A&O, Linklaters lead on €12bn Schaeffler debt restructuring

Allen & Overy (A&O) and Linklaters have played key roles in the restructuring of German company Schaeffler’s debt, paving the way for the ball-bearing maker to merge with auto-parts manufacturer Continental.

Neil Weiand

Neil Weiand

A&O was handed the mandate from Schaeffler thanks to a long-standing relationship between the company and A&O Dusseldorf partner Rolf Koerfer. Known as one of Germany’s leading M&A lawyers, Koerfer joined A&O from Shearman & Sterling last year (10 January 2008).

Koerfer was not part of the A&O team working on the deal, as he has been serving as chairman of Continental, which is 90 per cent owned by Schaeffler, since March. Koerfer is expected to step down from that role as soon as a replacement is found although it is understood that he will remain on the company’s board.

The A&O team was therefore led by Frankfurt banking partners Neil Weiand and Walter Uebelhoer.

Linklaters acted for the consortium of five lending banks, which was led by Commerzbank and RBS.

Banking partners Stephen Lucas in London and Marc Trinkaus in Frankfurt led the advice along with corporate partners Stephan Oppenhoff and Jochen Laufersweiler in Frankfurt.

The deal is one of the largest debt restructurings to take place in Europe this year.

Schaeffler took on €16bn of debt at the beginning of this year to finance its acquisition of Continental. It is understood that the banks involved had difficulty syndicating the debt.

As Continental also has significant amounts of debt, which was taken out to fund its acquisition of Siemens VDO Automotive at the end of 2007, Schaeffler’s debt had to be restructured before its full acquisition of Continental could complete.

Under the terms of the restructuring €12bn of Schaeffler’s debt has been split into two portions, with one part of the loan having a 4.5 year maturity while the maturity of the other part is six years.

Continental is advised by Freshfields Bruckhaus Deringer, with Hamburg corporate partners Christoph Seibt and Marius Berenbrok leading the advice.

Other firms involved in the debt restructuring were Willkie Farr & Gallagher and Latham & Watkins. Willkie Farr Frankfurt partners Michael Schlitt and Patrick Meiisel gave separate advice to bank consortium member Commerzbank.

Latham Munich partners Andreas Diem and Thomas Fox advised consortium member LBBW.