As a result, Deutsche BÃ¶rse has set a guidance for total costs in 2008 of EUR 1,130 million. The cost guidance for 2008 compares to an estimated total cost base for 2007 of EUR 1,200 million, before the above mentioned restructuring charges for the efficiency program of EUR 50 million. All costs are excluding consolidation of the International Securities Exchange (ISE). Closing of the ISE transaction is expected in Q4/2007.
Deutsche BÃ¶rse also decided on a revised financing concept for the ISE acquisition with a view to further optimizing its capital structure and resuming its share buyback program with immediate effect. Based on this revised financing concept, Deutsche BÃ¶rse plans to issue some EUR 1.5 billion in long-term debt and hybrid bonds, compared to EUR 1.3 billion under the initial structure. The revised financing concept is based on a management announcement of the credit metrics stated below, but not contingent on a change of Deutsche BÃ¶rseâs legal and organizational structure as foreseen by the original concept.
Given the higher amount of long-term debt/hybrid financing for ISE under the revised financing concept, a significant amount of the accumulated earnings in the current year are no longer necessary to finance the ISE acquisition. This in combination with the very strong operational performance of the company enables Deutsche BÃ¶rse to resume its share buyback program immediately. For the remainder of financial year 2007, Deutsche BÃ¶rse plans a share buyback volume of around EUR 300 million.
Deutsche BÃ¶rse continues to explore formats to further improve its capital structure and plans to give further guidance on its midterm capital structure and earnings distribution goals at its Annual Results Conference on 20 February 2008.
Targeted credit metrics
In the context of the revised financing concept for the ISE acquisition, while recognizing that ratings are based on a variety of factors Deutsche BÃ¶rse has decided to support Clearstreamâs current âAAâ rating credentials through the targeting of a âconsolidated EBITDA to Interest Expense ratioâ, so called interest coverage ratio, of at least 16 times. In calculating the Groupâs interest coverage ratio, the Company will include 50 percent of any coupons on hybrid debt with an equity credit from the rating agencies of 50 percent or higher. Furthermore, in view of Clearstreamâs âAAâ rating objective, Deutsche BÃ¶rse believes it is important to maintain certain minimum levels of tangible equity (currently EUR 700 million at Clearstream International S.A. and EUR 250 million at Clearstream Banking S.A. with subordinated profit participation rights issued by Clearstream Banking S.A. to Deutsche BÃ¶rse AG of EUR 150 million also in place). The management of the Company, therefore, dedicates its efforts to keeping the interest coverage, the tangible equity and subordinated profit participation rights of its controlled subsidiaries Clearstream International S.A. and Clearstream Banking S.A. at these levels in order to maintain key metrics that the Company understands are consistent with a âAAâ rating on Clearstream.
Deutsche BÃ¶rse will resume its share repurchase program on 20 September 2007. The company will use the current authorization by its shareholders to repurchase up to 10 percent of its share capital amounting to nominal 200 million euros while taking into account shares owned by the company. Currently, the company holds 5,682,738 own shares in treasury. Furthermore, the buyback up until 31 December 2007 is limited to a number of shares equivalent to an overall purchase price of up to 300 million EUR. It is anticipated to cancel the repurchased shares and to reduce the share capital of the company accordingly, to use the repurchased shares for employee share programs and/ or for obligations eventually arising from debt financial instruments exchangeable into equity instruments.
The shares will be repurchased exclusively on the exchange. The purchase price for the shares to be repurchased may neither exceed nor fall short of the volumeweighted average share price for the five trading days prior to the purchase commitment by more than 10 percent. The relevant prices for determining the volumeweighted average are the closing auction prices for Deutsche BÃ¶rse shares in electronic Xetra trading at the Frankfurt Stock Exchange (FWB).