Autopista del Sol, Concesionaria Española, S.A. (incorporated in Spain as a public limited liability company (sociedad anonima))

Transcription

1 Autopista del Sol, Concesionaria Española, S.A. (incorporated in Spain as a public limited liability company (sociedad anonima)) 320,000, per cent. secured senior class A1 bonds due ,000, per cent. secured senior class A2 bonds due 2045 The issue price of the 320,000, per cent. secured senior class A1 bonds due 2045 (the Senior Class A1 Bonds) of Autopista del Sol, Concesionaria Española, S.A. (Ausol, the Issuer or the Company) is 100 per cent. of their principal amount. The issue price of the 147,000, per cent. secured senior class A2 bonds due 2045 (the Senior Class A2 Bonds and together with the Senior Class A1 Bonds, the Senior Bonds and each a Class of Senior Bonds) of the Issuer is 100 per cent. of their principal amount. Unless previously redeemed or cancelled, the Senior Bonds will be redeemed on each Payment Date (as defined below) in accordance with the Senior Bond Payment Schedule (as defined in Condition 7.2 (Redemption in Instalments), with the last payment being due on 30 December 2045 (the Final Maturity Date). The Senior Bonds may be redeemed at the option of the Issuer in whole or in part. Optional redemption (other than for Tax as set out below) will be subject to the payment of the Senior Make-Whole Premium. The Issuer must redeem the Senior Bonds in certain circumstances, including upon its receipt of Compensation or an Equity Cure Amount. Any such redemption is subject to certain limitations. See Terms and Conditions of the Senior Bonds Redemption and Purchase. The Senior Bonds bear interest on their Principal Amount Outstanding from and including the Issue Date at the rate of 3.75 per cent. per annum (the Senior Rate of Interest), payable semi-annually in arrears on 30 June and 30 December (each a Payment Date). The first interest period commenced on the Issue Date and will end on 30 June The aggregate amount of interest payable on each Payment Date (each an Interest Payment) in respect of the Senior Bonds shall be as set out in the Senior Bond Payment Schedule. Payments on the Senior Bonds will be made in euro without deduction for or on account of taxes imposed or levied by the Kingdom of Spain to the extent described under Terms and Conditions of the Senior Bonds Taxation. This Prospectus has been approved by the Central Bank of Ireland as competent authority under the Prospectus Directive (as defined under Important Notices below). The Central Bank of Ireland only approves Prospectus as meeting the requirements imposed under Irish and European Union law pursuant to the Prospectus Directive. Such approval relates only to Senior Bonds that are to be admitted to trading on the regulated market of the Irish Stock Exchange (the Main Securities Market) or on another regulated market for the purposes of Directive 2004/39/EC and/or that are to be offered to the public in any member state of the European Economic Area in circumstances that require the publication of a prospectus. Application has been made to the Irish Stock Exchange plc (Irish Stock Exchange) for the Senior Bonds to be admitted to its official list (the Official List) and trading on the Main Securities Market. References in this Prospectus to the Senior Bonds being listed (and all related references) shall mean that the Senior Bonds have been admitted to the Official List and trading on the Main Securities Market. The Senior Bonds have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the Securities Act) or any U.S. state securities laws and may not be offered or sold in the United States or to, or for the account or the benefit of, U.S. persons as defined in Regulation S under the Securities Act unless an exemption from the registration requirements of the Securities Act is available and in accordance with all applicable securities laws of any state of the United States and any other jurisdiction. Each Class of Senior Bonds is in global bearer form and in the denomination of 100,000 each. Each Class of Senior Bonds is initially in the form of a temporary global bond (the Temporary Global Bonds), each without interest coupons, which was deposited on 17 March 2016 (the Issue Date) with a common safekeeper for Euroclear Bank S.A./N.V. (Euroclear) and Clearstream Banking, société anonyme, Luxembourg (Clearstream, Luxembourg). Each Temporary Global Bond will be exchangeable, in whole or in part, for interests in a permanent global bond (the Permanent Global Bonds), each without interest coupons, not earlier than 40 days after the Issue Date upon certification as to non U.S. beneficial ownership. Interest payments in respect of the Senior Bonds cannot be collected without such certification of non U.S. beneficial ownership. Each Permanent Global Bond will be exchangeable in certain limited circumstances in whole, but not in part, for the relevant Senior Bonds in definitive form in the denomination of 100,000 each and with interest coupons and principal receipts attached. See Summary of Provisions Relating to the Senior Bonds in Global Form. The Senior Bonds have been rated BBB by Standard & Poor s Rating Services (S&P). A security rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, reduction or withdrawal at any time by the assigning rating agency. A suspension, reduction or withdrawal of any rating may adversely affect the market price of the Senior Bonds. S&P is established in the European Union and is registered under the Regulation (EC) No. 1060/2009 (as amended) (the CRA Regulation). As such, S&P is included in the list of credit rating agencies published by the European Securities and Markets Authority on its website (at in accordance with the CRA Regulation. Senior Bonds may be rated or unrated by the rating agency referred to above. Sole Bookrunner BANCO SANTANDER, S.A. 22 March 2016

2 IMPORTANT NOTICES This Prospectus comprises a base prospectus in respect of the Senior Bonds for the purposes of Article 5.4 of the Prospectus Directive. When used in this Prospectus, Prospectus Directive means Directive 2003/71/EC (as amended, including by Directive 2010/73/EU), and includes any relevant implementing measure in a relevant Member State of the EEA. The Issuer accepts responsibility for the information contained in Prospectus. To the best of the knowledge of the Issuer (having taken all reasonable care to ensure that such is the case) the information contained in this Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information. The Issuer has confirmed to the bookrunner named under Subscription and Sale below (the Sole Bookrunner) that this Prospectus contains all information regarding the Issuer and the Senior Bonds which is (in the context of the issue of the Senior Bonds) material; such information is true and accurate in all material respects and is not misleading in any material respect; any opinions, predictions or intentions expressed in this Prospectus are honestly held or made and are not misleading in any material respect; this Prospectus does not omit to state any material fact necessary to make such information, opinions, predictions or intentions (in such context) not misleading in any material respect; and all proper enquiries have been made to ascertain or verify the foregoing. The Issuer confirms that where information included in this Prospectus has been sourced from a third party, such information has been accurately reproduced and as far as the Issuer is aware and is able to ascertain from information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading. The Issuer has not authorised the making or provision of any representation or information regarding the Issuer or the Senior Bonds other than as contained in this Prospectus or as approved for such purpose by the Issuer. Any such representation or information should not be relied upon as having been authorised by the Issuer or the Sole Bookrunner. Neither the Sole Bookrunner nor the Bond Trustee (as defined below) have independently verified the information contained herein. Accordingly, no representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by the Sole Bookrunner or the Bond Trustee as to the accuracy or completeness of the information contained or incorporated in this Prospectus or any other information provided by the Issuer in connection with the Senior Bonds. Neither the Sole Bookrunner nor the Bond Trustee accepts any liability in relation to the information contained or incorporated by reference in this Prospectus or any other information provided by the Issuer in connection with the Senior Bonds. No person is or has been authorised by the Issuer, the Sole Bookrunner or the Bond Trustee to give any information or to make any representation not contained in or not consistent with this Prospectus or any other information supplied in connection with the Senior Bonds and, if given or made, such information or representation must not be relied upon as having been authorised by the Issuer, the Sole Bookrunner or the Bond Trustee. Neither this Prospectus nor any other information supplied in connection with the Senior Bonds is intended to provide the basis of any credit or other evaluation or should be considered as a recommendation by the Issuer, the Sole Bookrunner or the Bond Trustee that any recipient of this Prospectus or any other information supplied in connection with the Senior Bonds should purchase any Senior Bonds. Each investor contemplating purchasing any Senior Bonds should make its own independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of the Issuer. Neither this Prospectus nor any other information supplied in connection with the issue of any Senior Bonds constitutes an offer or invitation by or on behalf of the Issuer, the Sole Bookrunner or the Bond Trustee to any person to subscribe for or to purchase any Senior Bonds. Neither the delivery of this Prospectus nor the offering, sale or delivery of any Senior Bonds shall in any circumstances imply that the information contained in it concerning the Issuer is correct at any time subsequent to its date or that any other information supplied in connection with the Senior Bonds correct as of any time subsequent to the date indicated in the document containing the same. The Sole Bookrunner and the Bond i

3 Trustee expressly do not undertake to review the financial condition or affairs of the Issuer during the life of the Senior Bonds or to advise any investor in the Senior Bonds of any information coming to their attention. The distribution of this Prospectus and the offering, sale and delivery of Senior Bonds in certain jurisdictions may be restricted by law. Persons into whose possession this Prospectus comes are required by the Issuer and the Sole Bookrunner to inform themselves about and to observe any such restrictions. For a description of certain restrictions on offers, sales and deliveries of Senior Bonds and on the distribution of this Prospectus and other offering material relating to the Senior Bonds, see Subscription and Sale. In particular, the Senior Bonds have not been and will not be registered under the Securities Act and are subject to United States tax law requirements. Subject to certain exceptions, Senior Bonds may not be offered, sold or delivered within the United States or to U.S. persons. PRESENTATION OF FINANCIAL AND OTHER INFORMATION Unless otherwise indicated, the financial information in this Prospectus relating to the Issuer has been derived from (i) the audited stand-alone financial statements of the Issuer for the financial years ended 31 December 2014 and 31 December 2013 and (ii) the unaudited stand-alone financial statements of the Issuer for the eleven months ended 30 November 2015, which have been prepared in accordance with generally accepted accounting principles in the Kingdom of Spain (Spanish GAAP). Spanish GAAP differ in certain important respects from International Financial Reporting Standards (IFRS). The Issuer s financial year ends on 31 December, and references in this Prospectus to financial information in respect of any specific year are, unless the context otherwise require, to the 12-month period ended on 31 December of such year. All capitalised terms used in this Prospectus and not defined will have the meanings assigned to them in the Glossary. Certain figures and percentages included in this Prospectus have been subject to rounding adjustments; accordingly, figures shown in the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which precede them. The language of the prospectus is English. Certain legislative references and technical terms have been cited in their original language in order that the correct technical meaning may be ascribed to them under the applicable law. SUITABILITY OF INVESTMENT The Senior Bonds may not be a suitable investment for all investors. Each potential investor in the Senior Bonds must determine the suitability of that investment in light of its own circumstances. In particular, each potential investor may wish to consider, either on its own or with the help of its financial and other professional advisers, whether it: (i) (ii) (iii) (iv) has sufficient knowledge and experience to make a meaningful evaluation of the merits and risks of investing in the Senior Bonds and the information contained or incorporated by reference in this Prospectus or any applicable supplement; has access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the Senior Bonds and the impact the Senior Bonds will have on its overall investment portfolio; has sufficient financial resources and liquidity to bear all of the risks of an investment in the Senior Bonds, including Senior Bonds where the currency for principal or interest payments is different from the potential investor s currency; understands thoroughly the terms of the Senior Bonds and is familiar with the behaviour of any relevant indices and financial markets; and ii

4 (v) is able to evaluate possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks. Legal investment considerations may restrict certain investments. The investment activities of certain investors are subject to investment laws and regulations, or review or regulation by certain authorities. Each potential investor should consult its legal advisers to determine whether and to what extent (1) Senior Bonds are legal investments for it, (2) Senior Bonds can be used as collateral for various types of borrowing and (3) other restrictions apply to its purchase or pledge of any Senior Bonds. Financial institutions should consult their legal advisers or the appropriate regulators to determine the appropriate treatment of Senior Bonds under any applicable risk-based capital or similar rules. CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS Forward looking statements contained in this Prospectus include statements concerning the Issuer s plans, objectives, goals, strategies, future operations and performance and the assumptions underlying these forward looking statements. When used in this Prospectus, the words anticipates, estimates, expects, believes, intends, plans, aims, seeks, may, will, should and any similar expressions generally identify forward looking statements. Since such statements are inherently subject to risks and uncertainties, actual results may differ from those expressed or implied by such forward-looking statements including, without limitation, any projections included as part of the Financial Model prepared by the Issuer and set out elsewhere herein. Although the projections contained in this Prospectus are reasonable as at the date of this Prospectus, the Issuer cannot give any assurance that such projections will prove to have been correct. Important factors that could cause actual results to differ from such projections are disclosed in this Prospectus, including, without limitation, those contained in the section entitled Risk Factors and any such projection is qualified in its entirety accordingly. Each investor in the Senior Bonds will be deemed to have represented and agreed that it has read and understood the description of the assumptions and uncertainties underlying the projections that are set forth in this Prospectus and to have acknowledged that the Issuer is under no obligation to update the information and do not intend to do so. Without prejudice to any requirements under applicable laws and regulations, the Issuer expressly disclaims any obligation or undertaking to disseminate after the date of this Prospectus any updates or revisions to any forward looking statements contained in it to reflect any change in expectations or any change in events, conditions or circumstances on which any such forward looking statement is based. All descriptions of documents referred to in this Prospectus are qualified in their entirety by reference to the terms of the original documents. FINANCIAL MODEL The results of the financial model in relation to the Project (the Financial Model) included elsewhere herein are not projections or predictions. A financial model simply illustrates hypothetical results that are mathematically derived from specified assumptions. In addition, the Financial Model shows cash flows available for debt service and does not model individual financial performance under the assumptions set forth therein. While the revenues, operating, maintenance and capital costs, interest rates and taxes have been modelled in alignment with the Issuer s most accurate expectation of the Project s performance, it can be expected that the actual revenues, operating, maintenance and capital costs, interest rates and taxes and any other elements of the Project s performance will almost certainly differ from those assumed for purposes of any run of the Financial Model. Accordingly, actual performance and cash flows for any future period will almost certainly differ from those shown by the results of the Financial Model. The inclusion of summary information derived from the Financial Model herein should not be regarded as a representation by the Issuer or any other person that the results contained in the Financial Model will be achieved. In addition, the summary information with respect to the Financial Model contained herein does not, and does not purport to, restate the Financial Model in its entirety. Prospective investors in the Senior Bonds are cautioned not to place undue reliance on the Financial Model or summary information derived therefrom and should make their own independent assessment of the future results of operations, cash flows and financial condition. iii

5 The Financial Model was compiled on the basis of the assumptions and hypothesis defined by the directors of the Issuer and set out and that the basis of accounting used by the directors of the Issuer in preparing the Financial Model, is consistent with the accounting policies used by the Issuer in the preparation of its audited Financial Statements for the year ended 31 December iv

6 CONTENTS Page IMPORTANT NOTICES... i OVERVIEW OF THE SENIOR BONDS... 1 RISK FACTORS DOCUMENTS INCORPORATED BY REFERENCE USE OF PROCEEDS DESCRIPTION OF THE COMPANY AND THE SHAREHOLDERS DESCRIPTION OF THE PROJECT DESCRIPTION OF THE REGULATORY REGIME AND THE CONCESSION AGREEMENTS. 45 SELECTED HISTORICAL FINANCIAL INFORMATION TERMS AND CONDITIONS OF THE SENIOR BONDS SUMMARY OF PROVISIONS RELATING TO THE SENIOR BONDS IN GLOBAL FORM DESCRIPTION OF THE COMMON TERMS AGREEMENT DESCRIPTION OF THE OTHER FINANCE DOCUMENTS SUMMARY OF ADVISERS REPORTS TAXATION SUBSCRIPTION AND SALE GENERAL INFORMATION GLOSSARY ANNEX A FINANCIAL MODEL...A-1 ANNEX B TRAFFIC REPORT... B-1 v

7 OVERVIEW OF THE SENIOR BONDS Words and expressions defined in the Terms and Conditions of the Senior Bonds below or elsewhere in this Prospectus have the same meanings in this overview. PARTIES Issuer: Initial Shareholders: Autopista del Sol, Concesionaria Española, S.A., a Spanish public limited liability company (sociedad anónima) existing under the laws of Spain with its registered office at Plaza Manuel Gómez Moreno, 2, Edificio Alfredo Mahou, Madrid (Spain) and is registered with the Commercial Registry of Madrid under Sheet M , Volume and Page 104. The Issuer is the issuer of the Senior Bonds. The issued shares of the Issuer are owned: 80% by Cintra Infraestructuras, S.E. (Cintra); and 20% by Unicaja Banco, S.A. (Unicaja). Security Providers: The Issuer has granted security over some of its assets to secure the Issuer s obligations under the Secured Documents. The Shareholders have granted security over their shares in the Issuer to secure the Issuer s obligations under the Secured Documents. Senior Bondholders: Senior Noteholders: Junior Lenders: Shareholder Debt Provider: Senior Secured Creditors: Junior Secured Creditors: Junior Agent: Senior Class A1 Bondholder Representative: Bond Trustee: Holders of the Senior Class A1 Bonds and the Senior Class A2 Bonds issued by the Issuer. Holders of the notes (the Senior Notes) issued by the Issuer under the Senior Note Purchase Agreement. The lenders for the time being under the Junior Facility Agreement. Cintra and Unicaja in their respective capacities as providers of the Shareholder Liabilities. The Senior Bondholders, the Senior Noteholders, the Account Bank, the Security Agent (acting in its own name and on behalf and for the benefit of the other Senior Secured Creditors), the Bond Trustee (acting in its own name and on behalf and for the benefit of the Senior Bondholders), the Junior Agent (acting in its own name only) and the Principal Paying Agent. The Original Junior Lenders or any bank, institution, trust fund or other entity which has become a party as a Junior Lender in accordance with the terms of the Junior Facility Agreement, and the Junior Agent (in its own capacity and on behalf of the Junior Lenders). Banco Santander, S.A. (or any successor facility agent appointed pursuant to the Junior Finance Documents) acting as agent on behalf of the Junior Lenders. Allianz Global Investors GmbH (or such other representative of the Senior Class A1 Bondholders as may be appointed by the Senior Class A1 Bondholders from time to time). BNP Paribas Trust Corporation UK Limited (or any successor trustee appointed pursuant to the Bond Trust Deed) acting as bond trustee on behalf of the Senior Class A1 Bondholders and on behalf of the Senior Class A2 Bondholders. 1

8 Security Agent: Account Bank: Principal Paying Agent: Capex Letter of Credit Providers: Expropriation Letter of Credit Providers: Rating Agency: Technical Adviser: Traffic Adviser: Insurance Adviser: Expropriation Adviser: BNP Paribas Trust Corporation UK Limited (or any successor security agent appointed pursuant to the STID). The Security Interests have been granted in favour of the Secured Creditors (and, in any case, in the case of each class of the Senior Bondholders through the Bond Trustee). The Security Agent will be entitled to enforce such Security Interests subject to the terms of the Security Documents and the STID. None of the Secured Creditors will have any individual powers to enforce the Security Interests granted in respect of the Secured Liabilities except through the Security Agent. Banco Santander, S.A. (or any successor account bank appointed pursuant to the Finance Documents). The Finance Documents provide that all bank accounts of the Issuer (except the Distribution Account), must at all times be held with a bank with the Requisite Rating. If the rating of the Account Bank is downgraded to lower than the Requisite Rating, the Issuer must move its bank accounts to a replacement bank with the Requisite Rating within 60 days. BNP Paribas Securities Services, Luxembourg Branch (or any successor principal paying agent appointed pursuant to the Paying Agency Agreement) will act as principal paying agent and, together with any other paying agents appointed by the Issuer (each, a Paying Agent), provide certain issue and paying agency services to the Issuer in respect of the Senior Bonds. Banco Bilbao Vizcaya Argentaria, S.A. and Cecabank, S.A. (or any successor entity with a minimum rating of BBB with S&P appointed pursuant to the Finance Documents). If the rating of the Capex Letter of Credit Provider is downgraded to lower than BBB, the Issuer must procure a replacement capex letter of credit provider with a minimum rating of BBB with S&P within 30 days. Banco Bilbao Vizcaya Argentaria, S.A. and Cecabank, S.A. (or any successor entity with a minimum rating of BBB with S&P appointed pursuant to the Finance Documents). If the rating of the Expropriation Letter of Credit Provider is downgraded to lower than BBB, the Issuer must procure a replacement expropriation letter of credit provider with a minimum rating of BBB with S&P within 30 days. Standard & Poor s Rating Services Ove Arup & Partners Limited Steer Davies & Gleave Limited Aon Gil y Carvajal, S.A. Correduría de Seguros, Sociedad Unipersonal Getinsa-Payma, S.L. 2

9 KEY TERMS OF THE SENIOR BONDS Senior Class A1 Bonds Amount: Senior Class A2 Bonds Amount: Currency: Redemption: 320,000, ,000,000 Euro The Senior Bonds will be redeemed on each Payment Date (as defined below) in accordance with the Senior Bond Payment Schedule, with the last payment being due on the Final Maturity Date. Final Maturity Date: 30 December 2045 Issue Price: 100% Interest: 3.75 per annum fixed rate. Interest will be calculated on the Principal Amount Outstanding of the Senior Bonds from time to time. Interest Periods and Payment Dates: Status: Form and Denomination: Periods of six months ending on 30 June and 30 December each year (each, a Payment Date), provided that the first interest period commenced on the Issue Date and will end on 30 June The Senior Class A1 Bonds and the Senior Class A2 Bonds constitute direct, unconditional and secured obligations of the Issuer, as described in Condition 2 (Status). The Senior Class A1 Bonds and the Senior Class A2 Bonds have each been issued in global bearer form in the denomination of 100,000 and each is initially in the form of a Temporary Global Bond, deposited on the Issue Date with a common safekeeper for Euroclear Bank S.A./N.V. (Euroclear) and Clearstream Banking, société anonyme, Luxembourg (Clearstream, Luxembourg). Each Temporary Global Bond will be exchangeable for a Permanent Global Bond in respect of the relevant class, which is exchangeable in whole, but not in part, for Definitive Bonds, in limited circumstances. Each Temporary Global Bond has been issued and each Permanent Global Bond is to be issued in new global note form. Optional Redemption General: Subject as described in paragraph 5 (Pari passu treatment) of the description of the Common Terms Agreement, the Issuer may, at its option, redeem the Senior Bonds in whole or in part at par on giving not more than 30 days and not fewer than 15 days prior written notice. Optional redemption (other than for Tax as set out below) will be subject to the payment of the Senior Make-Whole Premium. See Condition 7.6 (Redemption at the option of the Issuer). Optional Redemption for Tax: If the Issuer would be required to make any withholding or deduction in respect of an interest payment or redemption payment to the Senior Bondholders, the Issuer may, at its option, redeem the Senior Bonds, (in whole or in part) at par on giving not more than 90 days and not fewer than 15 days prior written notice. No Senior Make-Whole Premium shall be payable on such redemption. See Condition 7.5 (Redemption for Taxation Reasons). 3

