Tue, Sep 22, 2015 - Page 15 News List

Schaeffler planning Frankfurt IPO to pay down its debt

GETTING BACK ON TRACK:Debt has weighed on the German manufacturer since it made a takeover bid for Continental at the height of the global crunch

Bloomberg

Schaeffler AG, the family-owned German industrial company specializing in ball bearings and automotive parts, said it is planning an initial public offering (IPO) to pay down debt.

Schaeffler plans to list a stake of about 25 percent in Frankfurt, the company said in a statement yesterday.

The proceeds are to be used to improve the balance sheet and the company plans to further repay an additional 1 billion euros (US$1.1 billion) of debt from operating cash flow by 2018.

A successful Schaeffler IPO would advance a turnaround after the credit crisis, which weighed on the manufacturer as it made a takeover bid for German autoparts maker Continental AG at the height of the global crunch.

The company’s net debt stood at 6.24 billion euros at the end of the first half, accumulated mainly from becoming the biggest shareholder in Hannover, Germany-based Continental, in which Schaeffler owns about 46 percent, according to data compiled by Bloomberg.

The sale would be among Germany’s largest IPOs this year, alongside Bayer AG’s planned 2.5 billion euro listing of its plastics unit Covestro.

Bloomberg News reported the plans earlier, citing people familiar with the matter.

Schaeffler’s roller-bearings are used in the London Eye and the Airbus A380 passenger jet.

The manufacturer, based in Herzogenaurach in southern Germany, reported earnings before interest and taxes up 51 percent to 1.5 billion euros last year.

Profitability rose to 12.6 percent of sales from 9 percent, meeting the company’s projections of a margin of 12 percent to 13 percent.

Schaeffler, which competes with SKF AB of Sweden and Timken Co of the US, said this year’s margin would be within the same range.

The company is controlled by Maria-Elisabeth Schaeffler-Thumann and her son, Georg Schaeffler, who is also chairman of the supervisory board and ranks among the richest men in Germany with a fortune estimated at about US$19.8 billion, according to the Bloomberg Billionaires Index.

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