“It’s Time for Us to Stay the Course:” Maria-Elisabeth Schaeffler
In an interview with the German newspaper, Spiegel, Maria-Elisabeth and Georg Schaeffler – the owners of 20 and 80 per cent respectively of the automotive supplier – have answered a variety of questions relating to the current status of the business, considering the financial difficulties it is facing due to the timing of its takeover of Continental and the ongoing financial crisis. They insist that accusations of irresponsibility on the Group’s part in the takeover ignore the conditions in summer 2008 and use hindsight, which is in Georg’s words “the key to the debate,” to criticise their actions after the fact. In addition, the owners have referred to the banks’ and the government’s “responsibility” in the crisis and the differentiation between “the assistance benefiting a company that is fundamentally healthy and one that was already ailing before the crisis.”
Responding to the question of why the German government should help Schaeffler Group when it has 11 billion euros worth of debt, Maria-Elisabeth refers to the expansion of the company following the death of her husband in 1996, which has led to the current situation, in which “sales have tripled, as has the work force.” According to the owners, this evinces the fundamental healthiness of the company, though Spiegel counters with the risk involved in the takeover of Conti. As well as pointing out that a business will “stop making money altogether” if it does not take calculated risks, Georg replies that “The data in the summer of 2008 was positive… This transaction was evaluated in advance and endorsed by many highly qualified experts. No banking consortium is about to give you 16 billion euros in financing if a transaction is seen as an incalculable risk.”
Readers of Tyres & Accessories over the past six months will be well aware of the progression of the deal that involved a takeover bid for the Conti shares “only slightly above the minimum price required by law”, but which required a sudden outlay of a further 3.8 billion euros when Lehman Brothers filed for bankruptcy, catalysing the financial crisis. The propinquity of the subsequent recession and decline in sales to the share purchase has left Schaeffler, in the words of Spiegel, “fighting for its very survival.” Georg himself says that business continued to go well until the final quarter of 2008 and automotive sales that were clearly down by up to a half. “By January it was clear that we would not make it without additional stopgap funding. We approached the banks because a gap had emerged as a result of the agreed-upon loan repayment terms,” he concludes.
The interview was conducted by Armin Mahler and Janko Tietz, and translated from the German by Christopher Sultan.