Conti refinances syndicated loan
With the aim of further improving its financing structure and maturity profile, while enhancing its flexibility, Continental has refinanced its syndicated loan, which is due in April 2014. Within the scope of the planned refinancing, the loan volume is to be reduced slightly – to a total of 4.5 billion euros – and split up into two tranches with different maturities: a 1.5 billion euro term loan with a term of three years, and a five-year revolving 3 billion euro credit facility. Conti also intends to “ease the documentation complexity” through this refinancing.
“We are confident that we shall be able to conclude the negotiations and sign the credit agreement in January 2013,” announced Continental CFO Wolfgang Schäfer on 21 December. “Our company has developed very well in the past few years. We intend to take advantage of our much better financial position to further improve the maturity profile of our financial indebtedness as well as agree on the release of asset collateral and the improvement of certain other terms.”
Issuing five bonds and generating substantial free cash flow (FCF) have enabled the company to chop almost 9 billion euros off the 13.5 billion euro syndicated loan originally agreed upon in 2007. In the last three years, the company’s net indebtedness has declined by more than 2.5 billion euros. It stood at 6.8 billion euros at the end of the 3rd quarter of 2012 while the gearing ratio (net indebtedness divided by total equity) amounted to 78 per cent.