Financial strength allows Continental to buy back outstanding bond
Continental AG says it will reduce its outstanding debt by buying back a bond with an aggregate amount of 500 million euro outstanding.
Continental Rubber of America Corp., an indirect subsidiary of Continental AG, recently announced a Solicitation of Offers to Sell to all holders of its outstanding 5-1/4% bonds due in 2006 (ISIN: DE0003143004) issued in 1999.
"With this transaction, Continental demonstrates active balance sheet management when economic by using its cash surplus," says Chief Financial Officer Dr. Alan Hippe. "It underlines the improving financial position of Continental."
The Solicitation of Offers to Sell will be made subject to the conditions set forth in the Tender Offer Memorandum, dated Nov. 18, 2004 (the "Memorandum"), which may be obtained free of charge from the Dealer Managers ABN AMRO, HVB Corporates & Markets and UBS Investment Bank, or from the Tender Agent, Deutsche Bank AG.
Noteholders may make offers to sell until Dec. 1, 2004. The final purchase price will be determined on Dec. 2, 2004, based on the conditions in the Memorandum; settlement is expected to occur on Dec. 7, 2004.
The Solicitation of Offers to Sell is not being made directly or indirectly in the United States and Italy, and is not made to any resident in the U.S. and Italy. Further restrictions apply for residents of the United Kingdom, Belgium and France, and are described in more detail in the Memorandum.
Continental AG reported net income after taxes of 209.2 million euros on sales of 3.06 billion euros for the third quarter ended Sept. 30, 2004. That compares to income of 49.5 million euros on sales of 2.84 billion euros for the same period last year.
Based on the Sept. 30 exchange rate, Continental reported net income of $260 million on sales of $3.8 billion for the most recent third quarter.
For the first nine months of 2004, Continental posted net income of 430.6 million euros on sales of 9.2 billion euros -- increases of 76% and 8.6%, respectively, vs. the first nine months of 2003.
Before foreign exchange effects, sales of the Passenger and Light Truck Tires (PLT) division were up 7.7% for the first nine months of this year. Including exchange rate effects, sales improved by 5.1%.
Worldwide unit volumes sold to the automotive industry increased by 14%, and sales figures were up 7% in the European replacement business.
Although replacement unit volumes in the NAFTA region declined overall, a significantly improved product mix and implemented price increases still enabled the operating result to surpass internal goals. Losses in North America, which were lower than in the prior year, are still being offset within the division by the very good business in Europe.
Higher prices of materials and additional social welfare expenses in the U.S. continued to impact earnings, said the company. In addition, there was a 108.4 million euro charge against earnings due to the restructuring at the Mayfield, Ky., plant. This restructuring expense will amount to about 120 million euros for the year as a whole.
Before foreign exchange effects and changes in the scope of consolidation, the sales of the Commercial Vehicle Tires division rose by 9.9%. Including exchange rate effects and the consolidation of Continental Sime Tyre, sales went up 23.4%.
In the NAFTA region, commercial tire deliveries to the automotive industry were notably higher and sales to the replacement market declined.
"Once again our figures demonstrate that we are continuing on the road to success despite partly unfavorable conditions such as the sluggish global automotive economy," says Manfred Wennemer, the company´s executive board chairman.