HANNOVER, Germany (July 12, 2010) — Continental A.G. has increased the size of its five-year euro-denominated benchmark bond offering 50 percent to $1 billion as a result of higher-than-expected demand for the offering.
“We see this as an important sign of confidence of the capital markets in the company and as a confirmation of our refinancing strategy,” said Continental CFO Wolfgang SchÃ¤fer, who cited high demand for the firm's decision to boost the size of the bond offering.
Conti plans to use the net proceeds of the offering to repay a portion of the syndicated loan facility the firm opened in September 2007 to help underwrite its $16 billion acquisition then of automotive electronics systems supplier VDO Automotive from Siemens A.G. in 2007.
The bonds will be issued by Conti-Gummi Finance B.V. in the Netherlands in minimum denominations of $62,500, Conti said, and will be guaranteed by Continental A.G. and selected subsidiaries of the company. The coupon will pay 8.5 percent interest semi-annually in arrears, the company said.
Conti has mandated a bank consortium led by Citi and Royal Bank of Scotland to offer and sell euro-denominated notes to qualified investors internationally, the firm said. The consortium also includes Commerzbank, Deutsche Bank, ING, Landesbank Baden-WÃ¼rttemberg and UniCredit Bank.
The bonds will not be offered for sale to individuals in Australia, Canada, Japan or the U.S. or in “any jurisdiction to whom or in which such offer or solicitation is unlawful,” Conti said.