TAV: SUCCESSFULLY FINANCING OF THE TURIN-MILAN-NAPLES (TO-MI-NA) HIGH SPEED LINE. Giulio Guidoni Responsible of Financial Department of TAV.

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1 TAV: SUCCESSFULLY FINANCING OF THE TURIN-MILAN-NAPLES (TO-MI-NA) HIGH SPEED LINE Giulio Guidoni Responsible of Financial Department of TAV 1/2

2 TAV Investments ASSE VERTICALE (TO-MI-NA) 29,560 million of euro the cost of the investment of the Turin-Milan-Naples line ASSE ORIZZONTALE 11,550 million of euro the cost of the investment of the Milan-Verona-Padua [MI-VR-Pd] and Terzo Valico dei Giovi lines[mi-ge] 2/2

3 The Financing of TO-MI-NA: An ever scheme An ever-evolvingevolving Since 1991 the financing of TAV has undergone through changes. In time new and more effective financing solutions have been developed in order to: Maintain the sustainability of the project in a regulatoryinstitutional framework that has changed (liberalization of the European transport market) and in consideration of the evolution in the implementation phases of the project Limit the impact of the investment on the budget of the State and ensure full compliance with the Maastricht economic parameters; Make the project attractive for private investors 3/2

4 : the beginning of the financing schem In 1991 TAV was established as concessionaire of FS up to 2041 the share capital of TAV is private for more than 50% (Italian banks and insurance companies, foreign lending institutions) with public shares held by FS. Financing is provided by the State 40% - through FS - and by the market 60% the State pays the interest accrued on the market debt up until the start of operating of the line TAV markets the railway services and operate the line and the cash flow are used to distribute dividends to shareholders and to reimburse the debt 4/2

5 The Financing of TO-MI-NA: Main Steps mixed share capital: 43% public - 57% private - financing: 40% public 60% private - effective financing: 100% public an Act (78/94) provides the guarantee of last resort of the State - effective financing: 100% public share capital 100% FS - financing 40% public 60% private - guarantee of last resort by the State - effective financing 70% market 30% public Infrastrutture SpA - ISPA finances TO-MI-NA - share capital 100% FS (now RFI) 5/2

6 1994: the Guarantee by Guarantee by the State (Law( 78/94) In order to offer to the market a certainty capable of offsetting In order to offer to the market a certainty capable of the long timeframe of the funding, in 1994 an ad hoc Act offsetting the long timeframe of the funding, in 1994 an ad (Law 78/94) introduced the guarantee of last resort of the hoc Act (Law 78/94) introduced the guarantee of last State - to be used only in the case the commercial guarantee resort of the State - to be used only in the case in which would be insufficient to reimburse the debt related to the commercial guarantees would be insufficient to repay the financing, the construction and the management of the HS debt related to the financing, the construction and the System management of the HS System 6/2

7 : Limited Recourse Project Financing In 1998 the corporate and funding structure of TAV wa changed: FS buys back the shares held by private shareholders and becomes full owner of TAV The financial scheme remains unchanged TAV concentrates its mission exclusively on the design construction and the relative financing of the infrastructure and the marketing was assigned to another transpor company owned by FS 7/2

8 Financing of TO-MI-NA according to Law 78/94 State guarantee engineering company and suppliers State General Contractors and Builders State contribution infrastructure interest and reimbursement of financing Banks FS TAV State contribution financing State contribution fee (take or pay) FS (RFI) fee for the utilization of the infrastruture transport companies 8/2

9 List of the loan for the TO-MI-NA at the end of june 2003 Banks interest rate me expiring date BEI fixed march 2023 BEI fixed july 2023 BEI floating march 2024 BEI fixed december 2030 BEI floating december 2025 BEI fixed june 2032 Merrill Lynch floating january 2026 Westdeutsche Landesbank floating april 2009 Cassa Depositi e Prestiti fixed december 2021 Banca OPI floating settember 2009 Cassa Depositi e Prestiti floating december 2023 Westdeutsche Landesbank floating february 2012 Dexia Crediop floating may 2012 BEI fixed/floating december 2032 stand-by loans floating june 2003 total /2

10 List of the interest rate swap relating to loan unde slide 9 BEI 3 - UBS BEI 5 - UBS Merrill Lynch Morgan Stanley WEST 1 - UBS Bank Banca OPI JP Morgan Cassa Depositi e Prestiti Credit Swisse WEST 2 Morgan Stanley Dexia Morgan Stanley me expiring date 15 march december january april settember december february may /2