10 Mandatory Redemption: Termination of a Concession Agreement If one or both of the Concession Agreements are terminated (other than for a reason attributable to the Issuer or as a result of destruction of all or 25 per cent. or more of the Project), then the Issuer shall, as soon as reasonably practicable give notice thereof to the Senior Bondholders, the Bond Trustee and the Security Agent and upon receipt of Compensation following termination: immediately pay such Compensation into the General Account; and redeem each class of the Senior Bonds in full on the Redemption Date, which Redemption Date no less than six (6) Business Days and no more than ten (10) Business Days after receipt of such Compensation, at their Principal Amount Outstanding, together with accrued but unpaid interest to (but excluding) such date. See Condition 7.3 (Mandatory Early Redemption Termination of a Concession Agreement). Mandatory Redemption: Equity Cure Subject as described under Clause 7 (Pari passu treatment) of the Common Terms Agreement, upon receipt of an Equity Cure Amount into the General Account, the Issuer shall, as soon as it is reasonably practicable, give notice to the Bond Trustee, the Security Agent and the Senior Bondholders of a mandatory redemption of the Senior Bonds and the Redemption Date, and on the Redemption Date redeem the Senior Bonds in amount equal to the Equity Cure Amount (the Relevant Prepayment Amount) together with in all cases, accrued but unpaid interest on the Relevant Prepayment Amount to (but excluding) such date. See Condition 7.4 (Mandatory Early Redemption Equity Cure). Taxation: Rating: All payments in respect of the Senior Bonds by or on behalf of the Issuer will be made without withholding or deduction for or on account of, any present or future Taxes levied in Spain unless such withholding or deduction is required by applicable law. In that event, the Issuer shall pay such additional amounts as may be necessary in order that the net amounts received by the Senior Bondholders after such withholding or deduction shall be not less than the respective amounts which would have been receivable had such withholding or deduction not applied, subject to certain exceptions (please see Condition 8) and the Issuer s optional redemption right as set out above. The Senior Bonds have been rated BBB by S&P. A security rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, reduction or withdrawal at any time by the assigning rating agency. In general, European regulated investors are restricted from using a rating for regulatory purposes if such rating is not issued by a credit rating agency established in the EEA and registered under the CRA Regulation unless (1) the rating is provided by a credit rating agency not established in the EEA but is endorsed by a credit rating agency established in the EEA and registered under the CRA Regulation or (2) the rating is provided by a credit rating agency not established in the EEA which is certified under the CRA Regulation. Senior Class A1 Bonds ISIN: Senior Class A1 Bonds Common Code: Senior Class A2 Bonds XS XS

11 ISIN: Senior Class A2 Bonds Common Code: OTHER SOURCES OF FINANCING Senior Notes: The Issuer, on the Issue Date, issued 40,000,000 of notes in definitive registered form under, and in accordance with, the Senior Note Purchase Agreement. The Issuer s obligations in respect of the Senior Notes will rank pari passu with its obligations under the Senior Bonds on the terms set out in the STID. See Description of the other Finance Documents Redemption and Purchase Senior Note Purchase Agreement. Junior Facility Agreement: The Issuer, on the Issue Date, drew down loans (Junior Loans) in a principal amount of 50,800,000 under, and in accordance with, the Junior Facility Agreement. The Issuer s obligations in respect of the Junior Loans will rank junior to its obligations in respect of the Senior Bonds and the Senior Notes. See Description of the other Finance Documents Redemption and Purchase Junior Facility Agreement. COMMON TERMS Use of proceeds: The Issuer has used the net proceeds from the issue of the Senior Bonds (together with the net proceeds from the issue of the Senior Notes and the net proceeds of the Junior Loans) inter alia: (c) (d) to refinance the Existing Senior Facilities Indebtedness (including payment of break costs and hedging termination payments); to pay fees, commissions, costs and expenses incurred in connection with the above; to fund the Capex Reserve Account and the Expropriation Reserve Account; and to fund the Senior Debt Service Reserve Account. Intercreditor Arrangements: The Finance Document Liabilities will rank in right and priority of payment in the following order and are postponed and subordinated to any prior ranking Finance Document Liabilities as follows: first, the Senior Finance Document Liabilities; and second, the Junior Finance Document Liabilities. Pre-Enforcement Priorities of Payments: Save when otherwise provided in the Finance Documents, the Issuer may only withdraw amounts from the General Account if they are applied for the following purposes in the following order: first, in or towards (A) payment of Operating Costs; (B) in making a transfer to the Capex Reserve Account on each Payment Date of an amount sufficient to ensure that the amount standing to the credit of the Capex Reserve Account is not less than the Capex Reserve Account 5

12 Minimum Balance as at that Payment Date; and (C) in making a transfer to the Expropriation Reserve Account on each Payment Date of an amount sufficient to ensure that the amount standing to the credit of the Expropriation Reserve Account is not less than the Expropriation Reserve Account Minimum Balance as at that Payment Date, and, in each case, Taxes thereon; (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) second, pari passu and pro rata in or towards costs, fees, expenses (including legal fees and expenses) and any other amount (including, by way of indemnity) payable to the Bond Trustee, the Junior Agent, the Security Agent, any delegate appointed by the Bond Trustee, the Junior Agent or Security Agent or any Receiver or other Appointee under the Transaction Documents; third, pari passu and pro rata in or towards fees, costs, expenses (including legal fees and expenses) and other amounts (including by way of indemnity) due to, the Principal Paying Agent and the Account Bank under the Transaction Documents; fourth, pari passu and pro rata in payment of Technical Adviser, Traffic Adviser, Expropriation Adviser, legal advisers in connection with the Transaction Documents and Insurance Adviser fees, costs and expenses; fifth, in or towards interest due on the Participative Loan; sixth, pari passu and pro rata in or towards payment of all scheduled interest due on the Senior Debt on each Payment Date; seventh, pari passu and pro rata in or towards payment of scheduled principal due in respect of the Senior Debt on each Payment Date; eighth, pari passu and pro rata in or towards payment of any mandatory prepayment in accordance with Conditions 7.3 (Mandatory Early Redemption Termination of a Concession Agreement) or 7.4 (Mandatory Early Redemption Equity Cure) in respect of the Senior Bonds and clauses 8.3 or 8.4 of the Senior Note Purchase Agreement in respect of the Senior Notes, together with any accrued and unpaid interest on such amount; ninth, in making a transfer to the Senior Debt Service Reserve Account on each Payment Date of an amount sufficient to ensure that the amount standing to the credit of the Senior Debt Service Reserve Account is not less than the Senior Debt Service Reserve Account Minimum Balance as at that Payment Date; tenth, in or towards repayment of any principal of the Junior Loan on each Payment Date until the outstanding PIK Interest has been paid in full; eleventh, in or towards payment of Junior Cash Pay Interest on the Junior Loan on each Payment Date; twelfth, in or towards repayment of any principal of the Junior Loan on each Payment Date in an amount equal to the Junior Cash Sweep Amount to be repaid under and in accordance with clause 7.5 (Mandatory prepayments Junior Facility Cashweep) of the Junior Facility Agreement; thirteenth, if the Issuer has delivered a notice of redemption (in accordance with Condition 7.5 (Redemption for Taxation Reasons) or 7.6 6

13 (Redemption at the option of the Issuer)) in respect of the Senior Bonds and clauses 9.5 and 9.6 of the Senior Note Purchase Agreement, in payment pari passu and pro rata of principal due in respect of such redemption of all or part of the Senior Debt, including any applicable Senior Make-whole Premium; (n) (o) (p) fourteenth if the Issuer is required to repay the Junior Loan under clause 7.6 (Mandatory prepayment Termination of a Concession Agreement) of the Junior Facility Agreement or gives notice of prepayment under clause 7.2 (Voluntary prepayment)of the Junior Facility Agreement, in prepayment of the Junior Loan and any accrued interest thereon, including any applicable Junior Make-whole Premium; fifteenth, pari passu and pro rata, in or towards any other amounts payable to the Secured Creditors (to the extent not paid pursuant to the paragraphs above); and sixteenth, towards transfers to the Distribution Account in accordance with Clause 4.20 (Restricted Payments) of the Common Terms Agreement. Post-enforcement Priorities of Payment: All amounts from time to time received or recovered by the Security Agent shall be held by the Security Agent on trust to apply them at any time as the Security Agent sees fit, to the extent permitted by applicable law in the following order of priority: (c) (d) (e) (f) (g) (h) (i) first, pari passu and pro rata towards costs, fees, expenses (including legal fees and expenses) and any other amount (including by way of indemnity) payable to the Security Agent, any Receivers or Appointees under the Transaction Documents; second, pari passu and pro rata towards costs, fees, expenses (including legal fees and expenses) and any other amount (including by way of indemnity) payable to each Secured Creditor Representative or any delegate appointed by a Secured Creditor Representative under the Transaction Documents; third, pari passu and pro rata towards fees, costs, expenses (including legal fees and expenses) and other amounts (including by way of indemnity) due to, the Principal Paying Agent and the Account Bank under the Transaction Documents; fourth, towards accrued but unpaid interest on the Senior Finance Document Liabilities; fifth, towards all amounts of principal due and payable in respect of the Senior Finance Document Liabilities (including any unpaid Senior Makewhole Premium, if applicable); sixth, towards payment of any principal on the Junior Finance Document Liabilities until the outstanding PIK Interest has been paid in full; seventh, towards accrued but unpaid interest on the Junior Finance Document Liabilities; eighth, towards all amounts of principal due and payable in respect of the Junior Finance Document Liabilities (including any unpaid Junior Make- Whole Premium, if applicable); ninth, if the Issuer is not under any further actual or contingent liability 7

14 under any Finance Document, in or towards payment of the Participative Loan Liabilities; (j) (k) tenth, if the Issuer is not under any further actual or contingent liability under any Finance Document, in or towards payment to the Shareholders in respect of the Shareholder Liabilities; and eleventh, the balance, if any, in payment or distribution to the Issuer, Security: The initial Security in respect of the Senior Bonds comprises the following Spanish law governed pledges: (c) (d) a first ranking pledge granted by the Shareholders over 100 per cent. of the Issuer s share capital; a first ranking pledge granted by the Issuer over credit rights arising from certain of its bank accounts; a first ranking pledge granted by the Issuer over credit rights arising from all rights under the Concession Agreements including but not limited to the RPA Termination Payment; and a first ranking pledge granted by the Issuer over credit rights arising from certain Insurances. The first ranking pledges in respect of the Security have been granted in favour of the Senior Secured Creditors and subject to the terms of the STID. Second ranking pledges have been granted in favour of the Junior Secured Creditors over the same collateral as the first ranking pledges and subject to the terms of the STID. These second ranking pledges are also considered Security. The Security may only be enforced by the Security Agent on behalf of the Secured Creditors in accordance with the terms of the STID. Modification and Waiver by the Bond Trustee: Modification, Waiver and amendment: The Bond Trustee may without the consent or sanction of the Senior Bondholders, waive or authorise (or direct the Security Agent to waive or authorise) any breach or proposed breach by the Issuer or any other person of any of the provisions of the Senior Bonds or the other Senior Finance Documents and concur (or direct the Security Agent to concur) with the Issuer or any other person in making any modification in the circumstances contemplated by, and subject to, the Conditions, the Bond Trust Deed and the STID. The STID and the Bond Trust Deed contain provisions to consider the matters affecting the interests of the Senior Bondholders. These provisions permit: the Senior Class A1 Bondholder Representative to make, approve or reject certain matters on behalf of the Senior Class A1 Bondholders without a vote or instruction from the Senior Class A1 Bondholders; and defined majorities of the holders of the Senior Bonds (and, where relevant, the Senior Notes) to bind all Senior Bondholders who did not attend (or were not represented) and did not vote (either at the relevant meeting or otherwise) and Senior Bondholders who abstained or voted in a manner contrary to the majority. See Description of the other Finance Documents Security Trust and Subordination Deed. Governing law: English law, save for the status of the Senior Bonds and the Initial Security Documents which will be governed by Spanish law. 8

15 Jurisdiction: Risk Factors: Listing and Trading: Clearing Systems: Selling Restrictions: English courts, save for the Initial Security Documents which shall be submitted to the exclusive jurisdiction of the courts of the city of Madrid (Spain). Investing in the Senior Bonds involves risks. See Risk Factors. Application has been made for the Senior Bonds to be admitted to listing on the Official List and trading on the regulated market of the Irish Stock Exchange. The Senior Bonds have been accepted for clearance through the facilities of each of Euroclear and Clearstream, Luxembourg. See Subscription and Sale. 9

16 RISK FACTORS Any investment in the Senior Bonds is subject to a number of risks. Prior to investing in the Senior Bonds, prospective investors should carefully consider risk factors associated with any investment in the Senior Bonds, the business of the Issuer and the industry in which it operates together with all other information contained in this Prospectus, including, in particular the risk factors described below. Words and expressions defined in the Terms and Conditions of the Senior Bonds below or elsewhere in this Prospectus have the same meanings in this section. Prospective investors should note that the risks relating to the Issuer and the industry in which it operates are the risks that the Issuer believes to be the most relevant to an assessment by a prospective investor of whether to consider an investment in the Senior Bonds. However, as the risks which the Issuer face relate to events and depend on circumstances that may or may not occur in the future, prospective investors should consider, among other things, the risks and uncertainties described below. The following is not an exhaustive list or explanation of all risks which investors may face when making an investment in the Senior Bonds and should be used as guidance only. Additional risks and uncertainties relating to the Issuer that are not currently known to the Issuer, or that it currently deems immaterial, may individually or cumulatively also have a material adverse effect on the business, prospects, results of operations and/or financial position of the Issuer and, if any such risk should occur, the price of the Senior Bonds may decline and investors could lose all or part of their investment. Investors should consider carefully whether an investment in the Senior Bonds is suitable for them in light of the information in this Prospectus and their personal circumstances. RISK FACTORS RELATING TO THE COMPANY AND THE PROJECT Limited business operations and sources of funds The Company is a special purpose vehicle with no business operations other than those in relation to the operation and maintenance of the Project. The Company s principal sources of funds to meet its obligations under the Senior Bonds will be revenues generated by the Project. Other than such amounts, the Issuer will not have any other funds available to it to meet its obligations under the Senior Bonds. Dependence on the Concessions and capped compensation The Company derives its revenues through motorway activities carried out in accordance with the Concession Agreements granted by the Grantor for the operation of the Roads. Revenues generated from motorway activities and royalties deriving from the other activities conducted on the basis of the Concession Agreements represent virtually all of the Company s revenues. Therefore, the ability of the Company to meet its debt service obligations under the Senior Bonds is highly dependent on the Concession Agreements. The Ausol I Concession will terminate on 16 March 2046 (50 years after its execution date) and the Ausol II Concession will terminate on 2 July 2054 (55 years after its execution), unless the Concession Agreements are terminated earlier in accordance with their respective terms. Early termination may be triggered by the occurrence of events such as reckless negligence by the Company in relation to surveillance and maintenance obligations; serious breach of road maintenance due to failure to carry out maintenance work on more than one occasion, charging tolls in excess of authorised amounts; failing to provide Operational Bonds in accordance with the terms and conditions of the Concessions or failing to supplement such Operational Bonds within one month of its execution; or persistent non-compliance of the specific terms relating to a particular Concession. The Grantor may also unilaterally terminate the Concessions for public interest reasons, even in the absence of any breach by the Company. Upon a termination of either Concession, the ability of the Company to service amounts that may become due and payable under the Senior Bonds will depend significantly on the quantum of compensation payable to the Company by the Grantor upon termination (the RPA Termination Payment) and, in certain circumstances (e.g. following destruction of the Project) termination may result in no compensation being payable. RPA is the Spanish acronym for Responsabilidad Patrimonial de la Administración, or the liability of the public administration with respect to property. The size of the RPA Termination Payment will depend on the investment made in the asset comprising the relevant Concession (as far as such investment relates to land expropriations, construction work and acquisition of resources required for the operation of the relevant 10

17 Concession) at any point in time (as reduced through depreciation of the relevant assets) and not on any amounts owed to third party creditors of the Company, such as the Senior Bondholders, nor does it take into account any loss or damages suffered by the Company or the Grantor, such amounts being calculated independently of the quantum of the RPA Termination Payment. It is impossible to predict with certainty what the amount of the RPA Termination Payment will be at any point in time in the future. It could be less than the Company s assessment of the Project s then current market value. The concept of compensation for the amount of the investment is not defined in the regulatory framework applicable to the Concessions, nor does the regulatory framework establish a methodology for determining it. In an early termination scenario, the Company expects that the Grantor would determine the early termination payment by reference to the economic and financial plan which makes reference to the financial statements of the Company. However, absent any guidelines, there can be no assurances as to how the calculations for determining the early termination payment shall be carried out. One approach would be for the early termination payment to be determined by reference to the book value of the assets as they appear in the Company s financial statements, but a more conservative calculation would also be possible (whereby the book value of the assets is estimated with an accounting and depreciation method other than that used by the Company). In addition, depending on the nature of the breach triggering termination, amounts may be added to, or deducted from, the RPA Termination Payment in respect of loss and damage suffered. In relation to such a compensatory payment, this might be required to be made by the Company to the Grantor (in certain cases of the Company default) and therefore be offset against the RPA Termination Payment, thereby reducing amounts to be received by the Company (and which may be used to meet the Company s obligations to third parties, including to the Senior Bondholders). It is very difficult to forecast what amounts may be payable by way of compensation given the number of differing termination scenarios. If the Grantor fails to, or is prohibited from, appropriating sufficient funds for making the RPA Termination Payment, the Senior Bonds may not be repaid in full or at all notwithstanding the Company s contractual right under the Concessions to receive such payment which will continue to be in force against the Grantor. Either Concession may also be terminated early where there is destruction in respect of more than 25% of the Road (where destruction means the occurrence of an event or circumstance which substantially alters the infrastructure in such a manner that it is not possible to return the Road to its original state without undertaking work of a similar type and scale as that required to construct the Road). In this scenario the Company may choose between the termination of the relevant Concession and the return of the relevant Operational Bonds or the suspension of its rights and obligations under the relevant Concession until the Company has reinstated the Road. The Company would need to rely on its insurance policies for reinstatement and potential loss of revenue as no RPA Termination Payment would be payable in such a scenario. The occurrence of any such destruction event is likely to adversely impact the Company s revenues and may impact its ability to make payments of principal and interest on the Senior Bonds. The Grantor s estimate of amounts payable to the Company upon early termination may be less than the Company s estimate, which could result in the Company receiving insufficient funds to satisfy its payment obligations under a mandatory early redemption scenario. Under applicable law, the Grantor is empowered to make the final determination of the amount payable to the Company and, as a result, the amounts payable by the Grantor upon early termination may not be sufficient or sufficiently timely to enable the Company to meet its payment obligations under the Senior Bonds on a timely basis. According to the specific term sheets applicable to both Concessions, the RPA Termination Payment is capped to certain amounts (see Description of the Regulatory Regime and the Concession Agreements ). Handback The Concessions are to be handed back to the Grantor following the termination or expiration of the Concessions in a working condition sufficiently perfect to provide the services. In relation to this, the Grantor may carry out inspections in the area of the Concessions as to determine the compliance by the Company of its obligations under the Concessions. Inspections may be carried out only during the term of the Concessions. One year prior to the expiration of the Concessions, the Grantor will inspect the facilities to ensure its perfect condition to continue the service. Failure to satisfy this condition could result in the liability of the Company to the Grantor under the Concessions. The guarantee will not be returned to the Company until the facilities are in the required status 11

