Reports: Lenders Set to Oppose Continental/Schaeffler Combination
Banks responsible for as much as half of Continental AG’s 11 billion euros ($15.5 billion) of debt are reportedly going to oppose the company’s proposed combination with 90 per cent shareholder Schaeffler Group. Citing “people familiar with the situation,” Bloomberg reported that the banks are concerned about the levels of debt necessary for the two companies to re-merge. According to the report, the banks are trying to half the move by blocking changes to a loan agreement first reached in 2007. The two companies have combined debts of around 24 billion euros.
Neither Continental, Schaeffler nor the banks involved have yet commented. However, for all the banks fears and apparent threats to de-rail what is expected to become a reverse takeover, with less than 100 days before the German general election, government support for the move (and the thousands of jobs that depend on it) have the potential to make the re-merger work. Continental executives are expected to officially reveal their plans at the end of July.