GERMANY: High debt levels cause concern at Continental and Schaeffler
High debt levels are causing concern at German automotive supplier Continental and Schaeffler, which is in the process of taking it over.
Continental today rebuffed rumours that it was trying to restructure its debt. Debt levels at the company are high after it took out bank loans to finance its acquisition of the Siemens VDO automotive electronics business.
Schaeffler now needs EUR4-7bn to finance its acquisition of Continental, according to a report. Handelsblatt said Schaeffler has debt of RUR11bn, or six times its operating profit.
Schaeffler has acquired around 22% of Continental shares and plans to raise this to a majority shareholding next year.
Both companies have said they will reduce production and may lay off workers.