Also CFO for German supplier Behr, Schaefer will begin his work at Continental on January 1, 2010 and will have to find a way through the 10 billion euros debt the company has, by securing at least a 3.5 billion refinancing. He may also have to increase the manufacturer's capital by some 1.5 billion euros, as part of the same attempt to downsize the huge debt. The increase may be done by issuing a convertible or high-yield bond in early 2010.
"If Schaeffler is successful this could become quite expensive for Continental. The costs for a high-yield bond are estimated at about 10 percent," a Frankfurt-based trader was quoted as saying by the Financial Times Deutschland. "New uncertainties around the capital increase should act negative for Continental shares."
The debt now in need to be covered by the increase in capital is a legacy of the manufacturer's push to take over electronics specialist Siemens VDO Automotive in 2007.
The board meeting named Wolfgang Reitzle, also CEO in industrial gas company Linde to be the company's new chairman. Delphi diesel systems manager Jose Avila was named executive board member in charge of the powertrain division.
Schaeffler, the major shareholder, asked for the head of Continental's CEO back in August.