Schaeffler AG is undertaking plans to raise nearly Eur1 billion or US$1.31 billion in a bond sale to pay off outstanding debts and refinance loans. The German bearings maker, who is also the biggest shareholder in Continental AG is selling off Euro-denominated senior secured bonds at a period of five years with an option of two years buy back.
Aside from the Euro denominated bonds, Schaeffler AG also has US dollar denominated notes with a maturity of eight years and call option of three. This is the company's first bond sale since June 2012, according to Bloomberg data.
The junk rated German firm's debt came from the takeover offer of Continental AG that was decimated during the 2008 credit crisis. The Hanover, Germany based car parts firm was able to pass on to Schaeffler more than 90% of its shares and debt totalling more than Eur10 billion. There have been improvements though, as the net financial debt of Schaeffler had fallen from Eur7.1 billion to Eur6.8 billion.
According to Schaeffler spokesperson Marcus Brans through a statement on the company's website, "The remaining bank loan volume will be refinanced with improved terms and conditions and extended maturities. Through these measures, the company's debt maturity profile will be significantly improved and cost of debt further reduced."
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