The federal state of Lower Saxony, home to Continental AG, has said the Schaeffler family should drastically cut its stake in Conti to around 10% according to a media report.

Familiy-owned Schaeffler borrowed heavily to buy control of Conti last year but has been left struggling to service its debt.

Schaeffler has said it needs about EUR6bn in capital, and to raise the amount it has said it is prepared to sell a stake to outside investors while asking the government for temporary financial support.

“The owner-family can still play a small role if need be, perhaps with a stake of around 10%,” Christian Wulff, Chief Minister of Lower Saxony, said in an interview in Handelsblatt.

Schaeffler said last week it would present the German government with a restructuring plan for its business “in a short while”.

Wulff told Handelsblatt any state aid “is possible at the earliest when the company has presented a concept on how synergies of its Continental acquisition could be achieved and how the overall company would look”.

And any state aid could only be in the form of loan guarantees, he said.