(March 28, 2011)

Schaeffler Holding reduces indebtedness by approximately 2.8 billion Euros in total

Significant improvement in financing terms and conditions going forward

Sale of approx. 29.7 million shares in Continental AG by M.M.Warburg and Bankhaus Metzler to a broad range of investors

Free float of Continental AG increases from 24.9 percent to 39.7 percent

M.M.Warburg and Bankhaus Metzler are selling additional shares to Schaeffler; Schaeffler will increase its stake in Continental AG from 42.2 percent to 49.9 percent

Schaeffler GmbH to be converted into a stock corporation (Aktiengesellschaft) in 2011

The Schaeffler Group, one of the world’s leading automotive and industrial suppliers, has agreed a comprehensive refinancing package with its lending banks. On the basis of the agreement Schaeffler will significantly reduce the financial debt of the holding company and achieve a considerable improvement of its financing terms and conditions. Schaeffler thus creates flexibility for the further strategic development of the group.

As part of the refinancing package agreed with its lending banks Schaeffler Holding will reduce its debt from currently 7.4 billion Euros by 2.8 billion Euros to 4.6 billion Euros. The reduction in debt results from the sale of Continental shares by M.M.Warburg and Bankhaus Metzler to a broad range of international investors. Approx. 29.7 million shares were placed at a price of 60 Euros per share, yielding net proceeds of approx. 1.8 billion Euros, which will be used to pay down debt. Following the placement, the free float in shares of Continental AG will increase from 24.9 percent to 39.7 percent. The increased free float and improved liquidity in the stock will position Continental AG as a candidate for a re-entry into the DAX 30.

In addition, Schaeffler Holding made an unscheduled debt repayment of 400 million Euros from the operating cash flow of the group. Due to the strong operating business, 600 million Euros of debt will be transferred to Schaeffler GmbH. The interest rates paid by Schaeffler Holding will be reduced from as much as 17 percent p.a. to less than 10 percent p.a. and the maturities of the existing loans will be extended on average.

“As a result of the refinancing, Schaeffler’s financial position and financing conditions have improved significantly. With this, we gain further financial flexibility,” said Klaus Rosenfeld, Chief Financial Officer of Schaeffler.

In the context of the refinancing, the Schaeffler Group also rearranges its participation structure in Continental AG. Schaeffler buys a further 15.5 million shares from M.M.Warburg and Bankhaus Metzler and increases its stake in Continental AG from 42.2 percent to 49.9 percent. As a result of the two transactions, M.M.Warburg and Bankhaus Metzler will reduce their stake from approx. 33 percent in total to 10.4 percent. Schaeffler, M.M.Warburg and Bankhaus Metzler have agreed not to reduce their respective participations in Continental AG further over the next 12 months.

In addition, it is intended that Schaeffler GmbH will be converted into a stock corporation (Aktiengesellschaft) in the course of 2011. With the conversion, Schaeffler will take a further important step towards capital markets readiness and gain additional financial and strategic flexibility.

Georg F.W. Schaeffler, Chairman of the Supervisory Board and Shareholder of the Schaeffler Group said: “These measures will give us the flexibility required for the further successful strategic development of the Schaeffler Group. In addition, it increases the attractiveness of Continental shares for investors. On this basis, the Schaeffler Group will continue to examine all strategic options to further intensify the cooperation with Continental.”

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