Schaeffler sells 4% of Continental to cut debt

Photo credit: Reuters

FRANKFURT (Reuters) -- German supplier Schaeffler has sold a 3.9 percent stake in fellow supplier Continental for about $1.3 billion (950 million euros), taking advantage of a more than 20-year high in Continental's share price to pay down debt.

Schaeffler, which makes ball bearings and clutches, said today it placed 7.8 million shares with international investors at 122.50 euros apiece, a 3.5 percent discount to Monday's closing price.

The move is one of several measures to cut debt after privately-held Schaeffler's debt-financed takeover bid for Continental in 2008 caused liabilities to soar. In July, it struck a new credit agreement worth 3.9 billion euros.

Schaeffler will use proceeds from the placement and an additional 325 million euros from its free cashflow to cut its gross debt to about 9 billion euros from around 10.3 billion.

The transaction, managed by Goldman Sachs, cuts Schaeffler's stake in Continental to about 46 percent from 49.9 percent.

It agreed not to sell any more Continental shares for 180 days and confirmed it considers the holding a "long-term strategic participation."

ATTENTION COMMENTERS: Automotive News has monitored a significant increase in the number of personal attacks and abusive comments on our site. We encourage our readers to voice their opinions and argue their points. We expect disagreement. We do not expect our readers to turn on each other. We will be aggressively deleting all comments that personally attack another poster, or an article author, even if the comment is otherwise a well-argued observation. If we see repeated behavior, we will ban the commenter. Please help us maintain a civil level of discourse.

Email Newsletters
  • General newsletters
  • (Weekdays)
  • (Mondays)
  • (As needed)
  • Video newscasts
  • (Weekdays)
  • (Weekdays)
  • (Saturdays)
  • Special interest newsletters
  • (Thursdays)
  • (Tuesdays)
  • (Monthly)
  • (Monthly)
  • (Wednesdays)
  • (Bimonthly)
  • Special reports
  • (As needed)
  • (As needed)
  • Communication preferences
  • You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.