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Allen & Overy advises IHO Holding on refinancing

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Uebelhoer Walter
Dr Walter Uebelhoer

Partner

Munich

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Marc Plepelits

Partner

Frankfurt am Main

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Baudisch Ilja
Dr Ilja Baudisch

Counsel

Munich

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09 September 2016

Bonds with a volume of EUR 3.6 billion placed – Schaeffler AG rated "investment grade"

​Allen & Overy LLP has advised Schaeffler Verwaltung Zwei GmbH on the successful refinancing at the level of IHO Holding, a group of holding companies indirectly owned by the Schaeffler family.  In connection with the refinancing, the listed Schaeffler AG will receive approximately EUR 1.7 billion from the early prepayment of loan notes issued by Schaeffler AG to IHO Holding.  This prepayment reduces the net debt of Schaeffler AG to EUR 3.2 billion and the leverage ratio to 1.3x. In response to the successful refinancing, rating agency Moody's upgraded Schaeffler AG's rating to Baa3 (investment grade). 

Part of the comprehensive refinancing was IHO Holding's successful placement of EUR 3.6 billion equivalent senior secured PIK toggle notes in Euros and US-Dollars with institutional investors.  Due to the strong demand from Europe and the US, the originally planned transaction volume of EUR 2.5 billion has been increased by approximately EUR 1.1 billion.  The issue consists of three Euro tranches and three US-Dollar tranches with maturities of five, seven and ten years.  The bonds will be listed on the EuroMTF market of the Luxembourg Stock Exchange.  The transaction is the largest issue of PIK toggle notes in terms of volume since the financial crisis. 

Deutsche Bank AG and Citigroup acted as joint global coordinators and joint bookrunners.  Bank of America Merrill Lynch and HSBC were joint bookrunners. 

Apart from the note issue, the refinancing includes a new EUR 800 million credit agreement with four major international banks that replaces the previous credit agreement of IHO Holding.  The refinancing will significantly reduce the financing costs of IHO Holding and extend the debt maturity profile.  Allen & Overy advises the IHO Holding Group in connection with the new credit agreement as well. 

The Allen & Overy team was led by partners Dr. Walter Uebelhoer (Banking and Finance, Munich) and Marc O. Plepelits (US Corporate Finance, Frankfurt), who were assisted by senior associates Dr. Ilja Baudisch (Banking and Finance, Munich), John Kicken and Simon Weiß, associates Maylea Ma (all International Capital Markets, London and Frankfurt), Maximilian Mayer (Banking and Finance, Munich) and Lukas Greilich (International Capital Markets, Frankfurt) as well as transaction support lawyer Angelika Pikulska (Banking and Finance, Munich).