Continental AG (CON) is seeking to cut interest costs with a 4.5 billion-euro ($5.9 billion) loan refinancing, according to two people with knowledge of the matter.
Europe’s second-largest auto-parts supplier is offering an initial interest rate of 200 basis points more than benchmark rates for a 3 billion-euro five-year credit line and 225 basis points for a 1.5 billion-euro three-year term loan, said the people, who asked not to be identified because the terms are private. A basis point is 0.01 percentage point.
The Hanover, Germany-based company is replacing debt facilities due 2014 including a 2.875 billion-euro term loan paying an initial interest margin of 300 basis points more than the euro interbank offered rate and a 2.5 billion-euro revolving credit paying 250 basis points, according to data compiled by Bloomberg. Under a revolver, money repaid can be borrowed again.
Felix Gress, a spokesman for Continental, hasn’t returned an e-mail and a telephone call seeking comment on the financing.
The company plans to sign the refinancing this month, Chief Financial Officer Wolfgang Schaefer said in a Dec. 21 statement. The new deal reduces the company’s loan volume, extends the maturity of its debt and allows for the release of collateral, it said.
To contact the reporter on this story: Patricia Kuo in London at firstname.lastname@example.org
To contact the editor responsible for this story: Faris Khan at email@example.com