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UPDATE 1-SGL share issue will see VW and Voith stakes fall
November 29, 2016 / 9:51 AM / 10 months ago

UPDATE 1-SGL share issue will see VW and Voith stakes fall

* VW will see stake reduced to 7.4 pct from close to 10 pct

* BMW, Susanne Klatten to inject cash to keep their stakes

* SGL a key supplier of carbon fibres to BMW

* Carmakers’ uptake of carbon fibres lags expectations (Recasts, adds details on cash call, percentage shareholdings)

By Ludwig Burger

FRANKFURT, Nov 29 (Reuters) - Carmaker Volkswagen will not buy into a new share issue by SGL , reducing its stake in the German carbon fibre maker and allowing rival BMW more control over one of its key materials suppliers.

BMW and Susanne Klatten, one of the carmaker’s largest shareholders, will participate in the fundraising to maintain their current shareholdings, while Volkswagen (VW) and engineering group Voith will not inject cash, SGL said.

VW, which is facing billions in fines and costs in the wake of a scandal involving rigged emission tests, said in a statement that providing cash to SGL would “not make sense in light of the current situation at Volkswagen AG”.

VW is, however, not looking to cut its stake further, SGL said.

SGL, which competes with Japan’s Toray and Solvay’s Cytec in carbon fibre materials, will increase its capital by close to one third, with 40 existing SGL shares entitling shareholders to buy 13 new shares for 6 euros apiece.

This would result in a reduction of VW’s stake to 7.4 percent, down from close to 10 percent at the moment.

SGL said Voith currently holds between 5 and 10 percent, without being more specific.

BMW and Klatten’s investment vehicle Skion will continue to hold about 18.4 percent and 27.4 percent respectively.

SGL, which has this year sold its struggling graphite electrodes business, said on Tuesday it would use expected proceeds from the share sale of 180 million euros, as well as proceeds of at least 200 million from the graphite electrodes sale, to cut debt and gain some financial wiggle room.

“We expect to better balance the volatility in our business,” it said in the statement.

The graphite electrodes business, once SGL’s largest profit driver, has been eviscerated by Chinese competition and a slump in scrap metal recycling, the main use for the electrodes.

Klatten and the carmakers were initially attracted to SGL by its carbon fibres, used in light-weight components for BMW electric vehicles as well as VW’s Audi R8 sports cars.

While carbon fibre reinforced parts have become standard materials in aircraft and wind turbine rotors, the auto industry’s uptake has lagged expectations. BMW has recently limited its use of the costly material, turning to cheaper aluminium and speciality steel.

SGL shares were down 4 percent to 9.73 euros at 0910 GMT. (Reporting by Ludwig Burger; Editing by Maria Sheahan and Mark Potter)

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