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Schaeffler gets jumbo loan for Continental bid
LONDON (Reuters) - German ball bearings manufacturer Schaeffler Group has secured a multibillion syndicated loan backing its hostile 11.5 billion euro ($18.27 billion) bid for German car parts giant Continental AG (CONG.DE), banking sources said on Monday.
The banks leading the fully underwritten loan are mandated lead arrangers Commerzbank, Dresdner, HVB, LBBW, Royal Bank of Scotland, which is acting as co-ordinator, and UBS, bankers close to the deal said.
The size of the financing has not been revealed due to the hostile and competitive nature of the bid, but the loan is expected to be launched to a wider syndication shortly to reduce market risk for the arranging banks.
Senior lenders will be invited to make clearly defined take-and-hold commitments, rather than take a traditional sub-underwriting role, which relies on other banks participation to reduce commitments.
A bank meeting has been scheduled for July 29, one banker close to the deal said.
Schaeffler's loan will compete for limited loan market liquidity with several other large loans currently in syndication, including InBev's INTB.BR $45 billion loan backing its bid for Anheuser-Busch (BUD.N) and BG Group's (BG.L) $14 billion loan backing its bid for Australia's Origin Energy (ORG.AX).
Schaeffler amassed 36 percent of Continental last week using credit derivatives that were arranged discreetly by its banks in a move which prompted outrage at target Continental.
Schaeffler on Monday vowed not to settle for the 20 percent stake offered by Continental and is targeting a 30-50 percent stake, a second banker close to the deal said.
Schaeffler's bankers are hoping for a quick conclusion to its bid for Continental as greater certainty will aid syndication of the large loan.
"This is a German-German solution, it doesn't need synergies, it makes sense on a stand alone basis," the second banker close to the deal said.
(Reporting by Tessa Walsh, additional reporting by Alasdair Reilly; Editing by Quentin Bryar)