18 above. Any such expenses in excess of budgeted amounts could adversely affect the Issuer s ability to make payments under the Senior Bonds. No obligation to terminate both Concessions/no cross default The Grantor is not under any obligation to terminate both Concessions at the same time. The Concessions, though adjacent and sharing a substantially similar risk profile, were awarded under distinct mandates and are separate from an administrative law perspective. Whilst it is difficult to envisage realistic scenarios under which one Concession might be terminated and the other not, it remains a theoretical possibility. In such circumstances, the Issuer would be required to redeem the Senior Bonds in full, and may not have sufficient resources for it to do so. Insufficient revenues from toll receipts The Company s principal revenues are generated from toll collections under the Concessions, which may be insufficient to support payments on the Senior Bonds. The Company does not own any material assets other than those relating to the Concessions and cash on hand. Its ability to make payments under the Senior Bonds is dependent upon the successful operation of the Project and the receipt of sufficient revenues from tolls. Toll revenues depend on the number of vehicles that use the Concessions and the toll rates being charged to such users. Traffic volume depends on, and may be affected by, a wide variety of factors, many of which are not within the Company s control, such as demographic changes, economic growth, fuel prices, changes in tourism figures, social, political and economic stability in Andalusia and competing tourist destinations, competition from untolled roads or public transportation, technological or social innovations affecting traffic volumes that cannot be envisaged as of the date of this Prospectus and other factors prevalent in the areas surrounding the Project. As a result, the number of vehicles that use the Concessions may not equal forecasted levels. Steer Davies & Gleave Limited (SDG), an independent traffic consultant engaged by the Company, has made certain forecasts in relation to the level of traffic predicted on the toll roads until the end of each Concession s period. These assumptions relate to issues such as GDP forecasts and traffic forecasts for different vehicle classes. The Company uses these forecasts in determining toll receipts. It is possible that traffic growth may be higher or lower than expected. If traffic growth is considerably lower than expected, this will affect the levels of toll payments that the Company receives. Such forecasts are of necessity based on views and assumptions with respect to future economic conditions, and other risks and uncertainties, which are beyond the Company s ability to control or predict. As a result, actual traffic levels could differ materially from those forecast by the SDG and the Company, and neither the Company nor SDG makes any warranty as to the accuracy or reliability of such forecasts, nor assumes any liability in respect thereof. Failure to meet forecasted traffic volumes could adversely impact the Issuer s revenues and its ability to make payments of principal and interest on the Senior Bonds. Competing transport modes along southern Andalusian corridor The construction of competing highways or other transportation improvements may have an adverse effect on the Company s revenues and thereby adversely impact repayment of the Senior Bonds. The construction of new competing highways or other forms of transportation improvements may reduce the number of vehicles that use the Concessions. To the extent that fewer vehicles than projected use the Concessions, the Company s toll revenues may not reach forecasted levels thus adversely impacting payments of principal and interest under the Senior Bonds. Inclement weather or other natural disasters could adversely affect traffic volumes and the Company s toll revenues Traffic volumes may be affected by weather conditions and extraordinary events such as floods and, to a lesser extent, natural disaster such as earthquakes. The occurrence of any inclement weather events generally results in precautionary measures being taken to limit traffic for safety reasons. As a result, the occurrence of such events could lead to a proportional decrease in traffic volumes and thus a significant decline in toll revenue from the Company s motorways or a significant increase in expenditure for the operation, maintenance or repair of the Project. 12

19 In addition, even in the event that the Company has taken adequate precautionary measures to minimise the economic effects of such events (i.e. securing the relevant insurance), there can be no assurance that these measures would be adequate to compensate these effects. See Inadequacy of insurance for more information. Effects of the recent economic downturn The recent global economic downturn has had, and may continue to have, an adverse effect on the Company s business. The length and severity of the recent economic downturn and the uncertainty caused by the global credit and liquidity crisis has had a significant effect on the road s customer base and which has adversely affected usage of the Road. While traffic has started to grow again since May 2014 and in 2015 and an upward trend for all vehicle classes was observed (see Description of the Project Traffic Information and toll regime ), traffic levels remain lower than those recorded in A further economic downturn could result in declines in usage of the Concessions and decreases in tariffs which could have a material adverse effect on the Company s business, financial condition and results of operations. Although significant measures have been taken to address the economic crisis in Spain, economic growth and recovery remain fragile and at risk. Continuing disruptions in the global economy and in the global markets may, therefore, have a material adverse effect on the Company s business, financial condition and results of operations. Moreover, even in the absence of a global market downturn, the Company is exposed to volatility in its local markets, including changes in consumer and government spending, which could impact its business. In this regard, economic instability and difficult economic conditions in Europe, particularly in Spain, have resulted in a decline in tax revenue obtained by the Spanish government, which has resulted in higher effective tax rates and, in certain cases, reduced availability of local financing. In addition, general elections took place in December 2015, without there being any clear majority in the Spanish parliament. In this regard, political uncertainty in Spain is likely to have an impact on the administrative authorities involved, or in charge of, concession agreements. Such political uncertainty could adversely affect the Spanish economy and the Company s business. Eurozone financial and political crisis Since the second half of 2007, disruptions in the global credit markets have created increasingly difficult conditions in the financial markets. These conditions have resulted in decreased liquidity and greater volatility in global financial markets, affecting the functioning of financial markets and having an impact on the global economy. In Europe, despite measures have been taken by several governments, international and supranational organisations and monetary authorities to provide financial assistance to Eurozone countries in economic difficulty and to mitigate the possibility of default by certain European countries on their sovereign debt obligations, concerns persist regarding the debt and/or deficit burden of certain countries, including Spain, their ability to meet future financial obligations and the continuity of its membership in the European Union, given the diverse economic and political circumstances in each individual Member State. It remains difficult to predict the effect of these ongoing concerns on the economy and the financial system, how long the economic and political European crisis will last and to what extent the Company s business, results of operations and financial condition may be adversely affected. Major maintenance and operation risk The operation and maintenance of the Project involves various operational risks, and events outside of the Company s control could significantly increase the expense of operating and maintaining the Project. The Company is obliged to maintain the Road. The Company has estimated the timing and cost of the expenditure for such maintenance based on a costing exercise prepared by the Company based on previous experience in relation to the operation and maintenance of concession roads of this nature. Major maintenance and renewal programmes have been developed by the Company and audited by external advisors. These programmes are based on the Company s experience and survey data gathered from the Road to assess the remaining life of each of the most relevant elements. The Company has planned major maintenance to occur at non-peak times. However, there is a risk that the Company will not perform the maintenance of the Road in 13

20 accordance with its obligations under the Concessions and within budget, thereby adversely impacting payments under the Senior Bonds. There is also a risk that the Road will contain defects which give rise to the need for increased heavy maintenance during the period of the Concessions, together with a greater risk of deductions on account of lane closure or poor safety. The obligation to remedy any defects in the works relating to the Project falls on the Company. The Company engages independent contractors to provide various services in relation to the Project. If the performance of any such contractor is unsatisfactory, it may be necessary to replace it or take other actions to remedy the situation. Although this has not historically occurred, were it to occur, it could have adverse cost and timing implications for the Company. The Company s independent contractors may become bankrupt or insolvent, which may lead to operational risk. Directive 2004/54/CE of the European Parliament and Council, of 29 April 2004, on minimum safety requirements for tunnels in the Trans-European Road Network was implemented in Spain by virtue of Royal Decree 635/2006, of 26 May, on minimum safety requirements for tunnels on State roads. Under Royal Decree 635/2006, the concessionaire must carry out maintenance and other works in order to guarantee the correct operation of tunnels. It is unclear whether such additional maintenance or similar work that may be required as a result of the implementation of such regulations would be covered by the financial balance principle to be acknowledged by the Grantor. To the extent that the financial balance principle does not extend to meet totally or partially the costs of complying with such legislation, the Company could be required to totally or partially fund such costs. The nature and scope of the Project is subject to alteration. For example, in the event that the Road is not sufficient to provide the service for which it was built, the Company is required to widen the route. Although according to traffic forecasts only the untolled section at the Benalmádena Bypass is expected to require widening works in and in In addition, the Grantor, acting in the public interest, may amend the nature of the services provided and the tariffs to be paid. These amendments could be significant in nature and require considerable additional investment on the part of the Company which may adversely impact its revenues, thereby negatively impacting the repayment of the Senior Bonds. Although the financial balance principle is intended to compensate the Company in respect of such additional costs, there can be no assurance that an extension of the relevant Concession term or an increase in toll tariffs will be sufficient to cover the actual construction costs or that the Company will have additional financial resources to perform its construction obligations in such a scenario. If the compensation received is not sufficient, the Issuer s ability to meet its obligations under the Senior Bonds may be materially and adversely affected. Lifecycle Costs and Expropriation Costs There are a variety of factors that could lead to higher than projected Capex Costs and Expropriation Costs being payable, such as a shorter than anticipated asset life span or court proceedings being undertaken in shorter than estimated timeframes. The Company will bear the risk of increased Capex Costs and Expropriation Costs. Under the Account Bank Agreement, the Company will establish both lifecycle reserve and expropriations reserve accounts in order to provide reserve funds on a forward-looking basis for their costs. These funds will be available to fund Capex Costs and Expropriation Costs, subject to the Company s obligation to replenish such funds subsequently. There is no guarantee that this reserve will be large enough to meet all expenditures in all cases. Indexation Toll receipts are the main source of the Issuer s income. These are reviewed annually and are adjusted in accordance with the annual variation of the Spanish National Consumer Price Index (CPI) and the differential between the usage and the bid offer forecasted for each Concession. The CPI is calculated by the Spanish National Statistics Institute (Instituto Nacional de Estadística) and measures variations in prices of a selected group of goods and services typically consumed by Spanish families. As a result, the index may not precisely reflect variations in prices of the goods and services required by the Issuer to satisfy its operations and maintenance obligations. There is a risk that the indexation factor as calculated under the Concession Agreements will not fully reflect the underlying price inflation of the Project s operating costs. The Issuer s cost of financing is fixed and therefore in a deflationary scenario revenues will reduce in line with the indexed payments which will reduce the debt service coverage ratios. This risk is borne by the Issuer and could result in 14

21 the Issuer s available cash flow being insufficient to meet its payment obligations in respect of the Senior Bonds on a timely basis. No credit line for Operational Bonds or working capital facility The Company does not have committed financing in place with respect to its ordinary course of business operational guarantee needs nor in respect of the Operational Bonds required under the Concessions. Although the Company has used Unicaja as finance counterparty to meet such requirements to date, the latter is under no obligation and has made no commitment to provide the Company with any financing or similar facilities with respect to any Operational Bonds that may be required in relation to the running of the Project in the future. In the event that Unicaja does not provide such guarantees (or undertake to meet certain liabilities), the Company will need to approach other providers for Operational Bonds. The terms under which other providers may be willing to assume Operational Bonds risk with the Company as counterparty may be less favourable than has been the case with Unicaja. Although it is intended that proceeds from the Senior Bonds will be sufficient to meet its refinancing requirements, it is possible that the Company may need to raise further debt from time to time in order, amongst other things, to finance future capital expenditure or refinance any debt incurred to fund capital expenditure. Whilst the Common Terms Agreement sets forth the terms and conditions on, and circumstances under, which additional debt can be raised by the Company, there can be no assurance that the Company will be able to raise funds on terms that are economically viable. Inadequacy of insurance Although the Company currently benefits from insurance cover to protect against key insurable risks, such cover may not, in certain circumstances, be adequate to cover lost income, reinstatement costs, increased expenses or other liabilities that may arise in connection with certain events. This risk increases the more significant and serious the event or circumstance giving rise to the insurance claim. Moreover, there can be no assurance that such insurance cover will be available in the future at commercially reasonable rates or at all. Insurers could cease to offer current insurance cover, become insolvent or lose their licences or authorisations. Certain types of insurance cover may be cancellable on short notice by the relevant insurer, including for reasons other than nonpayment of premium or breach by the insured, such as in the event of terrorism. In the event of termination of insurance cover, it may not be commercially reasonable or possible for the Company to obtain replacement cover immediately or to the same extent as previous cover. The Company may not have, or may cease to have, insurance cover in respect of a loss if the loss is not covered under, or is excluded from, an insurance policy including by virtue of a deductible applying, exhaustion of applicable cover limits or a policy operating as an excess policy or if, in respect of a loss that would otherwise be insured, the relevant insurer successfully avails itself of defences available to it, such as breach of disclosure duties, breach of warranty, breach of condition precedent, breach of policy condition, non-disclosure or misrepresentation in connection with basis of contract clauses or failure to give notice of a claim in accordance with the policy. See Description of the Company and the Shareholders Insurance. Dependence on third parties The Company is a party to contracts with a number of other third parties that have agreed to perform certain services in relation to the Senior Bonds (e.g. financial institutions and insurance companies). In particular, the Company relies on certain services being provided by its majority shareholder Cintra under the Cintra Service Agreement. Disruptions in such services or failures by such third parties to carry out these services could require the Company to obtain replacement services, which may be more costly or unavailable. The inability of the Issuer to obtain the provision of such services could have an adverse effect on its ability to make payments under the Senior Bonds and/or early redemption of the Senior Bonds. Change in Law Poor economic conditions have affected, and continue to affect, government budgets. Such conditions may also lead to adverse changes in law or regulation, such as amendments to the Spanish tax law affecting the Company s ability to deduct finance costs or increased regulatory requirements relating to health, safety, environmental protection or other areas. Adverse changes in law or regulation for these or other reasons could have a material adverse impact on the profitability of the Project and therefore on the Issuer s ability to make payments under the Senior Bonds. 15

22 Employee unrest Industrial action could materially disrupt the Project s operations. For example, if protests involving the blockading of major routes and cities, as has previously occurred in Spain and other parts of Europe, were to take place on a prolonged and concerted basis, this could adversely impact levels of toll receipts and the ability of the Issuer to pay interest and principal under the Senior Bonds. Legal proceedings Legal actions could have a material adverse effect on the Company s business, financial condition and results of operations. From time to time, the Company is party to litigation and regulatory or other proceedings with governmental authorities and administrative agencies. Legal and regulatory proceedings present a risk of substantial fines or penalties, injunctive relief, attorneys fees, costs and expenses, reputational harm and diversion of management s attention from the operation of the Company s business. Unicaja rights as minority shareholder As owner of 20 per cent. of the share capital of the Company, Unicaja has the benefit of standard shareholder rights afforded to shareholders as a general matter pursuant to the Restated Text of the Spanish Companies Act approved by Royal Legislative Decree 1/2010 of 2 July 2010 (the Spanish Companies Act). There is no agreement in place between the shareholders of the Company governing their relationship or prescribing certain minority interest protections. Unicaja may allege that certain actions undertaken by the Company are made in breach of the Company s duty (to the minority) to act in good faith and exercise sound managerial judgement and represent the oppression of its minority interest. Further equity and financial support for the Company There are a number of matters which are potentially relevant to Senior Bondholders related to the shareholders providing further equity and other financial support to the Company. First, under the terms of the Concessions, the Company is required to maintain certain minimum levels of share capital. Secondly, the Common Terms Agreement allows, but does not oblige, the Shareholders of the Company to provide further equity and financial support in certain circumstances, for example to cure an event of default. Thirdly, under the Contingent Equity Agreement the Shareholders assume obligations to fund, inter alia, Reserved Capex Costs and Reserved Expropriation Costs. If the shareholders are unable or unwilling to provide further equity or other financial support for the Company, this could result in a default under the Concessions and/or an event of default under the Senior Bonds. The Shareholders have not undertaken to the Senior Bondholders to provide further equity or other financial support and factors beyond the Company s control may affect the shareholder s decisions in this regard. RISK FACTORS RELATING TO THE SENIOR BONDS Priority of credits in case of insolvency proceedings, risk of subordination and recognition of contractual subordination Upon the insolvency declaration of the Issuer, the Issuer s obligations under the Senior Bonds shall, to the extent secured, rank as special privileged credits (créditos con privilegio especial) up to 90% of the fair value (valor razonable) of the charged assets under the Security. Any amount which is not covered by the 90% of the fair value shall rank as appropriate under the Spanish Insolvency Law, as amended (i.e. any principal overflow shall rank as an ordinary claim against the Issuer and any interest overflow shall rank as a subordinated claim against the same). These limitations shall only apply to the ranking of claims for the purposes of voting on a proposal for composition with creditors (convenio de acreedores) but it does not operate as a cap regarding the amounts that secured creditors may recover from the charged assets, therefore, in any event, secured creditors shall be entitled to receive 100% of the proceeds obtained from the sale of the charged assets (up to the amount secured by the relevant security is agreed, as it is statutory in the case with mortgages). Any amounts under the Senior Bonds that are not covered by the amounts obtained from the sale of the charged assets under the Securities shall rank as appropriate under the Spanish Insolvency Law, as amended. 16

23 With regard to the payment of claims under the Spanish Insolvency Law, the following rules apply: (c) (d) (e) Before any of the creditors of the insolvency are paid, the insolvency administrators must deduct from the insolvency estate such assets and rights not affected by a special privilege as are necessary to pay the claims against the insolvency estate (créditos contra la masa). Creditors with a special privilege (broadly speaking, secured creditors and certain labour claims) are paid out of the proceeds obtained on the sale of the charged assets or rights (or with the acquisition of the secured asset by way of payment) but to the extent their claims remain unpaid, the unpaid claims will be reclassified as appropriate. Creditors with a general privilege (créditos con privilegio general) (broadly speaking, certain tax and labour claims among others) are paid out of assets remaining in the insolvency estate (e.g. after deducting such assets and rights not affected by a special privilege as are necessary to pay the claims against the insolvency estate and after selling the assets affected by a special privilege). Ordinary creditors are paid pro rata out of the assets remaining in the insolvency estate after the creditors with a general privilege have been paid. Subordinated creditors cannot be paid until all ordinary claims have been paid, and are paid out of assets remaining in the insolvency estate. Finally, claims against the Issuer under the Senior Bonds could be subordinated in an eventual insolvency proceeding of the Issuer to the following extent: (c) (d) (e) If they are reported late to the insolvency administrator of the Issuer (currently, one month since the debtor s declaration of insolvency is published). If they are contractually subordinated to all of the Issuer s creditors. With regard to interest, unless they are secured (subject to the 90% limitation described above). In the claims related to monetary penalties or other monetary sanctions. If they are held by persons that are specially related (personas especialmente relacionadas) (as defined under article 93 of the Spanish Insolvency Law) to the Issuer. The subordination provisions applicable to the Junior Facility Agreement cannot override Spanish law of mandatory application (including the Insolvency Law) and, therefore, such subordination may not be recognised and/or applied in the context of an insolvency of the Issuer, in which case all the creditors under the Senior Bonds, the Senior Notes and the Junior Facility Agreement may be treated pari passu under the insolvency proceeding. This is without prejudice of the right of Senior Bondholders (and Senior Noteholders) to claim from Junior Lenders any amounts received by the Junior Lenders otherwise than in accordance with the STID. The Senior Bonds are obligations of the Issuer only The Senior Bonds are solely obligations of the Issuer and will not be obligations or responsibilities of, or guaranteed by, any other entity. In particular, the Senior Bonds are not obligations of, and will not be guaranteed by, the Grantor, the Shareholders, the Bond Trustee, the Security Agent, the Sole Bookrunner or any of their respective affiliates nor any other persons. Furthermore, no person other than the Issuer accepts or will accept any liability whatsoever to the Senior Bondholders in respect of any failure by the Issuer to pay any amounts due under the Senior Bonds. Performance by the Issuer of its obligations is dependent upon certain third parties The Issuer is a party to contracts with a number of other third parties that have agreed to perform certain services in relation to the Senior Bonds. These third parties include, but are not limited to, the Account Bank, the Insurance Providers, the Grantor, the Principal Paying Agent, the Shareholders and the providers of the Reserved Capex Letter of Credit and the Reserved Expropriation Letter of Credit. As an example, the Principal 17

24 Paying Agent has agreed to provide payment services in connection with the Senior Bonds under the Paying Agency Agreement. Disruptions in such services or failures by such third parties to carry out these services could lead to a loss on the Senior Bonds and/or early redemption of the Senior Bonds. The Senior Class A1 Bondholder Representative may make, approve or reject certain matters on behalf of the Senior Class A1 Bondholders Under Condition 14.2, Allianz Global Investors GmbH, the Senior Class A1 Bondholder Representative is entitled to make, approve or reject certain matters on behalf of the Senior Class A1 Bondholders. In such circumstances, the Bond Trustee is entitled to follow the instructions of the Senior Class A1 Bondholder Representative and, in doing so, may treat all of the Senior Class A1 Bondholders as having made, approved or rejected any such matters as so instructed. Any actions taken by the Bond Trustee following the instructions of the Senior Class A1 Bondholder Representative will be binding on all Senior Class A1 Bondholders, notwithstanding their disagreement with the instructions given by the Senior Class A1 Bondholder Representative. Approval of certain matters may be effected without the positive approval of the Senior Bondholders Certain matters are approved by the Qualifying Secured Creditors on a Negative Approval basis. A matter will be approved in this way unless within the relevant period, Qualifying Secured Creditors representing 25% or more of the Qualifying Secured Debt have notified the Issuer and the Security Agent that they do not approve the particular matter. The Senior Bondholders who do not respond within that period will effectively be deemed to have approved the relevant matter. While documentation and other matters will be notified to the Senior Bondholders through publication on an investor website and through publication of a notice on the Irish Stock Exchange in accordance with Condition 13 (Notices), the Senior Bondholders who do not respond within the specified period will have no subsequent rights of challenge in the event that the relevant matter has been so approved. A Bondholder s ability to enforce following the occurrence of an Event of Default is limited Other than in limited circumstances, the Senior Bondholders have no individual rights to enforce. Accordingly, the ability of the Senior Bondholders to take enforcement action is limited and may only be effected in the circumstances described in the Conditions. The limited ability of the Senior Bondholders to take enforcement action may impact negatively on the efficacy of any such enforcement action, for example, if action needs to be taken quickly following the occurrence of an Event of Default (e.g. upon insolvency of the Issuer). Legal investment considerations may restrict certain investments The investment activities of certain investors are subject to legal investment laws and regulations, or review or regulation by certain authorities. Each potential investor should consult its legal advisers to determine whether and to what extent: (i) the Senior Bonds are appropriate legal investments for it; (ii) the Senior Bonds can be used as collateral for various types of borrowing; and (iii) whether other restrictions apply to its purchase or pledge of the Senior Bonds. Financial institutions should consult their legal advisers or the appropriate regulators to determine the appropriate treatment of the Senior Bonds under any applicable risk-based capital or similar rules. The value of the Senior Bonds may be adversely affected by movements in market interest rates Investment in the Senior Bonds involves the risk that if market interest rates subsequently increase above the rate paid on the Senior Bonds, this will adversely affect the value of the Senior Bonds. Conflicts of interest generally Conflicts of interest may arise during the term of the Senior Bonds as a result of various factors involving certain transaction parties. For example, such potential conflicts may arise because one or more of the Issuer s creditors may also act in other capacities under the Finance Documents, although the relevant rights and obligations under the Finance Documents are not contractually conflicting and are independent from one another. 18

