The uncertain development of 2009 made it necessary to amend the loan agreements concluded in connection with the takeover of Siemens VDO activities in 2007. The new terms and conditions stipulate an increase in the interest margin as well as amendments to further provisions. In return, until the end of 2010 Continental has been granted greater flexibility with regard to the indebtedness ratios that must be complied with as stipulated in the loan agreements. The economic environment has deteriorated substantially in recent months, which has also had an impact on the sales and earnings position of Continental. As for the future situation in 2009, major uncertainty prevails, and estimates of market development vary greatly. Despite these circumstances and the existing uncertainties, the Executive Board expects to comply with the newly negotiated financial covenants in 2009, based upon its current estimates founded on a careful review of the information available. In the event that the covenants are not complied with, the loans could be called for repayment. In view of Continental’s operative performance and good strategic setup, the Executive Board does however assume that the financing can be maintained as things look now. A cost increase from the credit terms and conditions would likely be a result. In addition there is also the risk, which is more closely explained in the report starting on page 92 pursuant to Section 289, Subsection 4 and Section 315, Subsection 4 of the Handelsgesetzbuch (German Commercial Code), that the lending banks will exercise their right to prematurely terminate their shares of the credit line if there is a change of control at Continental AG, especially if the Schaeffler Group’s shareholding reaches or exceeds 50% of Continental AG’s voting capital stock.

There is no real need in 2009 to refinance the syndicated loan originally amounting to €13.5 billion since Continental had more than a total of €3.8 billion available in the form of existing liquidity and unused bank credit lines at the end of 2008. In 2010, on the other hand, tranche B, in the amount of €3.5 billion, will become due. Depending on conditions, this amount is to be paid off in installments or in its entirety via the capital market in the form of one or more transactions by August 2010. In view of the significant deterioration in Continental’s credit rating and the high risk premiums for corporate risks, a material increase in net interest expense would be practically unavoidable from the current perspective if the sum were to be refinanced via the credit market.