Schaeffler launches jumbo loan for Continental buy: banks

LONDON (Reuters) - German ball bearing maker Schaeffler has launched the multibillion syndicated loan backing its hostile bid for Continental AG (CONG.DE) to a wider syndication, its lead banks said on Thursday.

The size of the loan has not been disclosed, but the facility has been launched to Schaeffler's key relationship banks and a group of international banks. A bank meeting will be held next week.

Schaeffler's fully underwritten loan joins a crowded loan market that was already facing serious questions about market capacity with InBev's INTB.BR $45 billion loan backing its bid for Anheuser Busch Cos Inc (BUD.N) currently in syndication along with a $14 billon loan backing BG Group's (BG.L) bid for Origin Energy (ORG.AX).

"We've been talking to people for the past week and a half and the feedback has been good, so we've decided there is no time like today (to launch the deal), the markets might get worse," a banker close to the deal said.

The loan, which is in the name of INA-Holding Schaeffler, has been fully underwritten and consists of term loan and multicurrency revolving credits.

The loan is being led by mandated lead arrangers Bayerische Hypo-und Vereinsbank, Commerzbank, Dresdner Kleinwort, Landesbank Baden-Wurttemberg, Royal Bank of Scotland and UBS. Royal Bank of Scotland is acting as the global co-coordinator and facility agent in relation to the deal.

The loan will be used to support Schaeffler's offer to Continental's shareholders to acquire all of their no-par value bearer shares in Continental AG by way of a voluntary public cash tender offer, the banks said.

The remainder of the facilities will be used to refinance debt incurred in the acquisition of Continental, refinance the payment of the costs of the public voluntary cash tender offer and for general corporate and working capital purposes, they added.

The acquisition will create the second largest automotive supplier with estimated pro-forma sales of 36 billion euros in 2008.

(Reporting by Tessa Walsh, additional reporting by Zaida Espana; editing by Andy Bruce)