HANNOVER, Germany (Dec. 22, 2009) — Continental A.G. has restructured some loans due this coming summer, clearing the way for the firm to start work on a capital increase next year.
The restructuring involves a $5 billion loan payment due in August that is related to Conti's purchase of automotive components supplier Siemens VDO in 2007. Conti struck a deal with existing lenders to use a “forward start facility” to obtain more payment flexibility on about three-fourths of the loan's value.
Conti said banks involved in the loan have agreed to new terms on about $3.5 billion of the loan.
With the loan restructured, Conti now will turn its attention to preparing terms of a capital increase of at least $1.45 billion, to be carried out in the first quarter.
“Although Continental has done a very good job reacting to the global crisis, especially in generating and maintaining liquidity, as a direct consequence we still needed to address the maturity in 2010 as well as the financial covenants related to the maturity structure,” said Conti Executive Board Chairman Elmar Degenhart.
Conti's ability to use the funding available under the forward start facility will depend on the successful implementation of a capital increase, the company said.
Conti did not comment on the financial implications of reworking its loan under the terms of a forward start facility. The company also faces a $7.25 billion loan repayment related to the Siemens deal in 2012.