Family-owned Schaeffler group has said it wants to maintain operational control even if forced to take on outside investors to help pay the debt it took on to buy rival Continental.
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The German bearings maker borrowed EUR16bn (US$20.39bn) to buy control of Continental in July 2008 but is now struggling to service the debt load and needs up to EUR6bn in fresh financing.
The Schaeffler family said earlier this week it was willing to sell a substantial stake in its business to outside investors however it wanted to remain an “anchor investor” in the group to fend off a potential break-up and to save jobs, Reuters reported.
The group owned by Georg Schaeffler and his mother Maria-Elisabeth Schaeffler, said it required more than the rights provided by a blocking minority and the ultimate size of the stake depended on the company’s valuation.
Two financial sources close to the deal have told Reuters Schaeffler’s stake could even fall below 25% while the supplier and its lending banks are talking about turning a large part of the debt into equity, shifting power to the banks.
“The banks want to control Schaeffler,” one of the sources told Reuters.
At the moment, there are no investors willing to take a stake in Schaeffler, one of the sources was reported to have said. Selling a stake to an outside party is therefore not on the agenda, however it could be a medium-term solution, the source said, adding it could be a way for the banks to exit once the automotive industry recovers.
Total disempowerment of the Schaeffler family would not be constructive, one of the financial sources told Reuters, as Maria-Elisabeth Schaeffler plays a key role for clients and workers.
Schaeffler is expected to prepare a restructuring plan very soon as that is one prerequisite for it to receive state aid.
