Hot on the heels of a successful junk bond sale by a German cement firm, Continental AG may accelerate plans to sell bonds to refinance debt, according to published reports.
HeidelbergCement AG’s junk-bond sale earlier this month exceeded supply, according to reports, and Continental is reportedly taking this as a clue that the market may work in its favor.
A bond sale would be in addition to a planned stock offering to help the company prepare for the repayment of $5.2 billion of debt due August next year.
Continental received board approval on July 30 to prepare for the sale of new shares valued at as much as 1.5 billion euros and has since begun talks with creditors over refinancing.
“A capital increase alone won’t be enough,” said Marc-Rene Tonn, an analyst at M.M. Warburg in Hamburg who has a “sell” recommendation on Continental’s shares. “The company needs more flexibility.”
On Aug. 13, Standard & Poor’s lowered Continental’s debt rating two notches to B+, four levels below investment grade, citing concerns about Schaeffler Group’s influence on strategy after the removal of Karl-Thomas Neumann as CEO.