25 Credit ratings assigned to Senior Bonds may not reflect all the risks associated with an investment in the Senior Bonds The ratings assigned by the Rating Agency to the Senior Bonds reflect only the views of the Rating Agency and, in assigning the ratings, the Rating Agency takes into consideration the credit quality of the Issuer and structural features and other aspects of the transaction. There is no assurance that any such ratings will continue for any period of time or that they will not be reviewed, revised, suspended or withdrawn entirely by the Rating Agency as a result of changes in, or unavailability of, information or if, in the Rating Agency s judgment, circumstances so warrant. If any rating assigned to the Senior Bonds is lowered or withdrawn, the market value of the Senior Bonds may be reduced. Future events, including events affecting the Issuer and/or circumstances relating to the industry generally, could have an adverse impact on the ratings of the Senior Bonds. One or more independent credit rating agencies may assign credit ratings to the Issuer or the Senior Bonds. The ratings may not reflect the potential impact of all risks related to structure, market, additional factors discussed above, and other factors that may affect the value of the Senior Bonds. A credit rating is not a recommendation to buy, sell or hold securities and may be revised, suspended or withdrawn by the Rating Agency at any time. The Senior Bonds are subject to exchange rate risks and exchange controls risks The Issuer will pay principal and interest on the Senior Bonds in euro. This presents certain risks relating to currency conversions if an investor s financial activities are denominated principally in a currency or currency unit (the Investor s Currency) other than the euro. These include the risk that exchange rates may significantly change (including changes due to devaluation of the euro or revaluation of the Investor s Currency) and the risk that authorities with jurisdiction over the Investor s Currency may impose or modify exchange controls. The Issuer has no control over the factors that generally affect these risks, such as economic, financial and political events and the supply and demand for applicable currencies. In recent years, exchange rates between certain currencies have been highly volatile and volatility between such currencies or with other currencies may be expected in the future. Fluctuations between currencies in the past are not necessarily indicative, however, of fluctuations that may occur in the future. An appreciation in the value of the Investor s Currency relative to the euro would decrease the Investor s Currency-equivalent yield on the Senior Bonds, the Investor s Currencyequivalent value of the principal payable on the Senior Bonds and the Investor s Currency-equivalent market value of the Senior Bonds. Government and monetary authorities may impose (as some have in the past) exchange controls that could adversely affect an applicable exchange rate. As a result, investors may receive less interest or principal than expected, or no interest or principal. Regulatory initiatives may result in increased regulatory capital requirements and/or decreased liquidity in respect of the Senior Bonds The Basel Committee on Banking Supervision (the Basel Committee) published a regulatory framework in 2006 (the Basel II Framework). The implementation of and/or changes to the Basel II Framework may affect the capital requirements of certain investors in the Senior Bonds and/or the liquidity of the Senior Bonds and/or the risk weighting of the Senior Bonds for such investors. The Basel Committee has approved significant changes to the Basel II Framework (Basel III), including new capital requirements, minimum liquidity standards and a minimum leverage ratio for credit institutions. In particular, the changes include new requirements for the capital base, measures to strengthen the capital requirements for counterparty credit exposures arising from certain transactions and the introduction of a leverage ratio as well as short-term and longer-term standards for funding liquidity (referred to as the Liquidity Coverage Ratio and the Net Stable Funding Ratio, respectively). Member countries are required to implement the new capital standards from January 2013, the Liquidity Coverage Ratio from January 2015 and the Net Stable Funding Ratio from January The European authorities have implemented Basel III via the adoption of Directive 2013/36/EU (CRD IV) and Regulation 575/2013 (CRR). CRD IV and the CRR will replace the existing Capital Requirements Directives from 1 January 2014, with full implementation by January 2019; however, the proposals allow individual EU Member States to implement the stricter definition and/or level of capital more quickly than is envisaged under the CRR. Investors should consult their own advisers as to: (i) the regulatory capital requirements in respect of the Senior Bonds and as to the consequences to and effect on them of the Basel II Framework, Basel III, CRD IV and the 19

26 CRR and any relevant implementing measures; and (ii) any other laws and regulations applicable to the investment in, and the holding of, securities such as the Senior Bonds. No predictions can be made as to the precise effects of such matters on any investor or otherwise. Change in law The structure of the transaction and, among other things, the issue of, and terms and conditions of, the Senior Bonds and rating assigned to each class of the Senior Bonds are based on law (including tax law) and administrative practice in effect at the date hereof and having due regard to the expected tax treatment of all relevant entities under such law and administrative practice. No assurance can be given as to the impact of any possible judicial decision or change to such law, tax or administrative practice after the date of this Prospectus and as to whether any such change could materially adversely impact the value of the Senior Bonds. There may not be an active trading market for the Senior Bonds, in which case the ability to sell the Senior Bonds may be limited The Issuer cannot assure the holders of the Senior Bonds as to the liquidity of any market in the Senior Bonds, their ability to sell the Senior Bonds or the prices at which they would be able to sell their Senior Bonds. Future trading prices for the Senior Bonds will depend on many factors, including, among other things, prevailing interest rates, operating results and the market for similar securities. Although an application has been made for the Senior Bonds to be listed on the Irish Stock Exchange, the Issuer cannot assure that the Senior Bonds will be or will remain listed. Although no assurance is made as to the liquidity of the Senior Bonds as a result of the admission on the Irish Stock Exchange, the failure to be approved for admission or the exclusion (whether or not for an alternative admission to listing on another stock exchange) of the Senior Bonds from the Irish Stock Exchange may have a material effect on a holder s ability to resell the Senior Bonds, as applicable, in the secondary market. RISKS RELATING TO THE SECURITY Enforcement of security interests may be restricted under Spanish Insolvency Law Under the Spanish Insolvency Law, the enforcement of security interests could be restricted upon the filing by the debtor of a pre-insolvency notice in accordance with article 5 bis of the Spanish Insolvency Law. Once a debtor is declared insolvent, the enforcement of security interests over assets owned by the debtor will be stayed until the first of the following circumstances occur: approval of a creditors composition agreement, unless the composition agreement has been approved by the secured creditors, in which case the composition agreement will govern, or one year has elapsed since the declaration of insolvency without liquidation proceedings being initiated. This does not apply to financial collateral security granted pursuant to Royal Decree-Law 5/2005, of 11 March. The stay may be lifted if the insolvency court considers that the relevant asset is not necessary for the continuation of the debtor s professional or business activities. The secured creditor could also lose its right to enforce separately within the insolvency proceedings if it did not commence the enforcement prior to the insolvency declaration. In determining which assets of the debtor are used for its professional or business activities, courts have generally adopted a broad interpretation and will likely include most of the debtor s assets. Nonetheless, for the purposes of such declaration, article 56 of the Spanish Insolvency Law points out that those shares or quotas (participaciones) in companies whose only activity is the holding of one asset and the liabilities deemed necessary for its financing shall not be deemed necessary for the continuity of the debtor s business, provided that the enforcement of securities over those shares or quotas (participaciones) does not lead to a termination event or an amending event that allows the insolvent debtor to maintain development of the relevant asset. However, the interpretation of such article 56 of the Spanish Insolvency Law is controversial and there are multiple interpretations between scholars and the existing case law. Furthermore, in accordance with the Spanish Insolvency Law, any action carried out or agreement entered into by the debtor in the two years preceding its declaration of insolvency can be clawed back (rescinded) by the court if the action or agreement is considered detrimental to the insolvency estate. This may arise even in the absence of fraudulent intent. 20

27 As a general rule, the insolvency administrator or the creditors who exercise the claw back action have to prove that the act was detrimental to the insolvency estate. This notwithstanding, the following acts are presumed detrimental without there being any possibility to provide evidence to the contrary: acts where no consideration is received for a disposed asset; and acts that result in the early repayment or settlement of obligations which would have become due after the declaration of insolvency (unless such obligations were secured by means of a security interest). In the following cases, however, the presumption is rebuttable: disposals made in favour of specially related parties to the debtor (including, inter alia, shareholders that meet certain requirements, group companies and legal or de facto directors); the creation of a security interest securing a pre-existing obligation or a new obligation that replaces an existing one; and (c) those payments or other acts extinguishing obligations that would have become due after the declaration of insolvency and which are secured by means of a security. Claims arising in favour of a creditor as a result of a claw back action will be subordinated if the court has determined that the creditor acted in bad faith. Other claims may also be subordinated including, inter alia, claims by legal or natural persons who are specially related parties to the debtor (including, de facto directors) and claims arising from reciprocal obligations if the court rules, based on the insolvency administrator s report, that the creditor repeatedly obstructed compliance with the agreement against the interest of the insolvency estate. Security interests granted by the debtor to secure claims held by a specially related party will be cancelled by the court. Under Spanish law, one factor considered in determining if a party is specially related is whether such party holds, directly and indirectly, more than 10% of the capital of the debtor (for companies that are not listed) or 5% (for companies that are listed) at the time the credit right under dispute in the insolvency scenario arises or in the event of companies belonging to the same group as the insolvent debtor and their common shareholders, provided that such shareholders meet, directly or indirectly, the minimum shareholding requirements set out before. The Security in the Initial Security Documents have been granted in favour of the Senior Bondholders acting through the relevant Bond Trustee. Enforcement of security interests may be affected by the appointment of the Security Agent The Spanish law security interests that secure the obligations of the Issuer under the Senior Bonds and the obligations of the Security Providers under the Security Documents have been granted in favour of, inter alios, the Senior Bondholders acting through the relevant Bond Trustee who has accepted the relevant security in its name and for the benefit of the relevant Senior Bondholders. The Senior Bondholders will not have any individual powers to enforce the security interests granted in respect of the Senior Bonds, except through the Security Agent, who shall enforce them following the instructions of the Bond Trustee given in accordance with the STID. Since Spanish law does not contemplate the concept of security agent or trustee, there is some uncertainty as to whether a Spanish Court would recognise its authority and whether this could eventually cause delays in the enforcement of security or prevent its enforcement in the terms stated in the Security Documents. Although by itself Spanish law does not prevent the appointment of the Bond Trustee or Security Agent, the absence of regulation creates uncertainty as to how a Spanish court would recognise the Bond Trustee or Security Agent s actions in an enforcement situation. Some legal scholars argue that a security agent would only be entitled to enforce its portion, if any, of the secured obligation but not that of the other secured parties. Therefore, the validity and enforceability of guarantees or security interests granted in favour of the holders of the Senior Bonds through the Bond Trustee and its subsequent enforcement through the Security Agent may be subject to certain limitations. Notwithstanding the foregoing, if enforcement of any security interest in Spain is to be carried out by the Security Agent in Spain, it may be necessary to prove that the Security Agent is duly and expressly empowered for such purpose by means of duly notarized powers of attorney granted in favour of the Security Agent by each of the actual Secured Creditors or future Secured Creditors, if necessary, with the Apostille of The Hague Convention dated October 5, Therefore, there could be a delay in the execution of the Security in Spain while the Security Agent obtains such powers. 21

28 The Senior Bonds and security interests are limited by applicable laws and are subject to certain limitations on enforcement or defenses Under Spanish law, any guarantee, pledge or mortgage generally must guarantee or secure a primary obligation to which it is ancillary. This implies that the primary obligation must be clearly identified in the guarantee or security agreement and the nullity or termination of the primary obligation entails the nulity or termination of the ancillary guarantee or security interest. Consequently, if the primary obligation is deemed null and void, the ancillary guarantee or security interest will also be deemed null and void. In addition, the obligations and liabilities of any guarantor entity granting a security interest in favour of the Senior Bondholders cannot extend to any obligation which, if incurred, would constitute a breach of Spanish financial assistance rules. Pursuant to these rules, a Spanish company may not generally advance funds, grant loans, guarantees or security interests or provide any other type of financial assistance in connection with the acquisition of its own shares or those of its parent company, in the case of public limited liability companies (sociedades anónimas), or other companies within the same group, in the case of private limited liability companies (sociedades de responsabilidad limitada). Any guarantee or security granted in breach of these provisions may be deemed null and void. There are no whitewash procedures available in Spain. Under Spanish law, claims may become time-barred (a general term of five years is set forth in the Spanish Civil Code for personal obligations) or may be or become subject to the defence of set-off or counterclaim. The terms enforceable, enforceability, valid, legal, binding and effective or any combination thereof mean that all of the obligations assumed by the relevant party under the relevant documents are of a type enforced by Spanish courts; these terms do not mean that these obligations will necessarily be enforced in all circumstances in accordance with their terms. Enforcement before courts will in any event be subject to: the nature of the remedies available in the courts; and the availability of defenses such as, without limitation, set-off (unless validly waived), circumvention of law (fraude de ley), abuse in the exercise of rights (abuso de derecho), misrepresentation, force majeure, unforeseen circumstances, undue influence, duress, abatement and counterclaim. The Senior Bonds are secured only to the extent of the value of the Security, which may not be sufficient to satisfy the obligations under the Senior Bonds The Senior Bonds have been secured by the Security. Subject to certain limits, the rights of a Bondholder to the Security may be diluted by any increase in the debt secured by the Security or a reduction of the Security securing the Senior Bonds. If there is an Event of Default, there is no guarantee that the proceeds of any sale of the Security will be sufficient to satisfy, and may be substantially less than, amounts due under the Senior Bonds as well as other debt benefiting from a pari passu security interest in the Security. If the proceeds of any sale or disposal of Security are not sufficient to repay all amounts due on the Senior Bonds, investors, to the extent not repaid from the proceeds of the sale of the Security, would have only an unsecured claim against the Company s remaining assets. Each of these factors or any challenge to the validity of the Security or the STID could reduce the proceeds realised upon enforcement of the security interests. The amount of proceeds realised upon the enforcement of the security interests over the Security or in the event of liquidation will depend upon many factors, including, among others, the ability to sell the Security in an orderly sale, economic conditions where operations are located and the availability of buyers. It may be difficult to realise the value of the Security securing the Senior Bonds The security interests in respect of the Senior Bonds are subject to any and all exceptions, defects, encumbrances, liens and other imperfections permitted under the Bond Trust Deed and the STID. The existence of any such exceptions, defects, encumbrances, liens and other imperfections could adversely affect the value of the Security, as well as the ability of the Security Agent to realise or foreclose on the Security. 22

29 Furthermore, the ranking of security interests can be affected by a variety of factors, including, among others, the timely satisfaction of perfection requirements, statutory liens, or certain statutory preferences. The security interests of the Security Agent will be subject to practical problems generally associated with the realisation of security interests in the Security and there can be no assurance that the Security will be saleable. The Issuer has control over the Security, and the sale of particular assets could reduce the pool of assets securing the Senior Bonds The Security Documents allow the Issuer to remain in possession of, retain exclusive control over, freely operate, and collect, invest and dispose of any income, dividends and other distributions from the Security Assets. So long as no default or event of default under the Bond Trust Deed would result therefrom, the Company may, among other things and subject to the terms of the Bond Trust Deed, without any release or consent by the Security Agent, conduct ordinary course activities with respect to the Security Assets, such as selling, factoring, abandoning or otherwise disposing of the Security Assets. See Description of the Project and the Concession Agreements Termination of the Concessions. Senior Bondholders rights in the Security may be adversely affected by the failure to perfect security interests in the Security Under applicable law, a security interest in certain assets can only be properly perfected, and its priority retained, through certain actions undertaken by the secured party or the grantor of the security. The liens on the Security securing the Senior Bonds may not be perfected with respect to the claims of the Senior Bonds if the Issuer fails or is unable to take the actions required to perfect any of the liens. Absent perfection, the holders of the Senior Bonds may have difficulty enforcing their rights in the Security with respect to third parties, including a trustee in bankruptcy and other creditors who claim a security interest in the Security. In addition, a debtor may discharge its obligation by paying the security provider until, but not after, the debtor receives a notification of the existence of the security interest granted by the security provider in favour of the secured party over the claims the secured party, as creditor, has against the debtor. Finally, since the ranking of pledges is generally determined by the date on which they became enforceable against third parties, a security interest created on a later date over the same asset constituting the Security, but which come into force for third parties earlier, by way of registration in the appropriate register or by notification, may have priority. The transfer of shares may be deemed by the Grantor as an indirect transfer of the Concessions The transfer of Ausol s shares, when resulting in a change of control (which would be the case upon the transfer of the shares as a result of an enforcement of the share pledge if it implies a change of control), may be understood by the Grantor as an indirect transfer of the Concessions and, therefore, the Grantor may deem the legal regime for the transfer of the Concessions as applicable in regards to, inter alia, the need for prior authorisation by the Grantor and the technical and economic requirements to be met by the acquirer of the shares. The same regime could apply in case of transfer of the political rights attached to Ausol s shares pursuant to the terms of the pledge over its shares. In addition, it cannot be totally ruled out that the Grantor considers restrictions to Ausol s ownership foreseen under clause 19 of Decree 215/1973. This clause states that foreign investors cannot own more than 50% of Ausol s share capital. In the unlikely event that the grantor upholds the restrictions, such would only apply to non-eu legal and natural persons from a country without international treaty providing otherwise. This should be taken into consideration upon enforcement of the pledge over the shares Reliance on Euroclear and Clearstream, Luxembourg procedures The Senior Bonds are represented by one or more Global Bonds that may be deposited with a common depositary for Euroclear and Clearstream, Luxembourg. Except in the circumstances described in each Global Bond, investors will not be entitled to receive Senior Bonds in definitive form. Each of Euroclear and Clearstream, Luxembourg and their respective direct and indirect participants will maintain records of the beneficial interests in each Global Bond held through it. While the Senior Bonds are represented by a Global Bond, investors will be able to trade their beneficial interests only through the relevant clearing systems and their respective participants. 23

30 While the Senior Bonds are represented by Global Bonds, the Issuer will discharge its payment obligation under the Senior Bonds by making payments through the relevant clearing systems. A holder of a beneficial interest in a Global Bond must rely on the procedures of the relevant clearing system and its participants to receive payments under the Senior Bonds. The Issuer has no responsibility or liability for the records relating to, or payments made in respect of, beneficial interests in any Global Bond. Holders of beneficial interests in a Global Bond will not have a direct right to vote in respect of the Senior Bonds so represented. Instead, such holders will be permitted to act only to the extent that they are enabled by the relevant clearing system and its participants to appoint appropriate proxies. RISK FACTORS RELATING TO TAXATION Certain payments in respect of the Senior Bonds may be impacted by the EU Savings Directive Under Council Directive 2003/48/EC on the taxation of savings income (the EU Savings Directive), Member States of the European Union (the EU Member States and each an EU Member State) are required to provide to the tax authorities of other EU Member States details of certain payments of interest or similar income paid or secured by a person established in an EU Member State to or for the benefit of an individual resident in another EU Member State or certain limited types of entities established in another EU Member State. For a transitional period, Austria is required (unless during that period it elects otherwise) to operate a withholding system in relation to such payments (subject to a procedure whereby, on meeting certain conditions, the beneficial owner of the interest or other income may request that no tax be withheld). The end of the transitional period is dependent upon the conclusion of certain other agreements relating to information exchange with certain other countries. A number of non-eu countries and territories, including Switzerland, have adopted similar measures (a withholding system in the case of Switzerland). On 24 March 2014, the Council of the European Union adopted a Council Directive (the Amending Directive) amending and broadening the scope of the requirements described above. The Amending Directive requires EU Member States to apply these new requirements from 1 January 2017, and if they were to take effect the changes would expand the range of payments covered by the EU Savings Directive, in particular to include additional types of income payable on securities. The Amending Directive would also expand the circumstances in which payments that indirectly benefit an individual resident in an EU Member State must be reported or subject to withholding. This approach would apply to payments made to, or secured for, persons, entities or legal arrangements (including trusts) where certain conditions are satisfied, and may in some cases apply where the person, entity or arrangement is established or effectively managed outside of the European Union. However, on 10 November 2015, the Council of the European Union adopted a Council Directive (the Overruling Directive) repealing the Savings Directive from 1 January 2017 in the case of Austria and from 1 January 2016 in the case of all other Member States (subject to on-going requirements to fulfil administrative obligations such as the reporting and exchange of information relating to, and accounting for withholding taxes on, payments made before those dates and certain other transitional provisions in the case of Austria). This is to prevent overlap between the Savings Directive and a new automatic exchange of information regime to be implemented under Council Directive 2011/16/EU on Administrative Cooperation in the field of Taxation (as amended by Council Directive 2014/107/EU). The Overruling Directive also provides that Member States will not be required to apply the new requirements of the Amending Directive. If a payment were to be made or collected through an EU Member State (or any non-eu country or territory which has adopted similar measures in order to conform to the EU Savings Directive) which applies a withholding tax system as referred to above and an amount of, or in respect of, tax were to be withheld from that payment, neither the Issuer nor any Agent (as defined in Terms and Conditions of the Senior Bonds ) nor any other person would be obliged to pay additional amounts with respect to any Bond as a result of the imposition of such withholding tax. The Issuer will be required to maintain an Agent in an EU Member State (if any) that would not be obliged to withhold or deduct tax pursuant to the relevant national legislation implementing, or introduced in order to conform to, the EU Savings Directive (so long as there was such a member state). Potential investors who are in any doubt as to their tax position should consult their own independent tax advisers. The proposed financial transactions tax (FTT) On 14 February 2013, the European Commission published a proposal (the Commission s Proposal) for a Directive for a common FTT in Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia (the participating Member States). 24

