Schaeffler Seeks Rate Cut on $2.1 Billion of Debt With New Loan

Schaeffler AG, the family-owned German bearing manufacturer, said it plans to lower the rate on 1.6 billion euros ($2.1 billion) of debt with a new term loan.

The company is offering to pay interest at 325 basis points more than the London interbank offered rate on the dollar portion of a new term loan C, and 375 basis points for a euro slice, according to a person with knowledge of the matter, who asked not to be identified because the terms are private.

The entire term C slice will have a 1 percent floor for the benchmark rates and may be sold at 99.5 percent of face value, said the person.

The new term loan will replace about 500 million euros and $1.5 billion of term loan B2 deals obtained in December, the company said in a statement today on its website. Any increase of the term loan C will be used to prepay term loan A and term loan B1,the Herzogenaurach, Germany-based company said.

Schaeffler agreed to an initial interest margin of 500 basis points on the term loan B2 in euros and a 475 basis-point margin on the portion in dollars, according to data compiled by Bloomberg. A basis point is 0.01 percentage point.

Schaeffler is seeking commitments from lenders by March 1, according to the statement.

Deutsche Bank AG is arranging the repricing for the portion in euros and JPMorgan Chase & Co. is arranging the rate cut on the dollar-denominated deal, said the person.

Christoph Beumelburg, senior vice president of investor relations at Schaeffler, declined to comment on terms of the repricing.

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