NEW YORK - With the broad S&P 500 Index gliding once again into uncharted territory and posting four straight weeks of gains, the talk of Wall Street's rally inevitably hitting a ceiling is starting to get old.
LONDON - From ketchup to hot drinks, family-run investment firms are shaking up the consumer deals market, squeezing out private equity players and forcing them to change strategy.
BEIJING/HONG KONG - China reiterated its opposition on Thursday to a European Union plan to limit airline carbon dioxide emissions and called for talks to resolve the issue a day after its major airlines refused to pay any carbon costs under the new law.
Schaeffler cuts Continental AG stake to lower debt
FRANKFURT (Reuters) - German automotive parts supplier Schaeffler is selling shares of partner Continental AG (CONG.DE) currently worth about 1.69 billion euros ($2.18 billion), reducing its stake to 49.9 percent and lopping off a chunk of its debt in the process.
The sale further unwinds one of the most debt-fuelled acquisition deals in German corporate history executed just as Lehman filed for bankruptcy in 2008.
In a statement after the market closed on Monday, Schaeffler said its two German private banks, M.M. Warburg and Bankhaus Metzler, will place with investors as part of an accelerated bookbuilding offering about 20.8 million shares -- or roughly 10.4 percent of tyre maker Continental's outstanding stock.
"Roughly 1.6 billion should result (in net proceeds), but we need to wait until tomorrow," finance chief Klaus Rosenfeld told reporters during a conference call.
Two sources told Reuters the placement would likely be priced between 77.50-79.30 euros, a discount to Monday's closing price of 81.49 euros yet still higher than the 75 euros Schaeffler first agreed to offer investors in August 2008.
The proceeds from the sale will go entirely to reducing just over 5 billion euros in debt weighing on Schaeffler Holding, which Rosenfeld said would amount to about 3.5 billion after the transaction.
During a conference call with reporters, the Schaeffler CFO declined to say if the company planned to sell further Continental shares despite his company's announcement that the Schaeffler family had agreed to a six-month lockup period.
The group nearly bankrupted itself in a debt-financed attempt to swallow Continental, a company three times its size. After Lehman collapsed and equity prices swooned, shareholders rushed to dump their stock with Schaeffler saddling it with more than the 49.9 percent it originally wanted. The rest had to be parked with two private banks as per an agreement with Continental.
Schaeffler later agreed with its handful of lenders to hive off its operating assets into a separate company and divvy up its near 12 billion euros in debt between the two.
Ball bearings and clutch maker Schaeffler AG, the operating unit, shouldered debt of 7.09 billion euros at the end of June. This is more than triple its earnings before interest, taxes, depreciation and amortisation (EBITDA) over the previous twelve months.
Goldman Sachs (GS.N) leads the consortium placing the Continental shares. Commerzbank CBKG.DE and UniCredit's (CRDI.MI) German unit HVB are co-bookrunners.
Continental's shares have gained almost 74 percent so far this year, winning them promotion to the Dax .GDAXI index of 30 leading German shares. On their first day of trading on the Dax on Monday they closed down 2.5 percent at 81.49 euros.
(Reporting By Christiaan Hetzner; Editing by Bernard Orr)
- Tweet this
- Share this
- Digg this