On July 17, Schaeffler Holding signed a new €3.875 billion credit agreement that it is said to offer improved terms. As part of the transaction, Schaeffler Holding intends to issue high yield bonds in euro and US dollar tranches, with an issue size equivalent to approximately €1.5 billion. This will go toward repaying the company’s debt. Schaeffler says these measures will further reduce borrowing costs and significantly improve capital structure at the holding level.
The new credit arrangement was completed by Schaeffler Holding subsidiary Schaeffler Verwaltungs GmbH together with several major international banks, and replaces in full the existing credit agreement arranged in November 2009. The refinancing package includes term loans of €2.175 billion and a €200 million revolving credit facility, all of which were concluded at what Schaeffer says are “significantly improved conditions.” The term loans are scheduled to mature in 2017.
The aforementioned €1.5 billion or so in euro and US dollar denominated senior secured bonds will be placed with institutional investors for a five-year term through financial subsidiary Schaeffler Holding Finance B.V. The exact issue size and the final terms will be determined in the coming days. Standard & Poor’s and Moody’s will publish their respective ratings for the bonds shortly.
In August 2009, the Schaeffler Group and its banks agreed upon a basic financing concept that saw the Group’s liabilities split between the holding and operational levels. Through two further stages of refinancing, in March 2011 and September 2012, leverage on the company’s holding level was significantly reduced and financing costs improved. In parallel, capital structure at the operating level was optimized in several steps. (Tyres & Accessories)
