ERJ staff report (DS)
Hanover, Germany -- Conti has announced a new issue of 31 million shares priced at Euro (€) 35 each. They will be available from 12 January. The issue has been underwritten by a consortium of banks which has already placed roughly three-quarters of the new shares. The company expects to raise around €1085 million from the issue, which will be used to pay off debt.
At the end of December 2009, the comÂpany had already successfully completed negotiations with its creditor banks regarding the modification of the credit agreements and a Forward Start Facility (FSF) in an amount of €2.5 billion.
This latest step, combined with debt restructuring announced previously goes along way toward resolving the mid-term financial commitments of the company and appears to reduce the risk of Conti selling its tyre and rubber operations, at least in the short term.
Continental will use the funds provided under the FSF and the proceeds from the capital inÂcrease to repay the €3.5 billion credit tranche B of a syndicated credit facility that comes due in August 2010.
The capital increase will increase the company's share capital from €432,655,316.48 by noÂminal €79,360,000.00 to €512,015,316.48 by issuing 31 million new shares from the authoÂrised capital. The capital increase will be implemented by way of a rights issue to the existing shareholders of Continental AG.