Looking For Bearings?
All Types Of High Quality Bearings. Extensive Inventory, Fast Shipping.Find Exactly What You Want Today!
bearings
Bearing Manufacturer  Products  Miniature Bearings  Skateboard Bearings  

Continental to Raise 1.09 bln Euros in Rights Issue

By Bearing Manufacturer>Bearing News>Continental to Raise 1.09 bln Euros in Rights Issue
©2004-2012

Price is 35 euros each, a 14 pct discount to Wed's close

* Schaeffler's stake will stay above key 75 pct threshold

* Deutsche, Goldman and JP Morgan fully underwrite sale (Adds bullet points, subscription period, Schaeffler holding)

By Christiaan Hetzner and Edward Taylor

FRANKFURT, Jan 6 (Reuters) - Indebted auto parts supplier Continental AG (CONG.DE) will raise just over 1 billion euros ($1.44 billion) in fresh equity from a rights issue to repair its sagging balance sheet.

The company said late on Wednesday that its supervisory board dominated by large shareholder Schaeffler had approved the issuance of
31 million new shares at 35 euros each, which will raise its capital by nearly a fifth.

"Continental AG will receive gross proceeds from the rights issue of 1.085 billion euros," it said in a statement.

The price represents a 14 percent discount to its closing price of 40.77 euros on Wednesday and is less than half the 75 euros Schaeffler paid late in 2008 to acquire 90 percent of the company's stock.

Originally the maker of fuel-injection systems, electronic brakes and winter tyres wanted to raise up to 1.5 billion euros to pay down debt, but the sale of any more shares would have diluted Schaeffler's stake below a key control threshold.

A syndicate led by Deutsche Bank (DBKGn.DE), Goldman Sachs International (GS.N) and J.P. Morgan Securities Ltd (JPM.N) agreed to underwrite the share offer, and have already found investors willing to subscribe to about three-quarters of the placement.

Existing shareholders will receive the option of buying 2 new shares for every 11 already owned, and these rights can be traded between Jan. 12 and Jan. 21. They can be subscribed through Jan. 25.

The new stock will also be fully entitled to dividends for last year, although Continental agreed with its creditors back in January of last year to cap its payouts for 2009 and 2010 at 323 million euros. [ID:nLN451970]

FOUGHT 12 MONTHS FOR CAP HIKE

Schaeffler and its two friendly German banks, M.M. Warburg and Metzler, have agreed to not exercise their subscription rights or transfer such subscription rights to third parties for the combined 89 percent of the stock they currently own.

"Upon the completion of the rights offering, these major shareholders are expected to hold an aggregate of 75.1 percent of the increased share capital of Continental AG," Continental said.

M.M. Warburg and Metzler hold about 40 percent on behalf of Schaeffler as part of an investor agreement with Continental struck in August 2008 that also prevents the family-owned ball bearings maker from gaining direct access to its cashflows until 2014 through a so-called domination agreement.

This requires approval from at least 75 percent of a company's assembled shareholders at a general meeting.

Plans for the share issue follows a deal struck in December when the Hanover-based auto supplier secured a 2.5 billion euros financing deal with over 50 syndicated creditors, easing a tight liquidity situation.

The company has been pushing for 12 months to issue new shares to help reduce its 9.5 billion euros in net debt on its books at the end of September -- more than twice its shareholder equity -- that it amassed following the acquisition of auto electronics company VDO from Siemens (SIEGn.DE) in 2007.

Schaeffler had previously opposed all attempts, acquiescing only after installing a friendly chief executive in August.


F T 
Latest Articles
Some tips on choosing ceramic bearing
Do the skateboard bearings need ...
The Secret of Dental Bearing
The Encounter of Stainless Steel ...
The Deep Groove Ball Bearing
The improvements design of non-standard ...
The selection of universal wheel ...
How to Choose Bearing Lubricating ...
Full disclosure about bearing materials
Electroplating Bearings
Latest Topic
K25X30X20 Needle Roller And Cage
F607 Bearings
SSFR2-6 ZZ & 2RS Stainless Steel
IR75X85X30 Inner Rings
6801zz bearings
NNTR50X130X65-2ZL Yoke Type Track
30310 Tapered Roller Bearings
Rc Bearings 697 2RSF
IR15X20X13 Inner Rings
Rc Bearings R156ZZ
Category

Dental Bearings
Rc Bearings
Bicycle Ceramic Bearings
Miniature Thrust Bearings
Flanged Ball Bearings
Ceramic Bearings