘Ready to Resign’ if Debt Solution Against Company’s Interests

Speaking at a Deutsche Bank conference, Continental AG chief executive, Karl Thomas Neumann has said he is ready to resign if the restructuring solution Conti and 90 per cent shareholder Schaeffler come up with is against Contienental’s best interests. According to Deutsche Bank analysts, Continental is “doing a good job in adapting the company to the current environment, especially in transferring fixed into variable costs (by approximately 50 per cent), mostly concerning labour costs.” However the analysts also point out that a lot of uncertainties remain including: the restructuring of the balance sheet specifically regarding a rights issue to reimburse a 3.5 billion euro debt which expires in August 2010; whether to acquire Schaeffler assets or not, and eventually the disposal of assets to accelerate debt reduction. Continental’s board is expected to present its solution around the end of July.

25th June 2009/by Tyrepress Editors

Reports: Lenders Set to Oppose Continental/Schaeffler Combination

Banks responsible for as much as half of Continental AG’s 11 billion euros ($15.5 billion) of debt are reportedly going to oppose the company’s proposed combination with 90 per cent shareholder Schaeffler Group. Citing “people familiar with the situation,” Bloomberg reported that the banks are concerned about the levels of debt necessary for the two companies to re-merge. According to the report, the banks are trying to half the move by blocking changes to a loan agreement first reached in 2007. The two companies have combined debts of around 24 billion euros.

Neither Continental, Schaeffler nor the banks involved have yet commented. However, for all the banks fears and apparent threats to de-rail what is expected to become a reverse takeover, with less than 100 days before the German general election, government support for the move (and the thousands of jobs that depend on it) have the potential to make the re-merger work. Continental executives are expected to officially reveal their plans at the end of July.

24th June 2009/by Tyrepress Editors

Wennemer Set to Become Opel Advisor

Former Continental AG CEO, Manfred Wennemer, is set to represent Berlin on an advisory board overseeing the trust that administers Opel, according to a Reuters report. Wennemer, who led Continental’s rearguard action against Schaeffler Group’s July 2008 hostile takeover, stepped down last August after seven years with the company when the automotive supplier managed to overcome Conti’s defences. He was subsequently nominated to join the board of steel wire manufacturer Bekaert in March 2009. According to Reuters, the trust holds 65 per cent of Opel shares and is charged with ensuring that 1.5 billion euros ($2.1 billion) in bridge financing offered by Berlin and the four German states with Opel plants is not misappropriated.

16th June 2009/by Tyrepress Editors

Continental, Schaeffler to Avoid State Assistance?

According to Reuters and other German media outlets, sources with “direct knowledge of the matter” report that Continental and owner Schaeffler intend to avoid any requests for government financial aid. The finance minister of Germany’s Lower Saxony region, where Continental has its headquarters, said the state has not been received any requests for aid. “We have not even been approached with a preliminary enquiry,” said finance minister Hartmut Möllring. Neither Continental nor Schaeffler have commented about their intentions.

10th June 2009/by Tyrepress Editors

Conti Executive Board to Assess Viability of Schaeffler Merger

During its June 8 meeting in Hanover, Germany, the Continental AG Supervisory Board deliberated on various future scenarios for the company, including the option of a merger between it and Schaeffler under the umbrella of a publicly listed Continental AG. In exploring this possible course of action, the Supervisory Board has asked Conti’s Executive Board to assess all aspects of a merger between Continental and Schaeffler, in particular the financial feasibility of such a joining. This process is to be completed by the end of July. At the same time, notes Continental, the Executive Board shall continue to analyse further alternatives and their possible implementation.

9th June 2009/by Tyrepress Editors