Schaeffler Verwaltungs GmbH, the parent of German industrial bearings maker Schaeffler AG, got 3.875 billion euros ($5 billion) of debt to replace financing from 2009.
The facilities include 2.175 billion euros of term loans and a 200 million-euro credit line, according to an e-mailed statement. Schaeffler is also selling about 1.5 billion euros of high-yield bonds through its Schaeffler Holding Finance BV unit.
The holding company cut its debt to 3.5 billion euros last year following the 1.6 billion-euro sale of shares in Continental AG (CON), the Hanover-based tire maker. Herzogenaurach, Germany-based Schaeffler still owns 49.9 percent of Continental.
The term loans mature in June 2017 and some parts include the option to use payment-in-kind interest, according to bond marketing materials seen by Bloomberg News. BNP Paribas SA, Citigroup Inc., Commerzbank AG, Deutsche Bank AG, HSBC Holdings Plc, JPMorgan Chase & Co. and UniCredit SpA (UCG) are arranging the loans, according to the documents.
Christoph Beumelburg, Schaeffler’s senior vice president of investor relations, didn’t respond to two telephone calls and an e-mail seeking comment on the financing.
The proposed notes are subordinated to the debt of Schaeffler AG, according to a report from Moody’s Investors Service. It grades the new issue B2, one rank below the B1 rating of the operating company, and five levels lower than investment grade.
Interest on the notes can be also be paid using additional debt, said a person with knowledge of the deal, who asked not to be identified because the transaction is private. The holding company’s outstanding debt includes PIK financing, the company said in a report last year.
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