Deutsche Boerse has asked its shareholders to approve plans for a new structure that will allow the company to take on more debt while maintaining a high credit rating at its settlement unit, Financial News reports.
The German exchange group has “identified a structure that will allow us to increase our financial flexibility while maintaining the group’s financial strength as well as Clearstream’s AA credit rating,” chief executive Reto Francioni told investors at their annual meeting in Frankfurt on Wednesday.
The plan involves the creation of a holding company that will limit Deutsche Boerse’s right to draw on Clearstream’s capital, allowing the exchange to raise more debt without impacting the clearer.
Since Clearstream is also active in banking, a high credit rating lowers financing costs.
Deutsche Boerse previously said the new structure could enhance debt capacity by “several hundred million euros.”
It currently has debt of about €1.5 billion, related to its acquisition last year of International Securities Exchange, the second-largest US options exchange.
The exchange has yet to decide on an outlet for the new capital.
“The creation of this option does not imply a decision to exercise it,” Francioni says. “[It] is intended merely to increase our financial flexibility,”
The group has previously pledged to return more cash to shareholders. It canceled 5 million shares under the share buy-back program in March, having distributed €2.1 billion ($3.3 billion) in 2005 and 2006 through dividends and buy-backs.
Deutsche Boerse first announced plans to change its legal structure to free up capital in February last year.