Continental AG, Europe’s second-largest auto-parts supplier, plans to sign its 4.5 billion-euro ($6 billion) loan refinancing next week, according to two people with knowledge of the matter, who asked not to be named because the information is private.
The new loans comprise a 3 billion-euro five-year credit line and a 1.5 billion-euro three-year term loan, according to data compiled by Bloomberg. The debt cuts the interest costs of the Hanover, Germany-based company, with the shorter loan paying an initial interest rate of 225 basis points more than benchmark rates and the longer piece paying 200 basis points, the data show. A basis point is 0.01 percentage point.
The debt to be replaced includes a 2.875 billion-euro term loan paying an initial interest margin of 300 basis points more than benchmarks and a 2.5 billion-euro revolving credit paying 250 basis points, according to the data. Under a revolver, money repaid can be borrowed again.
Antje Lewe, a spokeswoman for Continental, said the company was confident it would conclude negotiations with lenders and sign the loan this month.