11 Art. 75 of the Italian 2003 State Law Infrastructure S.p.A. finances primarily, also through the creation of one or more segregated assets, the investments for the realization of the railway infrastructure of the High Speed/High Capacity System, with the aim of, inter alia, reducing the ltalian State intervention. Funds necessary for the financing are raised in the capital and debt market, in compliance with principles of economy and transparency. In order to maintain the economic and financial stability of Infrastructure S.p.A., the ltalian State is responsible for the service of any financing granted by ISPA which cannot be covered through the forecasted train access charges during the economic exploitation of the High Speed/High Capacity System. In the event of revocation or termination of the concession for the management of the national railway infrastructure, either as a whole or only in respect of the implementation and management of the High Speed System, the new concessionaire shall be liable, together with the originai concessionaire, for the outstanding debt vis-à-vis Infrastructure S.p.A. and shall succeed the original concessionaire in its existing agreements.the sums due (if any) by the grantor of the concession to the former concessionaire for the use of the assets necessary for the provision of the railway service, for the repossession thereof, or for any other reason, shall be allocated in the first place to the satisfaction of the debt vis-à-vis Infrastructure S.p.A.. The ltalian State will be responsible for the service of debt vis-à-vis Infrastructure S.p.A. until the granting of the new concession, if there is a gap in time between the concessions. The Ministry of Infrastructure and transportation supervises and controls, also in the interest of lnfrastructure S.p.A., the compliance with the concession referred to under paragraph 2 above in respect of the part thereof that relates to the realization and management of the High Speed/High Capacity System. The claims and revenues deriving from the High Speed/High Capacity System are segregated for the repayment of the financing granted by Infrastructure S.p.A.. On such claims and revenues no actions are allowed other than those commenced by Infrastructure S.p.A. up to the final discharge of the relevant debt. The railway infrastructure manager is authorised to cover the cost relating to the infrastructure also through the restructuring funds provided for pursuant to article 43, fifth paragraph of law 23 December No /2

12 2003 : Modifications to the roles of FS, RFI and TAV during 2002 FS became RFI and trasformed the debt accrued by TAV with RFI in share capital during 2003 TAV became a scope company of RFI and the concession for the TO-MI-NA has been extended from 2041 up to /2

13 Financing of TO-MI-NA according to art 75 State engineering company and suppliers General Contractor and Builders State contribution infrastruture FS TAV State contribution loans loans + bonds State contribution fee take or pay RFI ISPA Separate fund Banks transport companies cash flow debt and debt service 13/2

14 2003 : Financial Management of HS System ISPA raises the funds for TO-NA in the marketplace the State contribution to reimburse interest during costruction remains unchanged the debt will be serviced, both for the interest and the principal, by the cash flow from the business exploitation of the TO-MI-NA the State guarantees became the reimbursement to ISPA of the portion of the debt that will not be covered by the cash flow until the end of the concession (2061) 14/2

15 Separate fund and Covered bond The possibility to realize separate fund for a specific business is one of the most important news of the recent reform of the Italian Corporate Code. In this case the Law allows to a joint stock company to realize a separate fund for a specific business, fixing conditions, limits, relevant accounting with possibility to issue financial instruments partecipating to this fund, foresee specific form of publicity, regulate the responsability conditions for this obligation, derogating to the generale principal of the universality of the asset responsability (art Italian Civil Code) according to which the debtor guarantees by means of all his present and future assets. The first Covered Bond(s), that are bonds with coupon and capital reimbursement guarantee by either the asset and the cash flow of the separate fund, has been realized by ISPA for the TO-MI-NA. 15/2

16 TAV Bonds On 5th February 2004 ISPA launched its first issue of TAV bonds which was a major success in both the national and foreign markets as envisaged in the financing program for a total amount of 5 billion Euro The issue operation was managed by Mediocredito Centrale, Morgan Stanley and Ubs Warburg. The bonds are divided into three tranches First tranche 1 billion Euro Maturity 10 years Underwriting 73% abroad Second tranche 750 million Euro Maturity 15 years Underwriting 81% Italy Third tranche 3,25 billion Euro Maturity 20 years Underwriting 80% abroad 16/2

17 Main documentation for the ISPA financing Offering Circular: describe the program to finance TO-MI-NA up 25 billion of euro Credit Facility Agreement: settle the rules relevant the Funding Loans and their reimbursement, the operation of the separate fund Intercompany Agreement: settle how FS, RFI and TAV are obliged to apply the State contribution as part of the separate fund Intercreditor Agreement: settle the relations among ISPA and the Banks Dealer Agreement: settle the conditions for the notes placement in the market 17/2

18 Investments of TO-MI-NA and its financing at the end of 2004 total investment: 29,6 billion of euro - financed at the end of 2004: 17,7 billion - to be financed: 11,9 billion (forecast) financed at the end of by the State: 5,1 billion of euro - by the Banks under the L 78/94: 5,5 billion - by ISPA under art. 75: 7 billion - by means of UE contribution: 0,07 billion 18/2

19 Financing of TO-MI-NA 4,5 4 3,5 3 portion financed according to art.75 billion of euro 2,5 2 1,5 portion financed according to LAW 78/94-3 billion of euro are 3 of the 5 billion of the first issue of ISPA portion financed by the State 1 0, year 19/2

20 Investments of Asse Orizzontale ASSE In order ORIZZONTALE to offer to the market a certainty capable of offsetting the long timeframe of the funding, in 1994 an ad (Genua-Milan hoc Act (Law plus 78/94) Milan-Verona-Padua) introduced the guarantee of last resort of the State - to be used only in the case in which Total commercial investment guarantees 11,550 would million be of insufficient euro of which to repay at the present debt related 482 million to the of euro financing, by the the State construction and the management of the HS System 20/2

1,000,000,000 ISPA SERIES 4 HIGH SPEED RAILWAY FUNDING NOTES DUE 2034 ISIN: IT COMMON CODE:

1,000,000,000 ISPA SERIES 4 HIGH SPEED RAILWAY FUNDING NOTES DUE 2034 ISIN: IT0003685093 COMMON CODE: 019605779 ORIGINAL PRICING SUPPLEMENTS UNDER THE 25,000,000,000 ISPA HIGH SPEED RAILWAY FUNDING NOTE