March 29, 2006
Bayer announces the launch of a EUR 2 billion mandatory convertible bond
Subordinated mandatory convertible bond due in June 2009 / Conversion into shares of Bayer AGLeverkusen, March 29, 2006 - Bayer Capital Corporation B.V., Mijdrecht offers
investors today a bond, mandatory convertible into shares of Bayer AG, with an issue
volume of EUR 2 billion. The bond will mandatorily convert into new shares, created
from the existing conditional capital of Bayer AG, at maturity in June 2009. The
mandatory convertible bond will be issued without pre-emptive rights for existing
The bond is subordinated and enjoys a subordinated guarantee from Bayer AG. The
bond offers investors an attractive annual coupon expected to be within a range of
6.25 to 6.75%, whereas the company participates in the upside from any future share
price appreciation up to the conversion premium level of 16 - 20%. The final coupon
and conversion premium will be determined during the course of today by way of an
accelerated bookbuilding. The issue volume of EUR 2 billion can be increased by up
to EUR 300 million if the overallotment option is exercised.
The net proceeds will be used among others as part of the financing of the intended
acquisition of Schering AG and is part of the previously announced equity capital
raising measures of up to EUR 4 billion. The bond will be sold in a private placement
to institutional investors only.
Based on the mandatory conversion into new shares of Bayer AG at maturity and the
subsequent strengthening of the equity capital, the company expects that the bond will
receive a high equity credit treatment from rating agencies.