11. Report on subsequent events
On January 27, 2012, Schaeffler AG entered into a new EUR 8 billion loan agreement with eight [--break--] banks. The new agreement replaces the existing loan agreements dated November 2009, improves the maturity profile of the financial debt and the collateral package and optimizes Schaeffler’s debt financing.
The new loan agreement replaces the existing credit facility totaling EUR 7.7 billion, which would have been available until the end of June 2014 including the option to extend it by one year. The new refinancing package includes EUR 5.0 billion in loans repayable at maturity (Term Loans), one tranche to be replaced by corporate bonds, and a revolving credit facility of EUR 1.0 billion. The loans have staggered maturities of up to five years.
In preparation for the refinancing package, Schaeffler AG had its creditworthiness reviewed by two leading international rating agencies. The ratings were published for the first time on January 27, 2012. Standard & Poor’s currently assigns a B rating with a positive outlook to Schaeffler AG. Moody’s rates Schaeffler AG at B2 with a stable outlook.
The new loan agreement became effective on February 9, 2012. As the Schaeffler Group issued corporate bonds with a total volume of EUR 2.0 billion at the same time, the tranche that was to be replaced by the corporate bonds was not drawn down.
The corporate bonds consist of two Euro- and two Dollar-denominated tranches. The two Euro-tranches totaling EUR 1.2 billion carry maturities of five and seven years and bear interest at 7.75 % p. a. and 8.75 % p. a. The two Dollar-tranches totaling approximately EUR 1.1 billion also carry maturities of five and seven years and have interest coupons of 7.75 % p. a. and 8.50 % p. a. The corporate bonds have been rated B by Standard & Poor’s and B1 by Moody’s.
In addition, Schaeffler AG plans to place parts of the loan with additional banks and institutional [--break--] investors. Schaeffler has already been able to syndicate a total volume of EUR 1.4 billion, consisting of a EUR 450 m Euro-tranche and a Dollar-tranche of approximately USD 1.3 billion, to institutional investors in mid-February 2012. This transaction enabled the Schaeffler Group to obtain favorable terms: A margin of 500 basis points above EURIBOR for the Euro-tranche and a margin of 475 basis points above LIBOR for the Dollar-tranche.
On February 20, 2012, Continental AG announced its intention to propose a dividend of EUR 1.50 per share for 2011 to its annual general meeting. This would result in a gross dividend of approximately EUR 108 m on the investment in Continental AG held by Schaeffler Beteiligungsholding GmbH & Co. KG.
No other material events occurred that we expect to have a significant impact on the net assets, financial position or results of operations of Schaeffler AG.