31 The Commission s Proposal has very broad scope and could, if introduced, apply to certain dealings in the Senior Bonds (including secondary market transactions) in certain circumstances. The Commission s Proposal considers that the issuance and subscription for bonds are, however, exempt. Under the Commission s Proposal, the FTT could apply in certain circumstances to persons both within and outside the participating Member States. Generally, it would apply to certain dealings in the Senior Bonds where at least one party is a financial institution, and at least one party is established in a participating Member State. A financial institution may be, or be deemed to be, established in a participating Member State in a broad range of circumstances, including: (i) by transacting with a person established in a participating Member State; and (ii) where the financial instrument which is subject to the dealings is issued in a participating Member State. The FTT proposal remains subject to negotiation between the participating Member States, and the scope of any such tax is uncertain. Estonia has decided to no longer participate, but additional EU Member States may decide to participate. Participating Member States had indicated an intention to implement the FTT by 1 January 2016 and they have announced that a final decision on the implementation of the FTT is expected to be made in June Prospective holders of the Senior Bonds are advised to seek their own professional advice in relation to the FTT. Risks related to Spanish withholding tax The Issuer considers that, pursuant to the provisions of Royal Decree 1065/2007, as amended, it is not obliged to withhold taxes in Spain on any interest paid under the Senior Bonds to any Senior Bondholder, irrespective of whether such Senior Bondholder is resident for tax purposes in Spain. The foregoing is subject to certain information procedures having been fulfilled. These procedures are described in "Compliance with certain requirements in connection with income payments" below. In accordance with the procedures established in Royal Decree 1065/2007, as amended, the Issuer does not have to receive information regarding the identity or tax residence of a Bondholder or the amount of interest paid to it, provided the securities (i) can be regarded as listed debt securities issued under Law 10/2014, and (ii) are initially registered with a foreign clearing and settlement entity that is recognised under Spanish regulations or under those of another OECD member state. The Issuer considers that the Senior Bonds meet these requirements and consequently payments made by the Issuer to the Senior Bondholders should be paid free of Spanish withholding tax. In the event that the current applicable procedures were modified, amended or supplemented by a Spanish law, regulation, interpretation or ruling of the Spanish Tax Authorities, the Issuer will inform the Senior Bondholders of such information procedures and of their implications, as the Issuer may be required to apply withholding tax on interest payments under the Senior Bonds if the Senior Bondholders would not comply with such information procedures. The Company may be required to pay tax liabilities generated by other companies of its tax consolidation group The Company is, to the best of its knowledge, in compliance with its tax filing obligations in all material respects. Spanish tax consolidation regime provides for joint and several liability for corporate income tax liabilities of the group among its members. If, as a consequence of being part of a tax consolidation group, the head company fails to pay group s tax liabilities, the Spanish tax authorities may request such liability to any member of the group, including, in the case of the Ferrovial group, the Company. In the event of the Company being requested and having to pay the group s corporate income tax liability, Ferrovial, S.A. or the relevant companies of the Ferrovial group would be required to reimburse the amount paid as a result of the application of this tax liability to the Company. Potential purchasers and sellers of the Senior Bonds may be required to pay taxes or other documentary charges or duties in accordance with the laws and practices of the country where the Senior Bonds are transferred or other jurisdictions Potential purchasers and sellers of the Senior Bonds should be aware that they may be required to pay taxes or other documentary charges or duties in accordance with the laws and practices of the country where the Senior Bonds are transferred or other jurisdictions (other than Spain). Potential investors are advised not to rely upon the tax summary contained in this Prospectus but to seek the advice of a tax professional regarding their individual tax liabilities with respect to the acquisition, sale and redemption of the Senior Bonds. Only these advisers are in a position to duly consider the specific situation of the potential investor. This investment consideration has to be read in connection with the taxation sections of this Prospectus. Such taxes or 25

32 documentary charges could also be due in case of a possible change of the tax residency of the Issuer. In addition, potential purchasers should be aware that tax regulations and their application by the relevant taxation authorities change from time to time. Accordingly, it is not possible to predict the precise tax treatment which will apply at any given time. Foreign Account Tax Compliance Act (FATCA) While the Senior Bonds are in global form and held within Euroclear or Clearstream, Luxembourg (together the ICSDs), in all but the most remote circumstances, it is not expected that the new reporting regime and potential withholding tax imposed by sections 1471 to 1474 of the U.S. Internal Revenue Code of 1986 (FATCA) will affect the amount of any payment received by the ICSDs (see the section of this Prospectus headed Taxation U.S. Foreign Account Tax Compliance Withholding ). However, FATCA may affect payments made to custodians or intermediaries (including any clearing system other than the Clearing Systems) in the payment chain leading to the ultimate investor if any such custodian or intermediary generally is unable to receive payments free of FATCA withholding. It also may affect payments to any ultimate investor that is a financial institution that is not entitled to receive payments free of withholding under FATCA, or an ultimate investor that fails to provide its broker (or other custodian or intermediary from which it receives payment) with any information, forms, other documentation or consents that may be necessary for the payments to be made free of FATCA withholding. Investors should choose the custodians or intermediaries with care (to ensure each is compliant with FATCA or other laws or agreements related to FATCA, including any IGA legislation, if applicable), and provide each custodian or intermediary with any information, forms, other documentation or consents that may be necessary for such custodian or intermediary to make a payment free of FATCA withholding. Investors should consult their own tax adviser to obtain a more detailed explanation of FATCA and how FATCA may affect them. Further, foreign financial institutions in a jurisdiction which has entered into an intergovernmental agreement with the United Sates (an IGA) are generally not expected to be required to withhold under FATCA or an IGA (or any law implementing an IGA) from payments they make. 26

33 DOCUMENTS INCORPORATED BY REFERENCE The following financial information is incorporated by reference in this Prospectus and has been filed with the Irish Stock Exchange and the Central Bank of Ireland: (i) the unaudited stand-alone financial statements of the Company for the eleven months ended 30 November 2015 prepared in accordance with Spanish GAAP, which can be found at the specified office of the Paying Agent and on the website of the Irish Stock Exchange at %20Interim%20Financial%20Statements%20November%202015_dfc734f abce- 68bb2d pdf?v= ; (ii) the audited stand-alone financial statements of the Company as at and for the year ended 31 December 2014 prepared in accordance with Spanish GAAP, which can be found at the specified office of the Paying Agent and on the website of the Irish Stock Exchange at together with the accompanying notes and independent auditors report; and (iii) the audited stand-alone financial statements of the Company as at and for the year ended 31 December 2013 prepared in accordance with Spanish GAAP, which can be found at the specified office of the Paying Agent and on the website of the Irish Stock Exchange at 4af5-a453-4be1e93eea6e.pdf?v= ; together with the accompanying notes and independent auditors report. See Selected Historical Financial Information. Cross-Reference List The tables below show where the information incorporated by reference in this Prospectus can be found in the above-mentioned documents. Audited annual financial statements of the Company as at and for the years ended 31 December 2014 and 2013 and unaudited financial statements of the Company for the eleven-month period ended 30 November 2015: Eleven month period ended Period ended 31 December 30 November Balance sheet... pg 7 pg 2 pg 2 Profit and loss account... pg 8 pg 3 pg 3 Explanatory notes to the financial statements... pgs pgs 7-50 pgs 7-50 Independent auditors report N/A pg 1 pg 1 Independent auditors limited review report... pgs 2-4 N/A N/A Information contained in the above documents other than the information listed in the cross-reference list above (except for the financial information for the eleven-month period ended 30 November 2015 which is additional information in its entirety) is considered additional information and is not required by the relevant schedules of Commission Regulation (EC) No. 809/2004 implementing the Prospectus Directive. The documents set out above are translated into English from the original Spanish. The Company has accepted responsibility for the accuracy of such translations. This Prospectus should be read and construed together with the information incorporated by reference herein. Copies of any document incorporated by reference in this Prospectus are available free of charge at the specified office of the Paying Agent, unless such documents have been modified or superseded. Such documents will also be available for viewing on the website of the Irish Stock Exchange ( 27

34 The unaudited financial statements of the Company for the eleven-month period ended 30 November 2015 and the audited financial statements of the Company as at and for the years ended 31 December 2014 and 2013 have been prepared in accordance with Spanish GAAP. The audited financial statements of the Company as at and for the year ending 31 December 2015 and as at and for each 31 December thereafter will be prepared in accordance with Spanish GAAP. To the extent the Company prepares any interim financial statements, these will be unaudited and prepared in accordance with Spanish GAAP. See Selected Historical Financial Information. Any information contained in any of the documents specified above which is not incorporated by reference in this Prospectus is either not relevant for prospective investors for the purposes of Article 5(1) of the Prospectus Directive or is covered elsewhere in this Prospectus. 28

35 USE OF PROCEEDS The Issuer has used the net proceeds from the issue of the Senior Bonds (together with the net proceeds from the issue of the Senior Notes and the net proceeds of the Junior Loans) inter alia: (c) (d) to refinance the Existing Senior Facilities Indebtedness (including payment of break costs and hedging termination payments); to pay fees, commissions, costs and expenses incurred in connection with the above; to fund the Capex Reserve Account and the Expropriation Reserve Account; and to fund the Senior Debt Service Reserve Account. 29

36 THE COMPANY DESCRIPTION OF THE COMPANY AND THE SHAREHOLDERS Origin and identification data Autopista del Sol, Concesionaria Española, S.A. (Ausol, the Company or the Issuer) is a Spanish public limited liability company (sociedad anónima), incorporated in Madrid on 12 April 1996 with Spanish Tax ID Number A The Company is incorporated for an unlimited term. As a Spanish public limited liability company (sociedad anónima), the Company is subject to Spanish corporate law, including the restated text of the Spanish Companies Act approved by Royal Legislative Decree 1/2010, dated 2 July 2010 (Real Decreto Legislativo 1/2010, de 2 de Julio, por el que se aprueba el texto refundido de la Ley de Sociedades de Capital) and Spanish Act 3/2009 on Structural Amendments of Private Companies (Ley 3/2009, de 3 de abril, sobre modificaciones estructurales de las sociedades mercantiles). Data related to its registration can be found at the Commercial Registry of Madrid under Sheet M , Volume and Page 104. Its registered office is at Plaza Manuel Gómez Moreno, 2, Edificio Alfredo Mahou, Madrid (Spain) and its telephone number is The share capital of the Company is 156,899, represented by 25,184,490 ordinary nominal shares in bearer form with a par value of 6.23 each, fully subscribed and paid. As of the date of this Prospectus, the issued shares of the Company are owned in the following proportions: 80% Cintra Infraestructuras, S.E. (20,147,592 shares) and 20% Unicaja Banco, S.A (5,036,898 shares). Principal Activities The Company is a special purpose vehicle whose principal activities comprise the construction, maintenance and operation of two sections of the AP-7 highway (Autopista del Mediterráneo) pursuant to the relevant Concession Agreements. The first 82.7 km-long section between Malaga and Estepona (Ausol I Concession) was granted for a period of 50 years starting on 16 March 1996 and ending on 16 March The second 22.5 km-long section between Estepona and Guadiaro (Ausol II Concession and together with Ausol I Concession, the Concessions) was granted for a period of 55 years starting on 2 July 1999 and ending on 2 July The Concessions were commissioned by the Directorate General of Roads of the Secretary of State for Infrastructure, Transport and Housing of the Public Works Ministry (Dirección General de Carreteras, Organización y Funciones de la Secretaría General de Infraestructuras del Ministerio de Fomento). Directors The table below sets forth the directors of the Company as of the date of this Prospectus: Name Board position Date of appointment Terms Expires Mr. Joaquín Ayuso García... Appointment proposed by Category/status Chairman and 26 November November 2018 N/A Executive Director (1) Mr. Manuel Azuaga Moreno... Director 17 June June 2017 Unicaja Proprietary Mr. Clemente Cebrián Ara... Director 29 May May 2018 Cintra Proprietary Mr. Rufino Genaro Del Rio Aparicio... Director 22 March March 2017 N/A Independent Mr. Andrés Sacristán Martín... Director 26 November November 2018 Cintra Proprietary Ms. Cristina Álvarez Fernández... Secretary Non Director 14 July 2015 Indefinite appointment N/A Independent Notes: (1) Mr. Ayuso s appointment as Director lasts from 26 November 2014 to 26 November 2018 while the appointment as Chairman was dated 19 December 2014 for an indefinite period. 30

37 All members of the Board of Directors designate the Company s registered address as their professional address for the purpose of this Prospectus. Biographical information The following is the biographical information of each of the members of the board of directors, including a brief description of each director s business experience and education: Mr. Joaquín Ayuso García: Mr. Ayuso García has been a member of the Board of Directors of Ferrovial since He is the former CEO of Ferrovial and was the Vice-Chairman of Cintra from 2002 to Mr. Ayuso García joined Ferrovial in 1982 and in 1992, he was appointed General Manager of Construction, and later, in 1999, appointed CEO of Ferrovial Agromán. Currently, Mr. Ayuso García is also a member of the Board of Bankia, S.A. and of the National Express Group, as well as a member of the Advisory Board of the Instituto Universitario de Investigación en Estudios Norteamericanos Benjamin Franklin. In addition, he served as a member of the Board of Holcim España, S.A. Mr. Ayuso García graduated in Civil Engineering from the Universidad Politécnica de Madrid. Mr. Manuel Azuaga Moreno: Mr. Azuaga Moreno joined Ausol s Board of Directors in He is also Managing Director of Unicaja Banco, S.A. and Chairman of Unicaja s subsidiary Banco CEISS. He joined Caja de Ahorros y Préstamos de Antequera (now Unicaja) as Audit and Internal Control Manager in In 1991, Mr. Azuaga Moreno was appointed Assistant Director-General for Planning and Management Control and, in 2004, he was appointed President/Chief Executive Officer of AENA (Aeropuertos nacionales y Navegación Aérea) until He then joined Unicaja as Manager of the Affiliates division and was appointed Managing Director of Unicaja in Mr. Azuaga Moreno holds a degree in Philosophy and Arts from Universidad de Málaga. Mr. Clemente Cebrián Ara: Mr. Cebrián Ara has been a member of the Board of Directors of Ausol since He is also the current CEO of Acturus Capital, S.L., a company that owns the chain of fashion retail shops El Ganso as well as director of Karlovy, S.L.. Prior to this, Mr. Cebrián Ara has been a director of companies like Acerinox, Swissport and Portman Baela. Mr. Cebrián Ara holds a PhD in Industrial Engeneering from Universidad Politécnica de Madrid and a Master in Business Administration from IESE. Mr. Rufino Genaro del Rio Aparicio: Mr. Del Río Aparicio has over 19 years of experience in the infrastructure and construction sectors, both in Spain and in international markets. He is a civil engineer, and worked three years in Tecsa (Dragados), one of the leading construction companies in Spain, before moving to Madrid, where he has been involved since 1999 in the development of Transport Infrastructure Projects in Cintra; first at Cintra Aparcamientos (Cintra s car parking division; now Empark) in several positions: Project Manager (one year), Regional Director (three years), and Development Director (one year). Then, as Managing Director of R4 Madrid-Ocaña Motorway project (two years). In 2007, he moved to Greece where he was appointed CEO of Nea Odos, S.A. and also CEO of Kentrikí Odos, S.A. (investment of more than 2.4 billion in 6 years). In March 2011, he moved back to Spain, as Managing Director of Autopista Madrid Sur (Radial 4) and Autopista Alcala-O Donnell. In March 2013, he was named Director for Spain and Colombia projects at Cintra. Mr. Del Río Aparicio has been involved in most aspects of infrastructure projects with Cintra over the past 16 years with wide experience in Project Finance (highways and car parks). Mr. Andrés Sacristán Martín: Mr. Sacristán Martín joined Cintra in 2001 and since then, he has developed diverse positions of responsibility within the Car Park division as well as the concession company Eurolink (Ireland). Afterwards, he has been CEO of Madrid Sur (Radial 4) and Alcalá-O Donnell highways and a member of the Board of Directors of SerranoPark, S.A. - the company that manages the new car parks located at Serrano street (Madrid). He was appointed Director for Spain in July 2010 and Director for Europe since March Mr. Sacristán Martín graduated in Civil Engineering from Universidad Politécnica de Madrid. Ms. Cristina Álvarez Fernández: Ms. Álvarez Fernández is the head of the legal department of Cintra for Europe. Ms. Álvarez Fernández joined Cintra in November Previously, she was an associate at Cuatrecasas Gonçalves Pereira law firm ( ). In 2004, she worked as a lawyer in the commercial law department of the English law firm Herbert Smith Freehills at its London office. While at Cintra, she has specialised in the negotiation and implementation of public-private partnerships projects (PPPs) related to transportation infrastructure. Since joining Cintra in 2006 until 2014, Ms. Álvarez Fernández was responsible for the legal department of Cintra U.S. 31

38 Senior Managers The table below lists certain members of the Company s senior management team as of the date of this Prospectus: Name Mr. Jaime Platón Lamela Pascua Ms. Andrea Muñoz Muñoz Function Chief Executive Officer (CEO) Chief Financial Officer (CFO) Biographical information: Set forth below is the biographical information of each of the members of our senior management team: Mr. Jaime Platón Lamela Pascua: Mr. Lamela Pascua has over ten years experience as an engineer for Ferrovial Agromán and Cadagua. He previously acted as CEO for construction of the Serranopark car park Project in Madrid and as CEO for the toll road concession company Sociedad Concesionaria Autovía de la Plata, S.A. in Benavente (Zamora). Ms. Andrea Muñoz Muñoz: Ms. Muñoz Muñoz has over thirteen years experience as an economist for Cintra. She previously acted as CFO for a Spanish concession of road passenger transport in Cordoba (Spain). Conflicts of Interest To the best of the Company s knowledge, as at the date of this Prospectus, there are no actual or potential conflicts of interest amongst the members of the Board of Directors and senior management team and none of them is engaged in self-dealing or personally engaged in any business relating to the Company s activities and which could represent a conflict of interest. Management and control The Company is managed and controlled in Spain. As of the date of this Prospectus, the Company is subject to, and complies with, the Spanish Companies Act. There are no measures in place which would prevent control of the Company being exercised by its shareholders. Employees The following table sets forth the number of employees to undertake toll collection and maintenance, which as of 30 November 2015 had an average of 73 employees: Activity Area Total Toll Collection Road Maintenance Machine Equipment... 8 Control Centre... 6 Total Shareholders Cintra Infraestructuras, S.E. Cintra Infraestructuras, S.E. (Cintra) holds 80% of the Company s issued shares. Cintra has its registered address at Plaza Manuel Gómez Moreno 2, Edificio Alfredo Mahou, Madrid, 28020, Spain with additional offices in Austin, Texas (United States); Lisbon (Portugal); Bogota (Colombia) and Sydney (Australia). 32

39 Incorporated in 1998, Cintra develops and manages a portfolio of 28 concessions in countries such as Canada, United States, Spain, United Kingdom, Portugal, Ireland, Greece, Colombia and Australia with a total of 2,100 km of roadways. These assets include the 407 ETR highway in Canada and Ausol, in Spain. Cintra engages in managing the various stages of a project s life that range from the tender, financing, design, construction, and implementation of infrastructure, to operations and maintenance, and final handback to the governing body concerned. Cintra s managed investment totals more than 19,997 million as of April 2015 (the latest practicable date prior to the date of this Prospectus) and EBITDA of 257 million (2014). In 2014, Cintra was awarded #2 Global Infrastructure Developer of the Year by the Public Works Financing magazine. Additionally, the NTE roads in Texas were awarded with two ARTBA Globes by the American Road & Transportation Builders Association (ARTBA), the oldest and most highly respected U.S. transport infrastructure constructors association. Cintra is a subsidiary of Ferrovial, S.A. (Ferrovial), an infrastructure operator and industrial company with over 75 years of experience. The company operates in multiple countries in a range of sectors including construction, airport, toll road, and municipal services. Ferrovial has also a business services division in which they provide facility management, infrastructure maintenance, and energy and waste management services. Cintra Infraestructuras, S.E. has started a proceeding for transferring its registered office to The Sherard Building, Edmund Halley Road, Oxford, Oxfordshire, OX44DQ. The public deed for transferring the registered office has been registered with the Commercial Registry of Madrid but the transfer of the registered office is pending to be registered with the UK Companies House. As per article 8.10 of Council Regulation (EC) No 2157/2001 of 8 October 2001 on the Statute for a European company (SE), the transfer of Cintra Infraestructuras, S.E. and the consequent amendment of its articles of association shall take effect on the date on which Cintra Infraestructuras, S.E. is registered with the UK Companies House. The cancellation of the registration of Cintra Infraestructuras, S.E. with the Commercial Registry of Madrid, in turn, will occur once a communication of the registration of the new corporate domicile in the UK Companies House is provided to the Commercial Registry of Madrid in accordance with that established in articles 8.10 and 8.11 of the Council Regulation (EC) No 2157/2001. Cintra expects to obtain registration with the UK Companies House in April Cintra Infraestructuras, S.E. intends to transfer the shares held by it representing 80% of the share capital of the Issuer after the Issue Date to Cintra Infraestructuras España, S.L. a Spanish company with registered office at Plaza Manuel Gómez, Moreno, 2, Edificio Alfredo Mahou, that is controlled by Ferrovial, S.A. and that forms part of Ferrovial s group. The Grantor acknowledged the transfer by Cintra Infraestructuras, S.E. of its shares of the Issuer to Cintra Infraestructuras España, S.L., on 24 February 2016 and such transfer will not be considered a change of control under the Concession Agreements since Cintra Infraestructuras España, S.L. is an affiliate of Ferrovial and provided that it observes the obligations vis-à-vis the Grantor applicable to concessionaires of toll roads such as the Issuer. Unicaja Banco, S.A. Unicaja Banco, S.A. (Unicaja) holds 20% of the Company s issued shares. In the first half of 2015, Unicaja consolidated as the sixth largest banking group in Spain (source: Unicaja s half-yearly results release) with a significant presence in Castile-Leon and Andalusia, the latter being the region in which the Project is located. Unicaja was incorporated on 18 March 1991 as a non-profit charity institution with a social purpose through the merger of various local saving banks (Caja de Ahorros). As a result of the new regulation for Spanish saving banks and as part of the restructuring process of the Spanish banking system brought by the recent global economic downturn, the former savings bank was transformed into a limited liability company (sociedad anónima) in Unicaja is a member of the Spanish Confederation of Savings Banks and is a party to the Savings Banks Deposits Guarantee Fund. Its long-term debt is currently rated BBB- by Fitch. The rights of Cintra and Unicaja as shareholders in the Company are contained in Company s articles of association. The Company will be managed in accordance with those articles and with the provisions of the Spanish Companies Act approved by Royal Legislative Decree 1/2010, dated 2 July 2010 (Real Decreto Legislativo 1/2010, de 2 de Julio, por el que se aprueba el texto refundido de la Ley de Sociedades de Capital). 33

40 Financial Statements The Company has prepared its financial statements for each of the years ended 31 December 2014 and 2013 (in Spanish), in accordance with the applicable Spanish financial reporting framework (Spanish GAAP), which have been audited by Deloitte, S.L. and are incorporated by reference into this Prospectus. The Company has prepared interim financial statements as of and for the eleven months ending at 30 November 2015 in accordance with Spanish GAAP. The financial information related to this period is derived from Ausol s financial reporting system and is presented in a manner consistent with the Company s financial statements and has been subject to limited review procedures by Deloitte, S.L. Independent Auditors The Company has appointed Deloitte, S.L. as its independent auditor for each of the years ended at 31 December 2015, 2014 and The address of Deloitte, S.L. is Plaza Pablo Ruiz Picasso, 1, Torre Picasso, 28020, Madrid, Spain. Insurance The Company has entered into, among others, the following insurance policies: (c) an all risk property damage policy with Royal & Sun Alliance Insurance plc, Sucursal en España (RSA), which covers all material damage or loss that may occur in relation to the structures and roadways/pavements of the toll road for an insured amount of million and a cap on loss of profits of 70 million; an all risk property damage policy with Royal & Sun Alliance Insurance plc, Sucursal en España (RSA), which covers all material damage or loss that may occur in relation to the buildings, installations and other construction carried out within the tolling area for an insured amount of 14.6 million; and a commercial general liability insurance policy with Zurich Insurance PLC, Sucursal en España, which covers (i) public liability arising during the undertaking of Ausol s business activities, to include its own acts or omissions and those of its employees; (ii) public liability in respect of losses and damages caused by contractors, subcontractors or persons acting for the account of Ausol without any established employee employer relationship; (iii) losses, damages and injuries to third parties within the area of the toll road installations; and (iv) claims arising from road traffic accidents caused by conservation and/or maintenance issues with the road during the period of the relevant Concession. Despite not being obliged under the Concession Agreements to maintain certain levels of insurance, the Company is required to do so under the terms of the Existing Senior Facilities Indebtedness. See Loans and Borrowings Existing Senior Facilities Indebtedness. As of the date of this Prospectus, the insurance policies currently entered into by the Company comply with these requirements and good industry practices. Loans and Borrowings Participative Loan On 28 July 1999 the State granted a participative loan to Ausol for a nominal amount of 99,166, for the construction of Ausol II (the Participative Loan). For further details regarding this Participative Loan, refer to Description of the Regulatory Regime and the Concession Agreements Participative Loan Existing Senior Facilities Indebtedness Additionally, two bank facilities were made available by a syndicate of financial entities in favour of the Company for the purposes of refinancing the Project, as follows: a facility for an amount of 364,623, for the purposes of refinancing the incurred debt in respect of the construction and maintenance of the first 82.7 km-long section between Malaga and Estepona (Ausol I Facility), pursuant to the facility agreements dated 19 March 2007, as amended on 17 March 2010, 12 April 2010, 16 March 2011 and 17 June 2011; and 34

41 a facility for an amount of 127,620, for the purposes of refinancing the incurred debt in respect of the construction and maintenance of the second 22.5 km-long section between Estepona and Guadiaro (Ausol II Facility and, together with Ausol I Facility, the Existing Senior Facilities Indebtedness), pursuant to the facility agreement entered into on 19 March 2007, as amended on 17 March 2010, 12 April 2010, 16 March 2011 and 17 June Although the facilities described above were executed separately, they constituted a single financing for both Concessions and, as such, Ausol maintains a single financial accounting in respect of both Concessions. Subordinated Credit Facility A subordinated credit facility was made available by Ferrovial and Cintra in favour of the Company, for an amount of 12,531,000; pursuant to a commercial facility agreement dated 17 June 2011 (the Subordinated Credit Facility). As of 30 November 2015, the Subordinated Credit Facility is outstanding in an amount of 3,616,989. Authorisation to issue Senior Bonds By a decision dated 19 February 2016, Ministry of Economy and Competitiveness (Ministerio de Economía y Competitividad), following the favourable report from the Government Delegation in the Concessionaire Companies of National Toll Roads (Subdelegación del Gobierno en las Sociedades Concesionarias de Autopistas Nacionales de Peaje), authorised the issuance of the Senior Bonds. See Description of the Project and the Concession Agreements Financing Restrictions. On 14 March 2016, the Company filed notice to the Government Delegation in the Concessionaire Companies of National Toll Roads to inform the Grantor of the signing of part of the Finance Documents and the final terms of the financing. Technical Adviser Ove Arup & Partners Limited (Arup) has been appointed as Technical Adviser. Arup is a global management, engineering and development consultancy adding value for public and private clients on agenda-setting and next-generation projects worldwide. Tribunal, administrative and arbitration proceedings The Company is not involved in any legal or arbitration proceedings (including any proceedings which are pending or threatened of which Ausol is aware) which may have or have had in the 12 months preceding the date of this Prospectus a significant effect on its financial position. The principal litigation to which Ausol is currently a party is set out below: Administrative appeal 896/2015 filed before the High Court of Justice of Madrid (Tribunal Superior de Justicia de Madrid) regarding a Company claim against the Ministry of Public Works (Ministerio de Fomento) in relation to the obligation to supply electricity to Nagüeles tunnel. The amount of the procedure cannot be ascertained as at the date of this Prospectus but the Company has provisioned an amount of 782, in the financial statements for the eleven-month period ended 30 November expropriation procedures in an amount of 28,816, For more information, see - Expropriations and Summary of Advisers Reports Expropriation Report. Expropriations There is a legislative framework procedure which operates in Spain so as to expropriate land and other assets for use in the public interest, for example in the case of building certain infrastructure assets. Under this procedure, used in the case of the Project, the affected person and the expropriating entity will first try to reach an agreement with respect to the price payable for the relevant assets (in this case, the land on which the road was built). Failure to reach an agreement results in a process being commenced which may end up in a specialist body, charged with regulating such matters, fixing a fair price for the relevant assets. 35

42 As of 8 February 2016, the total number of expropriation cases Ausol has been involved in with respect to the Concessions is 909, of which 884 have been satisfactorily settled. Getinsa-Payma (Getinsa) have estimated Ausol s risk with respect to ongoing expropriation processes to amount to 28,816, for more information, please see the Summary of Advisers Reports section of this Prospectus. Getinsa s estimations are based on the criteria applied by the juries in the cases that have already been settled. Such estimations are as follows: Expropriation Risk Annual Estimate Year Principal (EUR) Interest (EUR) Total (EUR) , , ,219, , , , Ausol I and II , , , ,007, , ,739, ,487, ,109, ,597, Total 16,286,102,98 12,529, ,816, As of 8 February 2016, the maximum financial risk was estimated at 28,816, This amount does not reflect the real net financial risk for the Project due to the fact that a total amount of 25.6 million, expected to be paid in 2021, relates to a single case in which Ausol has already paid 6 million. This amount should not have a negative impact on base case cash flows as it will be covered by the Expropriation Letters of Credit. As of 31 December 2015, the amount of the expropriation reserve account is 405,

43 DESCRIPTION OF THE PROJECT Introduction The legislative centrepiece which regulates the general framework for concessions and concession companies is Law 8/1972 of 10 May on the construction, maintenance and operation of highways under concession (Law 8/1972) and Decree 215/1973 of 25 January, on General Terms for the Construction, Conservation and Exploitation of Roads in a concession regime (Decree 215/1973) (and specifically for toll roads). Such requirements are later developed under the particular terms and conditions relevant to each concession. Please refer to section Description of the Regulatory Regime and the Concession Agreements Applicable legislation and relevant documents for the Concessions for an overview of the more relevant legislation applicable to the Project, being the construction, conservation and exploitation of the Malaga-Estepona and Estepona-Guadiaro toll stretches of the AP-7 highway (the Project). Details of the Project The toll road which is the subject of the proposed transaction described in this Prospectus forms part of the AP-7 (Autopista del Mediterráneo), the highway that runs from La Jonquera on the French border to Cadiz, linking the main cities along the Spanish Mediterranean coast and representing one of the most significant tourist areas in the country. There are a limited number of points of entry to the stretches corresponding to the Concessions, which favours long-distance journeys. The alternative routes that exist are urban roads running along the coast that predominantly take local traffic travelling for short distances and on which roundabouts and urban crossings are located. The Project comprises two sections: one from Malaga to Estepona (Ausol I) and a shorter one from Estepona to Guadiaro (Ausol II) (together, the Concessions), which cover adjoining but distinct sections of the AP-7 highway, including three tolled stretches and three bypasses. 37

44 Ausol I Ausol I stretches along the Malaga-Estepona section of the AP-7 highway. It is 82.7 km in length and was opened to traffic in June The Concession has two tolled sections with toll plazas at Calahonda and San Pedro. No tariffs are charged on the Benalmádena, Marbella and Estepona bypasses. There are 27 large structures forming part of Ausol I, including six tunnels with an aggregate length of 3.1 km. The initial construction investment was approximately 300,000,000 and the term of the Concession is 50 years from the relevant award, being from 16 March 1996 to 16 March Ausol II Ausol II stretches along the Estepona-Guadiaro section of the AP-7 highway. It is 22.5 km in length and was opened to traffic in August The Concession has one toll plaza at Manilva. There are six large structures forming part of Ausol II, including four tunnels with an aggregate length of 2.75 km. The initial construction investment was approximately 180,000,000 and the term of the Concession is 55 years from the relevant award, being from 2 July 1999 to 2 July Both Ausol I and Ausol II have two lanes in each direction, other than in the case of the Benalmádena and Marbella bypasses (both of them part of Ausol I), which have three lanes running in each direction. The Estepona bypass (also part of Ausol I) has two lanes in each direction. The Concessions run parallel to the N-340/A-7 highway, a national road widened and converted to a dual carriageway road with two lanes in each direction and which in practice works as a free alternative. The road has a double function: it connects the main cities and towns along the coast; and it provides access to the properties and commercial areas located along the route. As the A-7 highway was not originally conceived as such, the road features a considerable number of poorly designed junctions, including short ramps to exit and access, as well as short lanes for merging or exiting the road. The maximum speed allowed on the alternative route between Malaga and Estepona is 80 to 120 kph, while on the alternative route from Estepona to Guadiaro it is limited to the range of 60 to 80 kph. The fact that the N-340/A-7 highway crosses densely urbanised areas and the main tourist and commercial developments on the coast renders it almost impossible to widen them in order to increase their capacity. To the extent of the Company s knowledge, there are no plans in the future to build a road that could compete with the Concessions. Construction The Ausol construction works were carried out by a wholly owned subsidiary of Ferrovial Agromán, S.A. (formerly, before their merger, Grupo Ferrovial, S.A. and Agromán Empresa Constructora, S.A.) under the following construction contracts, each as approved by the Ministry of Public Works: Construction contract for the Malaga-Estepona stretch of the Project, dated 16 April 1997 (and supplemented on 23 October 1997); and Construction contract for the Estepona-Guadiaro stretch of the Project, dated 8 November Ferrovial Agromán, S.A. is the unit through which Ferrovial carries out civil engineering construction, building and industrial projects. It is internationally renowned for its design capacity and construction of all kinds of projects, and primarily for its major transport infrastructures. Construction works in respect of the Concessions were completed within the terms and budget under each of the contracts. Both Concessions are fully operational, with historic traffic information available in respect of Ausol I over a 15-year period (i.e. since 1999) and in respect of Ausol II over a 13-year period (i.e., since 2002). 38

45 Traffic Information and toll regime Ausol s income depends principally on toll receipts. For each of the years ending on 31 December 2014 and 2013, over 96 per cent. of Ausol s income has historically been derived from toll receipts and it is expected that this trend will continue in the future. A summary on traffic levels and the toll regime is set out in the following sections. Traffic Information The coastal strip that includes the AP-7 highway is a highly dynamic corridor, catering for both long-distance and tourist traffic. Traffic levels in both Ausol I and Ausol II experienced increases in the period, reflecting population growth and in particular the extensive and predominantly tourist developments that have been constructed along the route of the Concessions. The annual daily traffic compound average growth rate in during this period in respect of Ausol I was 6.8 per cent., and 10.8 per cent. in respect to Ausol II. In 2007 both Concessions reached their highest volume of utilisation, with almost 20,000 vehicles per day (20,365 and 19,072 vehicles, respectively). Traffic levels experienced decreases in the period, as a result of the general decline in global and local economic activity. AADT levels fell at a compound average rate of 10.3% to reach levels of 10,000 and 12,000 vehicles per day in Ausol I and Ausol II respectively. In 2014 the total number of vehicles started growing again at a rate of 3.5% and 2.3% per annum. As of and for the eight months ended 31 August 2015, traffic has seen an increase of approximately 10% when compared with the eight months ended 31 August Annual Average Daily Traffic in 2015 is expected to have grown at a rate of 12.0% and 9.6% for Ausol I and Ausol II, respectively, compared to 2014 (source: SDG report). This growth can be explained by the economic recovery in the region as well as by the growth in tourism figures derived from the political and economic instability in holiday competing destinations in the Mediterranean area. Historical traffic data going back to 1999 is set out below (for each individual Concession): AUSOL I AUSOL II Year Annual Average Annual Average % Daily Traffic Daily Traffic % ,309 - N/A , % N/A , % N/A , % 11, , % 13, % , % 14, % , % 16, % , % 17, % , % 19, % ,621 (8.6%) 17,640 (7.5%) ,208 (13.0%) 16,049 (9.0%) ,901 (8.1%) 15,284 (4.8%) ,610 (8.7%) 14,341 (6.2%) ,986 (11.9%) 13,057 (9.0%) ,806 (9.8%) 12,583 (3.6%) , % 12, % , % 14, % Source: Steer Davies Gleave with information from Cintra. 39

46 The historic AADT and annual rate increases during the period are shown below: Source: Steer Davies Gleave based on data provided by Ausol SDG, as independent traffic consultant, has undertaken an analysis of the traffic levels and has estimated future traffic levels across the Concessions. The Traffic Report sets out such projections and also includes information on historical AADT, growth in traffic levels and what SDG consider to be the drivers of such growth. See Summary of Advisers Reports Traffic Report. Toll regime Toll receipts are the main source of the Company s income. Revenues from toll receipts amounted to 43,942,304 (VAT excluded) in 2014, 95.6% of the Company s income for that year. Tariffs are calculated by the distance travelled and can vary according to the following three factors: type of vehicle (Light, Heavy I and Heavy II); the time of year (high or low season); and frequency of travel. Vehicles are classified according to its features, as follows: Light vehicles include: cars, motorcycles, small vans and minibuses with or without trailers with single wheels; Heavy 1 vehicles include: trucks with two or three axles, vans and minibuses with trailers with twin wheels; and Heavy 2 vehicles include: trucks with four or more axles and coaches with two or more axles. Toll rates vary by vehicle type and depend on the time of year. High season rates apply during the summer months of June, July, August and September and during a 17 day period over Easter commencing on the Friday falling one week and one day before the Easter weekend and running until the Sunday following Easter Sunday, both inclusive. 40

47 Set out below is a table displaying the tolls currently applicable, depending on type of vehicle, period and Concession: Low Season Tolls 2015 (Eur) AUSOL I AUSOL II Section Light Vehicle Heavy Vehicle I Heavy Vehicle II Malaga-Marbella Marbella-Estepona Total Ausol I Estepona-Guadiaro Total Ausol I and II High Season Tolls 2015 (Eur) AUSOL I AUSOL II Section Light Vehicle Heavy Vehicle I Heavy Vehicle II Malaga-Marbella Marbella-Estepona Total Ausol I Estepona-Guadiaro Total Ausol I and II Whenever the toll rate is paid using the same payment method (i.e., the same credit card or tag/on board equipment), discounts are applied depending on the total number of trips made each month. Additionally, it is common for frequent users to pay the normal fare throughout the year. Discounts can be up to 50% as shown in the table below: Number of Trips per Month Discount 1 st to 10 th trips - 11 th to 15 th trip 5% 16 th to 20 th trip 10% 21 st to 25 th trip 20% 26 th to 30 th trip 30% 31 st to 35 th trip 40% From the 36 th trip onwards 50% The toll tariffs are reviewed annually and are adjusted in accordance with the annual variation of the CPI and usage for each Concession for the previous year versus the bid offer forecast. In 2000, by means of Royal Decree 429/2000 of 31 March the toll tariffs for Ausol I (together with other toll roads in Spain) were not reviewed. In 2004, the lack of tariff review gave rise to the enactment of Royal Decree 2219/2004 under which the Company was compensated for the difference between the tariffs received in the Ausol I Concession from April to December 2000 and the tariffs that the Company should have received had the annual review been undertaken. Changes to the toll tariffs are derived from the following formula: Where: = 1 + =1/100 [ Est_ ]/ Est_ with 0 X 1 = Observed real daily total traffic _ = Traffic forecasted in the Bid 41

48 The X factor is only applied when the actual traffic is higher than the traffic forecasted in the bid offer. The value of X has been historically very small, so in practise tariffs have increased following inflation rates. The following figure illustrates the changes in tariffs for both Concessions: Source: Cintra and INE The different increase in tariffs between the Concessions can be explained by the application of the X factor adjustment, which has been different in each Concession. This is due to a higher than expected traffic in Ausol II until Both CPI variation and consequently the tariff change may be negative. An example in respect of Ausol I for the year 2010 follows: X = 1/100 x [(16,375-21,109)/21,109] = (Given x cannot be negative it is treated as being zero). CPI variation was In this case: Tariff Increase = 1 + ( ) + 0 = Each year, prior to 1 December, Ausol makes a request to the Ministry of Public Works to carry out a review of the tariffs. Part of this request will include the filing of a proposal on the part of Ausol with respect to the adjustment to be made. Within 30 days the Ministry of Public Works issues an order setting out the revised tariffs which are to apply from 1 January. The most recent review of the tariffs was carried out by virtue of a Ministry Order dated 10 December The table below illustrates historical adjustments to the toll tariffs for each Concession: 42

49 AUSOL I AUSOL II Year CPI and Tariff CPI and Factor X other Increase other Factor X % % % % % % Tariff Increase % % % % % % % % % % % % (0.07%) (0.07%) % % (Jan-Jul) (1) 3.21% % (Ago-Dec) 7.53% % % % % % % % Notes: (1) Royal Law Decree 6/1999 implemented, among other measures, a 7% tariff reduction for toll roads operated through a concession regime. The Royal Law Decree affected the Ausol I Concession. The Grantor, at the end of each financial year, compensated this reduction with an equivalent to the difference between the revenue that Ausol would have achieved if the tariff reduction was not implemented and the revenue earned during the year increased by the relevant statutory interest rate. The rule was derogated through Royal Decree 20/2012 and, consequently, tariffs increased in 2012 well above inflation (by 7.53%) to compensate this loss. Operation and maintenance Ausol employs a full time maintenance team in order to ensure the proper day-to-day maintenance of the Road. See Description of the Company and the Shareholders The Company for details of Ausol s management team and employees. Additionally, Cintra (itself or through third parties) provides Ausol with information systems, as well as, among others, technical, financial, HR, legal and administrative services under the Cintra Service Agreement in consideration for an amount of 1,714,614 in 2014 and 1,736,404 in 2013 (VAT excluded), in line with previous experience in relation to the operation and maintenance of concession roads of this nature. In the eleven months ended 30 November 2015, Cintra received 1,596,479 (VAT excluded) for these services. Ausol has previously engaged a variety of reputable construction companies to perform such major maintenance work. Ausol operates by means of a procurement process when deciding upon which entity to engage, taking into consideration both technical capabilities and specific expertise and experience. Exploitation Contracts In addition to revenues from toll receipts, Ausol generates revenues from exploitation contracts. Revenues from these contracts aggregated 2,036,561 (VAT excluded) in 2014, 4.43% of the Company s revenue for that year. Ausol has entered into two exploitation agreements in relation to: Three service semi-areas located on Ausol I, entered into with Repsol, S.A. (Repsol) and terminating on 6 November Repsol pays Ausol the price of the construction work for the service semi-areas up to 7,931,833 (VAT excluded) plus a royalty proportional to its annual sales. One service semi-area located on Ausol II, entered into with Compañía Española de Petróleos, S.A. (Cepsa) and terminating on 2 July Cepsa pays Ausol the price of the construction work for the service semi-areas up to 3,289,350 (VAT excluded) plus a royalty proportional to annual sales. Termination events applicable to both contracts include: expiration of the term; termination of the relevant concession; (c) substantial breach of one party s obligations; and (d) the insolvency of either party. 43

50 In the event of early termination or rescission of any of the contracts by reason of force majeure, Ausol shall repay Repsol or Cepsa, as applicable, an amount corresponding to the time period in which the relevant service area may no longer be used. Additionally, Ausol has entered into the following agreements: Framework agreements permitting France Telecom España, S.A. (now Orange Espagne, S.A.), Vodafone España, S.A. and Jazz Telecom, S.A. to use part of Ausol s surplus fiber optic network. Agreements with Balearia Eurolínea Marítimas, S.A. for the exclusive use of two of the three installations in Ausol I and the installations in Ausol II in order to sell ferry tickets and use of Arabic bathrooms and prayer areas. Agreements with Ferrys Rapidos del Sur, S.L. for the exclusive use of the third installation in Ausol I for the ticket sales and use of Arabic bathrooms and prayer areas. 44

51 DESCRIPTION OF THE REGULATORY REGIME AND THE CONCESSION AGREEMENTS Applicable legislation and relevant documents for the Concessions The construction and operation of public roads pursuant to work concessions granted by public authorities to third parties are regulated in Spain by public laws which govern the construction, maintenance and operation of public roads and contractual arrangements between the private parties and the Spanish public authorities (grantors). Currently, contracts entered into with public authorities in Spain are governed by the Consolidated Text of the Public Sector Contract Law, adopted by Royal Legislative Decree 3/2011 of 14 November (TRLCSP). Prior to TRLCSP, public contracts had been governed by Law 30/2007, dated 30 October, on public sector contracts and previously by Royal Legislative Decree 2/2000, dated 16 June, or by Law 13/1995, of 18 May on Public Sector Contracts (LCAP), among others. The Concessions were awarded under LCAP and are subject, as a general matter, to LCAP to the extent not otherwise regulated in Law 8/1972 and Decree 215/1973. Additionally, particular regulations govern the terms of the Concessions as follows: (i) (ii) (iii) (iv) (v) (vi) particular terms and conditions of Ausol I, approved by Order 27 July 1995, published in the Official State Bulletin (Boletín Oficial del Estado) number 183, of 2 August 1995 (PT Ausol I); particular terms and conditions of Ausol II, approved by Order 23 December 1998, published in the Official State Bulletin (Boletín Oficial del Estado) number 313, of 31 December 1998 (PT Ausol II); award of Ausol I by means of Royal Decree 436/1996, of 1 March, published in the Official State Bulletin (Boletín Oficial del Estado) number 65, of 15 March 1996; award of Ausol II by means of Royal Decree 1099/1999, of 18 June 1999, published in the Official State Bulletin (Boletín Oficial del Estado) number 156, of 1 July 1999; Service Regulations (Reglamento de Servicio) of Ausol I, authorising the servicing of the road by Ausol, approved by virtue of Order of 12 July 1999, published in the Official State Bulletin (Boletín Oficial del Estado) number 180, of 29 July 1999; and Service Regulations (Reglamento de Servicio) of Ausol II, authorising the servicing of the road by Ausol, approved by virtue of Order FOM/2076/2002, of 2 August 2002, published in the Official State Bulletin (Boletín Oficial del Estado) number 194, of 14 August Public tender process and award As other contracts with public authorities, works concessions for public roads are awarded through a public tender process whereby the public authorities select the best bid submitted by the tenderers and enter into the contract with that private tenderer. The specific conditions of the concession contract are set forth in the technical and administrative term sheets (Pliegos de Cláusulas Administrativas Particulares y Pliegos de Prescripciones Técnicas) published by the public authority together with the public tender announcement. Tenderer s bids must adapt to the conditions set forth in the published term sheets. These conditions may differ and establish particular legal, economic and technical terms for each type of contract and for each project. As mentioned above, the specific legal and contractual regime applicable to each concession contract is determined by the contract documents -which mainly include the terms of tender for the concession, the selected bid, the awarding resolution and the contract itself- as well as the relevant legislation in effect at the time the concession was awarded. Type of contract Public roads may be operated generally under three different types of public contracts: (i) a contract for the management of a public service without works; (ii) a contract for the management of a public service with 45

52 works; and (iii) a contract for a concession of public works (work concession) which includes relevant works for the construction of the infrastructure and the render of services for the maintenance of the infrastructure. The Project is a work concession. Rights of the Grantor Given the public nature of concessions, there are certain privileges afforded in favour of the administration as well as specific obligations imposed on it, including those referred to below. Granting concessions is a specific activity of the public sector and, hence, the grantor administration is provided with certain privileges in relation to the agreement, as specified below: The privilege of determination: the Grantor is entitled to interpret the concession agreements and to resolve any questions in relation to its fulfilment, amend the concession agreements for reasons relating to public interest, (c) terminate the concession agreements and (d) determine the effects of termination of the concession agreements. The privilege of ius variandi : the Grantor can modify the provisions of the concession agreements unilaterally if new needs or unforeseeable circumstances arise in accordance with articles 24 and 25 of Law 8/1972. The privilege to declare the termination of a concession: the Grantor is entitled to terminate a concession agreement if doing so is in the public interest, through the rescue (rescate) of the relevant concession as described below. Any decision taken by the Grantor in respect of any of the privileges referred to above may be challenged by Ausol before the courts. Term and renewal of administrative concessions For any concession, the contract and the terms of the tender will establish the specific contract s term, which may not exceed the maximum term permitted by the relevant legislation. Under the applicable legislation to the Project, the term of contracts for the construction and operation of highways under concession is established in the awarding resolution. The Concessions term is 50 years in section Malaga to Estepona (Ausol I), and 55 years in section Estepona to Guadiaro (Ausol II), counted from the day following the announcement of the awarding resolution in the Official State Bulletin (Boletín Oficial del Estado; i.e. until 16 March 2046 Ausol I, and until 2 July 2054 Ausol II). In certain circumstances, the term may be extended provided that such possibility of extension had been contemplated in the terms of tender and that the maximum term permitted by the relevant legislation is not exceeded. According to the applicable legislation to the Project, exceptionally, when the grantor imposes certain modifications, the financial balance of the contract may be restored by means of the extension of the concession term within the legal maximum term of 75 years. Once the term of the contract expires (including the envisaged extensions), the contract may not be renewed without undergoing a public tender process. Obligations of the Company Ausol s main obligations are: to carry out the works to build the Road; and to operate the Road. Construction of the Road has been completed. Ausol I has been in operation since 29 June 1999 and Ausol II has been in operation since 12 August

53 In addition, Ausol s other obligations are as follows: road-widening obligation: in the event that the Road is not sufficient to provide the service for which it was built, the Concessions require Ausol to widen the route at its own cost in accordance with clause 17 of PT Ausol I and clause 19 of PT Ausol II. No such work is expected to be undertaken during the life of the Senior Bonds other than that described in the paragraph below. Based on current traffic projections the only widening works that are anticipated relate to a third lane to be incorporated into Ausol I, to be built by 2037/8 at Ausol s own cost and for which provision has been made. The cost of such work has been estimated at 106,000,000. maintenance works for tunnels: Ausol must carry out such maintenance works as are necessary to ensure the proper and safe operation of the tunnels and their installations. In the event a significant incident and/or accident occurs in the tunnels, Ausol must prepare a report to be sent to the General Road Direction from the Ministry of Public Works (Dirección General de Carreteras del Ministerio de Fomento), the public authority that manages tunnels. Where an inspection of the tunnels has been carried out which highlights any failure to meet the required safety standards, Ausol shall adopt those measures necessary to remedy such failure within the timeframe proposed by the Grantor. (c) maintenance of the Road: although the Concessions do not explicitly refer to the relevant standards to be met, Ausol interprets the Concessions (and case law supports its view) as requiring that the Road, access points, signs and electronic traffic information systems be kept in such manner as one would expect of a reasonably diligent operator of the same road. There are a number of ways in which the Grantor can verify whether Ausol is complying with its obligations under the Concessions. The Grantor is required to approve the accounts of Ausol in respect of each financial year. In addition to any other powers the Grantor has to approve proposals, receive information or otherwise as set out in the Prospectus, it is entitled to: require general access to the project in order to undertake periodic inspections (of the Road/tunnels etc); and receive such information from Ausol as it deems necessary, to include the ability to review its books and accounts. Risk assumption The works are executed and the concessions are operated at the concessionaire s risk (riesgo y ventura). Modifications of the Concessions As part of its rights (see Rights of Grantor above), the Grantor may introduce changes in the contract for public interest, duly justifying its necessity, and provided the modification is due to new needs or unforeseeable causes. In this regard, extensions on the purpose of the contract that cannot be integrated into the initial project through an amendment thereof or consisting in providing independent use or directed to satisfy new purposes, may not be considered as modification of the contract. When the modifications of the concessions imposed by the authorities affect the contractual financial balance, the financial plan may be reviewed to rebalance the contract. See - Economic and Financial Plan. Concept of economic-financial rebalancing below. In the case of the Project, the services to be rendered by Ausol as well as the tariffs applicable to both Concessions may be modified for public interest. Economic and Financial Plan. Concept of economic-financial rebalancing Bidders in the tender process are required to submit an economic and financial plan for the concession together with their bid. This plan includes, among others, a detailed description of the system of tariffs, investment and operating costs, payment obligations and the direct or indirect estimated financial costs. 47

54 The Spanish toll road sector is highly regulated. Concession projects generally require high levels of investment (both initially and, to a lesser extent, for replacement) and always generate negative cash flows during construction as well as in the first few years of operation. This results in significant initial financial leverage of the project and a temporal dissociation between finance and operating revenue. The Grantor and the concessionaire will therefore seek to establish an economic financial plan for the life of the particular project in order that the concessionaires initial investment is recouped and profits may be earned. As mentioned, the grantor of public concessions has certain privileges as that to amend the contract for public interest or interpret the terms of the contract. These privileges are subject to an administrative procedure which includes the concessionaire s views being heard. The authority s decisions can be challenged in court. As a result, the authority cannot interpret the contract or amend it contract based on any political initiative but only under within the contractual terms and according to public interest reasons. The concept of reasons of public interest is not clearly defined in case law, and there is a risk in the interpretation of this concept by the grantor. In any event, the grantor must justify the existence of the reason of public interest in each particular case, and this interpretation may be challenged in court. In general, public contracts, and particularly the Concessions, are subject to the concessionaire s own risk (propio riesgo y ventura). According to this principle, the concessionaire must assume the consequences that, in economic terms, may arise from the execution of the contract, as they were agreed. Under Spanish law, the concept of financial rebalancing (or equilibrium principle) arises as a way to modulate the contractor s risk and venture. In simple terms, the equilibrium principle aims to control that, when changes in the financial plan do not correspond to the normal execution of the contract but to an authority decision or other extraordinary circumstances, the financial rebalancing is approved by the grantor in order to guarantee the continuity of the contract and the public service under it. In general terms, the public authority may rebalance the economic terms of the contract upon the occurrence of mainly three general types of events if such events result in a change which is detrimental to the concessionaire in the fundamental economic balance that existed when the contract was awarded (and not just in a mere reduction of the expected profits of the concessionaire): (c) modifications of the contract imposed by the grantor due to public interest reasons; the authority s acts or force majeure events which directly lead to a substantial breach of the economy of the contract; and when any of the events occur or circumstances arise that, according to the terms of tender, might lead to restoring the economic balance excess. The concessionaire can claim for the financial rebalancing to the grantor, evidencing the rebalancing event and the real effects of that event on the existing financial plan approved as part of the contract. The rebalancing can be implemented by means of the modification of any economic condition of the contract. The specific terms of the tender may limit the general circumstances for financial rebalancing. In this regard, the term sheets of both Concessions provide that when a certain traffic intensity is reached, the concessionaire must increase the service as necessary with no right for any compensation. For more information see Obligations of the Company above. The acknowledgement of financial rebalancing in favour of the concessionaire generally implies an amendment to the terms of the contract. Therefore, the rebalancing provisions are considered to be effective from the moment of the contract amendment, without prejudice to the possibility of taking into consideration when the change that prompted the rebalancing occurred when deciding the scope of the rebalancing. As of the date of this Prospectus, and other than amounts of compensation payable in connection with the adjustment of tariffs (as described at Description of the Project Traffic Information and toll regime above), the Grantor has not exercised the privilege of ius variandi and no other payments have been made pursuant to the financial balance principle, as described above, in connection with the Concessions. 48

55 Capital Structure Ausol I A minimum share capital of 25 per cent. of the total investment in the construction of Ausol I must be maintained at all times. As the total investment figure increases, for example upon expropriation payments being made, the minimum share capital commensurately increases. As of 31 December 2015, the share capital attributed to Ausol I represented 26 per cent. of total investment in Ausol I. Total investment includes equity paid in by shareholders and third party financing. Ausol II In the case of Ausol II, the minimum share capital is in an amount of 10 per cent. (of the total investment, which can fluctuate in the same manner as described in respect of Ausol I). As of 31 December 2015, the share capital attributable to Ausol II represented 11 per cent. of total investment in Ausol II. Total investment also includes the Participative Loan. Operational Bonds Ausol is obliged to maintain Operational Bonds until the end of each Concession term, one in respect of each Concession and each one being in favour of the Grantor (the Operational Bonds). This is required principally to secure performance of Ausol s road maintenance obligations. The quantum of such Operational Bonds is 2 per cent. of the total investment amount for each Concession, excluding VAT. Annual revisions to the quantum of total investment are made upon application of the Company addressed to the regional Government Representation, acting for and on behalf of the Grantor (Delegación de Gobierno). The application sets out the amount of Operational Bonds held at the time of the application together with a Company s proposal to increase, maintain or decrease the amount held in Operational Bonds. After consideration, the Government Representation on behalf of the Grantor issues a notification approving the terms under which such amount must be revised, taking into account expropriation amounts paid during the previous year, which are added to the previous year s total investment. As a result, Ausol is required to either issue new Operational Bonds or increase the quantum of each Operational Bond then in place to cater for annual expropriation amounts paid in respect of each Concession in order to satisfy the 2 per cent. total investment requirement. The annual revisions also take into account corrections resulting from the application of the coefficient applicable for the review of annual tariffs. Applications for the annual revision were filed for the year ended 31 December 2014 without having received any notification from the Government Representation or the Grantor. As of 31 December 2014, the Company estimated that the amount held in the form of Operational Bonds was required to be increased by 2.28 million with respect to Ausol I Concession and 0.3 million with respect to Ausol II Concession. As of the date of this Prospectus, Operational Bonds amounts to 19.4 million and 5.82 million for Ausol I Concession and Ausol II Concession, respectively. See Description of the Project Traffic Information and toll regime above. Unicaja has historically acted as the financing counterparty in respect of the Operational Bonds, although it is not obliged to act in such capacity going forward and Ausol does not have a committed line of financing in place in respect of the Operational Bonds or other guarantees that may be required for the Project see Risk factors No credit line for Operational Bonds or working capital facility. Dividend Restrictions Ausol I In accordance with clause 54 of Decree 215/1973 where the profit in any financial year is greater than 10 per cent. of the nominal value of the share capital, Ausol must contribute 50 per cent. of such excess to a statutory reserve account. Amounts so contributed may be distributed to shareholders, subject to compliance with Spanish company law. Ausol II Subject to compliance with Spanish company law, Ausol may distribute dividends from its reserves and from the profits of any financial year. 49

56 Financing Restrictions Without prejudice to the requirement to comply with the minimum share capital ratios set out above, any additional resources necessary to finance the Project, together with anticipated costs, may be sourced by Ausol without any significant limitation in terms of their nature and the proportion between equity and those thirdparty resources. Ausol is not entitled to incur indebtedness which would have a longer term than either Concession, or if issued after 16 March 2021, result in an increase in Ausol s net indebtedness. Additionally, in respect of Ausol I, the amount attributed to Ausol I of any bond issue shall not be in an amount greater than three times the paidup share capital attributed to Ausol I. After the issue of the Senior Bonds, Ausol shall be in compliance with these requirements and those established in respect of the minimum share capital. Participative Loan On 28 July 1999 the State granted a Participative Loan to Ausol in a nominal amount of 99,166, for the construction of Ausol II. The particular terms of the PT Ausol II indicate that the Participative Loan is considered to be a participative loan within the definition set out under section 20 of Royal Decree 7/1996, meaning that the principal amount of the Participative Loan is considered as equity for the purposes of Spanish company law and the State, as lender under the loan and, in the case of an insolvency of Ausol, will be subordinated to other ordinary creditors. The State would, however, have priority to claims made in respect of subordinated loans provided by Ausol s shareholders. 25 per cent. of the principal amount of the Participative Loan ( 24,791,479.30) was made available to Ausol three months after its incorporation. The remaining portion ( 74,375,517.92) was made available to Ausol three months after commencement of the works relating to Ausol II. The first tranche of the Participative Loan matured on the transfer by Ausol to the State of the totality of the complementary works of splitting the N340 highway between Estepona and Guadiaro. Upon such transfer, the proportion of the loan amounting to 30,461,697.50, being the total investment amount foreseen for such works, matured and was repaid. As of 30 November 2015, the outstanding amount of the Participative Loan was 68,705, This amount is payable in January of the last year of the Ausol II Concession period (i.e. January 2054). Interest payable under the Participative Loan is dependent on the following conditions: Daily Average Intensity of traffic in Ausol II being greater than in 2001 (i.e. 8,000 vehicles); and an annual growth beyond the levels set out below: Period Annual Growth % % % % % % If both conditions are met, the Grantor is entitled to receive by way of remuneration 50 per cent. of toll revenue (net of VAT) for the amount in excess of such annual growth levels. Remuneration is payable to the Grantor during the following financial year (one month after the approval of the accounts by the Government Delegation in the Concessionaire Companies of National Toll Roads, which generally falls during the month of July). 50

57 Authorisations Under the Concessions terms, any bond issue and/or any other financing transaction relating to the Road requires the pre-approval of the Ministry of Economy and Tax (Ministerio de Economía y Hacienda). According to the current distribution of powers between both Ministries (Economy and Tax), the authorisation would be granted by the Ministry of Economy and Competitiveness (Ministerio de Economía y Competitividad), based on a prior report of the Government Delegation in the Concessionaire Companies of National Toll Roads, without prejudice to any general authority of the Spanish National Securities Market Commission (Comisión Nacional del Mercado de Valores). Application was made on behalf of Ausol on 25 January 2016 to the General Secretariat of Treasury and Financial Policy (Secretaría General del Tesoro y Política Financiera) within the Ministry of Economy and Competitiveness, for its approval in respect of the bond issue and the financing transactions described in this Prospectus. The approval of Ministry of Economy and Competitiveness, based on the prior report of the Government Delegation in the Concessionaire Companies of National Toll Roads, was granted on 19 February Concession tariffs and other remuneration arrangements The terms of the tender of both Concessions as well as the awarding resolutions establish the basic tariff schemes to remunerate the concessionaire (see Description of the Project Traffic Information and toll regime ). Authorisations and change of control clauses Usually public authorities impose certain restrictions on the transfer of ownership of the concessionaire and the guarantees and security interests that the concessionaire can grant to third parties. For example, the concession contract may require the prior authorisation of the public authority in order for the concessionaire to grant a mortgage over the concession. In some cases a concession contract may contain a clause which prohibits the transfer of the concession without the prior approval of the public authority, or may rule the requisites for the transfer of shares of the concessionaire. In addition, public authorities may terminate the concession in the event that insolvency or winding-up proceedings are instituted against the concessionaire. The terms of the Concessions do not contain a change of control clause, therefore the legal regime applies. According to this legal regime (LCAP), the assignment of the Concession is subject to the following requisites: (c) (d) the grantor expressly authorises the assignment; the assignment must be executed in a public deed; the assignee must have the required capacity to contract with public authorities and meet the solvency requirements that the awardee had to meet at the time the concession was awarded; and the assignor must have performed at least 20% of the price of the contract, or operated it for at least one fifth of their duration in the case of services concessions. The similarities between the services concessions and the works concessions raise the question of which of these two requirements is applicable to the Concession. When the assignment of the concession occurs during the operational phase, the grantor may apply the duration criteria instead of the performance of 20% of the price. In certain cases, when the transfer of shares refers to a company whose sole corporate purpose is to operate public concessions, the transfer may be considered equivalent to an assignment when it entails a change in the person who controls the holder of the concession. In those cases, requisites applicable to the assignment (above) may apply to the share transfer. The transfer of shares (when it does not entail a change of control) is subject to the terms of the Concessions. The terms of the Concessions provide the communication of the share transfer to the Grantor. 51

58 Termination of the Concessions Under the applicable regulatory regime, the contracts for the construction and maintenance of toll roads can be terminated upon certain circumstances. Events of default that give the Grantor the right to terminate the Concession are: Ausol doing any of the following: (i) (ii) (iii) (iv) (v) (vi) (vii) Reckless negligence in relation to surveillance and maintenance obligations. Serious breach of road maintenance as a result of Ausol s failure to carry out maintenance work on more than one occasion and as a consequence such works are carried out at the direction of the Grantor and financed from the Operational Bonds. Charging tolls in excess of authorised amounts. Failing to provide Operational Bonds in accordance with the terms and conditions of the Concessions or failing to supplement such Operational Bonds within one month of its execution. Persistent non-compliance of the specific terms relating to a particular Concession. Ausol s abandonment of the Concessions. Breach of obligations regarding minimum share capital, accountability, bond issuances or dividend distribution. (c) Declaration of insolvency by Ausol. Termination of the legal personality of Ausol (for example, on the winding-up of Ausol). The right to terminate the Concessions also exists in a situation in which Ausol has not committed any breach. The Grantor has the right to terminate the Concession by a rescue (rescate) of the Project due to public interest reasons, which involves a unilateral declaration of termination notwithstanding Ausol s due and proper management. The Concessions may be terminated if a destruction event occurs, where destruction means the occurrence of an event or circumstance which substantially alters the infrastructure in such a manner that it is not possible to return the Road to its original state without undertaking work of a similar type and scale as that required in the construction of the Road. The partial destruction (more than 25% of the Road) entitles Ausol to choose between the termination of the relevant Concession and the return of the relevant Operational Bonds or the suspension of its rights and obligations under the relevant Concession until Ausol has reinstated the Road. In addition to termination of the Concession deriving from unilateral actions by the relevant parties (as referred to above), further causes for resolution of the Concessions are: End of each Concession term the return of the Concession ( handback ) is required. Mutual agreement between Ausol and the Grantor. Termination due to mutual agreement can only be applied when no termination event exists due to the concessionaire s default. In that case, the termination will take place on the basis of the concessionaire s default Termination is not automatic. The Grantor must undertake a procedure including the concessionaire s views being heard. The procedure is initiated by the Grantor itself or at the concessionaire s request depending on the applicable termination event. The procedure will end with the Grantor s resolution on the termination and its effects. There is no pre-established legal term for this administrative procedure. During the termination procedure, the authority may adopt cautionary measures to ensure the effect of the termination resolution. 52

59 Liability and compensation for termination of concession contract Liability and compensation arising for termination varies depending on the specific termination cause. In general terms, in the event of the termination of a concession contract due to breach by the public authority, the authority will be liable for payment of the loss and damage caused to the concessionaire. Likewise, a termination of the contract due to the breach by the concessionaire entails indemnification to the authority by the concessionaire. However, the term sheets of the specific contract may adapt the general scheme for compensation due to termination. Under Decree 215/1973 and LCAP, in the circumstances set out below, the Grantor will pay Ausol an amount equal to the total investment made by Ausol in the Road as far as such investment relates to land expropriations, construction work and the acquisition of assets required for the operation of the relevant Concession, as reduced by depreciation of the relevant assets calculated on the basis of the accounting principles applicable in producing the audited annual accounts of Ausol (the RPA Termination Payment). These assets are depreciated according to traffic forecasts over the entire life of the Concession. This is intended to more closely reflect use of the Road. The RPA Termination Payment is not calculated by reference to amounts owing to third party creditors of Ausol. It is based on the investment made by Ausol in the assets comprising the Concessions. No compensation is paid in respect of other outlays, such as the cost of establishing Ausol, preparing reports and so forth. Please note that, pursuant to the Concessions, the total amount payable upon termination (the Compensation Payment) shall be limited for each of Ausol I and Ausol II in a maximum amount as follows: Ausol I: A maximum amount in respect of expropriations: 66,111,331.48; A maximum amount to be paid as RPA Termination Payment (in respect of construction works, excluding expropriations): 306,426, Ausol II: A maximum amount in respect of expropriations: 9,964, ; A maximum amount to be paid as RPA Termination Payment (for construction works, excluding expropriations): 185,604, The Compensation Payment includes the RPA Termination Payment capped in the amounts described above and additionally, in specific prescribed circumstances, there may be an increase or decrease to such amount on account of loss and damage arising on termination. The Compensation Payment will therefore vary according to the particular event that triggers termination. The table provides a high level breakdown of the Compensation Payment under the different termination scenarios which in Ausol s view are most relevant to the Senior Bondholders; please note, however, that the table comprises a summary and that not all potential compensation scenarios are included. Default by Ausol Termination Event Compensation Payment RPA Termination Payment minus losses and damages*. Losses and damages will not decrease the Compensation Payment on the insolvency of Ausol if the relevant court declares the insolvency was not a result of negligence or wilful misconduct on the part of the company or the directors (concurso culpable). Operational Bonds enforced. See Operational Bonds above. 53

60 Default by the Grantor RPA Termination Payment plus losses and damages*. The quantum of damages will take into account any future profits which Ausol will no longer be capable of earning. Operational Bonds returned. Rescue Destruction of Road** RPA Termination Payment plus losses and damages*. No RPA Termination Payment amount will be payable. Ausol will rely on insurance policies for reinstatement and potential loss of revenue unless destruction follows as a consequence of any Grantor order. * Losses and damages in the absence of legislative guidance, Ausol s expectation is that standard Spanish civil law rules would apply in deciding the quantum of damages payable. ** If the Destruction is in respect of over 25 per cent. of the Road, Ausol may opt between the extinction of the Concessions and the return of the Operational Bonds or the suspension of its rights and obligations under the Concessions until Ausol has been reinstated (funded through the application of insurance proceeds). The Compensation Payment under each Concession will be applied to meet Ausol s obligations against third parties (including the Senior Bondholders). Any third party creditors guaranteed by the State or preferred as a matter of Spanish insolvency rules have priority to any payment to Senior Bondholders. By virtue of the RPA Pledge, Ausol has granted security over the credit rights arising from the RPA Termination Payment in favour of the Secured Creditors. Seizure of the Concessions The Grantor may seize the Concessions when due to the breach of the concessionaire s obligations serious risk arises for the public service and the grantor decide not to terminate the Concessions. Loss and damages caused by the seizure will be imposed to the concessionaire. Liability Ausol shall indemnify for all damages caused to third parties as a result of the development of its obligations under the Concessions. If such damages have been caused as an immediate and direct consequence of an order of the Grantor, the Grantor may be liable under Spanish law. Penalties for breach In the event of a breach of operational standards (as set forth under clause 27 of Law 8/1972) or the occurrence of any of the circumstances provided under clause 99 of Decree 215/1973 (being the termination events that would enable the Grantor to terminate the Concessions as outlined under Termination Events above) the Grantor may impose fines of up to 300 per day on Ausol. These fines are in addition to any rights the Grantor may have to terminate the Concession. Law 8/1972 establishes a maximum annual limit for penalties of 20 per cent. of income obtained from the operation of the road in the preceding financial year. Besides these fines, the Grantor is also entitled to impose recurrent fines if Ausol persists in breaching its obligations, for a daily amount of up to 6,000, as long as Ausol has been notified in advance and been afforded a period in which to remedy said breach. No such penalties have ever been imposed on Ausol in respect of either Concession. 54

61 Force majeure events Decree 215/1973 establishes the following principal force majeure events: (c) (d) fires resulting from heavy electrical thunderstorms; natural phenomena causing catastrophic effects such as earthquakes, seaquakes, mudflows, landslides, floods; war, serious alterations in public order, widespread robbery and/or sabotage; and other similar damage as previously approved by the Counsel of Ministers (Consejo de Ministros). Upon the occurrence of a force majeure event, Ausol is entitled to compensation from the Grantor for damages, unless it has acted recklessly, and with the limits applicable in case of destruction as explained in Termination of the Concessions. 55

62 SELECTED HISTORICAL FINANCIAL INFORMATION The selected financial information as of and for the years ended 31 December 2014 and 2013 and for the eleven-month period ended 30 November 2015, which includes 30 November 2014 financial information for comparative purposes, have been prepared in accordance with accounting principles generally accepted in Spain (Spanish GAAP). The financial information for the eleven-month period ended 30 November 2015 is derived from the Company s financial reporting system and is presented in a manner consistent with our financial statements and has been subject to limited review procedures. In addition, the selected financial information set out below is a summary only. It may not contain all the information that is important to prospective investors and, accordingly, should be read in conjunction with Risk Factors, Financial Model, General Information, the auditor s reports and the Financial Statements incorporated by reference into this Prospectus. The accounting policies and principles applied are those as set out in the Note 2 of the financial statements of the Company incorporated by reference into this Prospectus. The information below is not necessarily indicative of the results of future operations. 1. Income statement under Spanish GAAP The table below shows a summary of the historic income statement for the years ending 31 December 2014, 2013 and 2012 (audited) and for the eleven-month periods ending 30 November 2015 including November 2014 for comparative purposes (unaudited): Eleven months ended 30 November Year ended 31 December (unaudited) ( thousands) Revenue... 46,165 41,390 43,942 41,511 44,170 Supplies and self-constructed assets... (104) 7 45 (29) (216) Other operating income... 1,966 1,876 2,037 1,968 2,050 Personnel expenses... (4,191) (3,778) (4,120) (4,996) (5,188) Other operating expenses... (5,866) (5,416) (6,007) (6,304) (6,933) Depreciation and amortization... (8,911) (8,010) (8,757) (10,809) (12,276) Reversals of provisions... 35,265 (71,647) (74,697) Other gains/(losses) (48) (48) 256 2,725 Results from Operating Activities... 64,861 (45,625) (47,605) 21,598 24,332 Net Finance Cost... (61,056) (10,826) (11,694) (11,950) (11,873) Profit Before Income Tax... 3,805 (56,451) (59,299) 9,648 12,459 Income tax... (13,133) 16,946 16,754 (2,908) (3,738) Profit for the Period... (9,328) (39,505) (42,545) 6,740 8,721 56

63 2. Balance sheet under Spanish GAAP The table below shows a summary of the historic balance sheet as at 31 December 2014, 2013 and 2012 (audited) and as at 30 November 2015 (unaudited): As at 30 November As at 31 December (unaudited) ( thousands) Assets Non-current assets , , , ,388 Current assets... 39,477 32,603 20,597 15,025 Total assets , , , ,413 Equity and Liabilities Equity , , , ,098 Non-current liabilities , , , ,055 Current liabilities ,303 10,564 10,251 13,259 Total Equity and Liabilities , , , , Cash flow statement under Spanish GAAP The table below shows a summary of the statement of cash flow for the years ending 31 December 2014, 2013 and 2012 (audited) and for the eleven-month periods ending 30 November 2015 including November 2014 for comparative purposes (unaudited): Eleven months ended 30 November Year ended 31 December (unaudited) ( thousands) Profit for the year before tax... 3,805 (56,451) (59,299) 9,648 12,459 Adjustments... 34,165 90,435 94,986 24,619 23,655 Changes in operating assets and liabilities ,191 (819) 861 (76) Other cash flows from operating activities... (3,037) (1,645) (986) Cash flows from/(used in) operating activities 35,855 35,987 35,684 33,484 35,052 Payments for investments... (6,140) (1,078) 4,170 (535) (7,438) Cash flows used in investing activities... (6,140) (1,078) 4,170 (535) (7,438) Proceeds from and payments for financial liability instruments... (20,185) (21,301) (40,297) (29,444) (32,342) Proceeds from and payments for dividends and other equity instruments Cash flows (used in)/from financial activities (20,176) (21,170) (40,165) (29,412) (32,159) Net cash increase/(decrease) in cash and cash equivalents... 9,538 13,739 (310) 3,538 (4,545) 57

64 TERMS AND CONDITIONS OF THE SENIOR BONDS The following is the text of the Conditions of the Senior Bonds which (subject to modification) will be endorsed on each Bond in definitive form (if issued): The 320,000, per cent. Secured Senior Class A1 Bonds due 30 December 2045 (the Senior Class A1 Bonds, which expression shall in these Conditions, unless the context otherwise requires, include any Further Senior Bonds of the same class issued pursuant to Condition 16 (Further Issues) and forming a single series with the Senior Class A1 Bonds) and 147,000, per cent. Secured Senior Class A2 Bonds due 30 December 2045 (the Senior Class A2 Bonds, which expression shall in these Conditions, unless the context otherwise requires, include any Further Senior Bonds of the same class issued pursuant to Condition 16 (Further Issues) and forming a single series with the Senior Class A2 Bonds and, together with the Senior Class A1 Bonds, the Senior Bonds) of Autopista del Sol, Concesionaria Española, S.A., a sociedad anónima incorporated under the laws of the Kingdom of Spain, having its registered office in Plaza Manuel Gómez Moreno, 2, Edificio Alfredo Mahou, Madrid (Spain) and with tax identification number A (the Issuer) are constituted by a bond trust deed dated on or about the Issue Date (the Bond Trust Deed, which expression shall include any modification, supplement or novation thereto) made between the Issuer and BNP Paribas Trust Corporation UK Limited (the Bond Trustee, which expression shall include its co-bond trustees and successors as bond trustee for the holders of each class of the Senior Bonds (the Senior Bondholders) and the holders for the time being of the relevant Coupons and the Receipts (each as defined below)). Payments in respect of the Senior Bonds will be made pursuant to a paying agency agreement (the Paying Agency Agreement, which expression shall include any modification, supplement or novation thereto) dated on or about the Issue Date made between the Issuer, BNP Paribas Securities Services, Luxembourg Branch as principal paying agent (the Principal Paying Agent, which expression shall include its successors as principal paying agent) and, (together with such additional or other paying agents (if any) appointed under the Paying Agency Agreement (the Paying Agents)) and the Bond Trustee. The Senior Bondholders, the holders of the related principal receipts (the Receiptholders and Receipts, respectively) and the holders of the related coupons (the Couponholders and Coupons, respectively) are entitled to the benefit of, are bound by, and are deemed to have notice of, all the provisions of the Senior Bond Documents (which include the Bond Trust Deed, the Paying Agency Agreement, the STID, the Master Definitions Agreement and the Common Terms Agreement) (each as defined below) applicable to them. Copies of the Senior Bond Documents are available for inspection during normal business hours by the Senior Bondholders, the Receiptholders and the Couponholders at the registered office for the time being of the Issuer and at the specified office of each of the Paying Agents. The Issuer has entered into or will enter into on or about 17 March 2016 (the Issue Date): (c) (d) (e) a common terms agreement between, among others, the Bond Trustee, the Security Agent and the Principal Paying Agent (the Common Terms Agreement); a master definitions agreement, between among others, the Issuer, the Bond Trustee and the Senior Note Purchaser (the Master Definitions Agreement); a security trust and intercreditor deed (the Security Trust and Intercreditor Deed or the STID), between, amongst others, the Issuer and the Bond Trustee; one or more senior note purchase agreements (each a Senior Note Purchase Agreement) with, among others, the note purchaser named therein (the Senior Note Purchaser), pursuant to which the Issuer will agree to issue and the senior note purchaser(s) will agree to subscribe for or purchase the Senior Note(s); and a junior facility agreement (the Junior Facility Agreement) pursuant to which the Junior Lenders will advance loans to the Issuer. All capitalised terms used herein and not otherwise defined herein shall have the meanings given to them in the Master Definitions Agreement. 58

65 1. FORM, DENOMINATION AND TITLE 1.1 Form and Denomination 1.2 Title The Senior Bonds are in bearer form, serially numbered, in the denomination of 100,000 each with Coupons and Receipts attached on issue. Title to the Senior Bonds, the Receipts and the Coupons will pass by delivery. 1.3 Holder Absolute Owner The Issuer, any Paying Agent and the relevant Bond Trustee may (to the fullest extent permitted by applicable laws) deem and treat the bearer of any Senior Bond, Receipt or Coupon as the absolute owner for all purposes (whether or not the Senior Bond, Receipt or Coupon shall be overdue and notwithstanding any notice of ownership or writing on the Senior Bond, Receipt or Coupon or any notice of previous loss or theft of the Senior Bond, Receipt or Coupon or of any trust or interest therein) and shall not be required to obtain any proof thereof or as to the identity of such bearer. 2. STATUS 2.2 Status The Senior Bonds and the Receipts and Coupons pertaining thereto are direct, unconditional and secured obligations of the Issuer and rank and each of the Senior Class A1 Bonds and the Senior Class A2 Bonds will rank pari passu without any preference among themselves and, in relation to other present and future obligations of the Issuer, including the Senior Notes, in accordance with the provisions of the STID, save for such obligations that may be preferred by provisions of law that are mandatory and of general application, including in the event of insolvency. 2.3 Security Under the Security Documents, the Security will be granted by the Issuer and the Shareholders to secure the Secured Liabilities. The Security will be granted in favour of the Secured Creditors and accepted by the Bond Trustee on behalf of itself and the Senior Bondholders in accordance with the terms of the STID. Each Senior Bondholder, by subscribing to, purchasing or otherwise acquiring a Senior Bond, shall be deemed: (i) to have authorised the Bond Trustee and the Security Agent to enter into the Security Documents and accept the relevant Security in their name and for their benefit; and (ii) to be bound thereby. The initial Security will, once perfected in the manner set out in the Security Documents, consist of the following Spanish law governed pledges: (c) (d) (e) a first ranking pledge granted by the Shareholders over 100 per cent. of the Issuer s share capital; a first ranking pledge granted by the Shareholders over Shareholder Liabilities to the extent existing on the Issue Date; a first ranking pledge granted by the Issuer over credit rights arising from certain of its bank accounts; a first ranking pledge granted by the Issuer over credit rights arising from all rights under the Concession Agreement including but not limited to the RPA Termination Payment; and a first ranking pledge granted by the Issuer over credit rights arising from certain Insurances. 59

66 The documents under which the Security described above will be referred to as the Initial Security Documents. Under these Conditions and the other Finance Documents, the Issuer and the Shareholders will grant and/or extend additional Security (and take all necessary action to ensure such Security is granted) to secure the Secured Liabilities over: (i) (ii) future shares comprised in the Issuer s share capital; and any Shareholder Liabilities arising in the future. In these Conditions, the assets over which any such Security has been granted to secure the Secured Liabilities shall be referred to as the Secured Assets. 2.4 Extension of Security The Security Agent may agree to the extension of the Security created by any of the Security Documents to Further Senior Bonds in accordance with these Conditions and the other Finance Documents without requiring the consent of Bond Trustee or the Senior Bondholders. All Security granted to the Secured Creditors under the Security Documents shall be automatically and unconditionally released to the Issuer and the Shareholders on the Final Discharge Date (without recourse, representation or warranty). 3. INFORMATION COVENANTS So long as any of the Senior Bonds remains outstanding, the Issuer shall comply with the information covenants set out in clause 3 (Information Covenants) of the Common Terms Agreement. 4. COVENANTS OF THE ISSUER So long as any of the Senior Bonds remains outstanding, the Issuer shall comply with the covenants set out in clause 4 (General Covenants) and clause 5 (Ratios) of the Common Terms Agreement. The Issuer has covenanted in the Bond Trust Deed to perform all obligations and exercise (to the extent required) all rights under and in accordance with the Finance Documents to which it is a party. 5. INTEREST 5.1 Amount of Interest The Senior Bonds bear interest on their Principal Amount Outstanding from and including the Issue Date at the rate of 3.75 per cent. per annum (the Senior Rate of Interest), payable semi-annually in arrear on 30 June and 30 December (each a Payment Date). The first interest period will commence on the Issue Date and end on 30 June The aggregate amount of interest payable on each Payment Date (each a Senior Interest Payment) in respect of the Senior Bonds shall be as set out in the Senior Bond Payment Schedule, and each Senior Bond then outstanding will receive its pro rata share of the Senior Interest Payment amount set out in the Senior Bond Payment Schedule (as defined in Condition 7.2). 5.2 Calculation of Broken Interest When interest is required to be calculated in respect of a period of other than a full six months then, unless Condition 5.1 (Amount of Interest) applies, it shall be calculated on the basis of the actual number of days in the period from and including the date from which interest begins to accrue (the Accrual Date) to but excluding the date on which it falls due divided by the actual number of days from and including the Accrual Date to but excluding the next following Payment Date multiplied by two. 60

67 5.3 Further Interest Interest shall cease to accrue on any part of the principal amount of each Senior Bond from and including the due date for payment of such part unless, upon due presentation in accordance with Condition 6.1 (Payments only against presentation) and subject to Condition 6.4 (Payment only on a Presentation Date), payment of the relevant amount is improperly withheld or refused or default is otherwise made in the payment thereof, in which event interest will continue to accrue (such continued accrual of interest, Further Interest) on such principal amount at the Senior Rate of Interest (after as well as before judgment) until whichever is the earlier of: the day on which all sums due in respect of such principal amount, together with Further Interest thereon up to but excluding that day, are received by or on behalf of the relevant Senior Bondholder; and the day which is seven days after the Principal Paying Agent or the Bond Trustee has notified the relevant class of Senior Bondholders in accordance with Condition 13 (Notices) that the Principal Paying Agent or, as the case may be, the Bond Trustee has received all sums due in respect of such principal amount up to but excluding such seventh day together with Further Interest as aforesaid (unless and except to the extent that there is any subsequent default in payment, in which event Further Interest shall continue to accrue on any principal amount unpaid until such principal amount, together with Further Interest thereon up to but excluding the date of receipt, are received by or on behalf of the relevant Senior Bondholder), (the Further Interest Accrual Date). Any amount of Further Interest as aforesaid will be payable on the next following Payment Date or such earlier date on which the Senior Bonds are required to be redeemed in full under Condition 7 (Redemption and Purchase) or Condition 10 (Enforcement). Any amount of Further Interest accruing on or after the final Payment Date shall be immediately due and payable. Each period beginning on (and including) the date on which the relevant payment is improperly withheld or refused or default is otherwise made in payment thereof and ending on (but excluding) the relevant Further Interest Accrual Date is herein called a Further Interest Period. The amount of Further Interest payable in respect of each Senior Bond for any Further Interest Period shall be calculated on the basis specified in Condition 5.2 above (Calculation of Broken Interest) mutatis mutandis. 6. PAYMENTS AND EXCHANGES OF TALONS 6.1 Payments only against presentation Payments by the Issuer in respect of any Senior Bond will be made only: (c) (d) in the case of Senior Interest Payments, against presentation and surrender or, in the case of part payment only, endorsement of the appropriate Coupon; in the case of Principal Payments, against presentation of such Bond and the appropriate Receipt and surrender (or, in the case of part payment only, endorsement) of such Receipt; in the case of final redemption, against presentation and (provided that payment is made in full) surrender of such Senior Bond; and in any other case, against presentation and surrender (or, in the case of part payment only, endorsement) of such Senior Bond, in each case at the specified office of any Paying Agent outside the United States (which expression, as used herein, means the United States of America (including the States and the District of Columbia and its possessions)) by credit or transfer to a euro account specified by the payee with a bank in a city in 61

68 which banks have access to the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET2) System. 6.2 Unmatured Receipts and Coupons void On the early redemption in full of any Senior Bond pursuant to Condition 7.5 (Redemption for Taxation Reasons) or 7.6 (Redemption at the option of the Issuer) or Condition 10.1 (Exercise) all unmatured Receipts and Coupons relating thereto (whether or not attached) shall become void and no payment will be made in respect thereof. 6.3 Payments subject to applicable Laws Payments in respect of principal and interest on the Senior Bonds are subject in all cases to any fiscal or other laws and regulations applicable in the place of payment, but without prejudice to the provisions of Condition 8 (Taxation). 6.4 Payment only on a Presentation Date A Senior Bondholder shall be entitled to present a Senior Bond, Receipt or Coupon for payment only on a Presentation Date and shall not, except as provided in Condition 5 (Interest), be entitled to any further interest or other payment if a Presentation Date is after the due date for payment. Presentation Date means a day which (subject to Condition 9 (Prescription)): (c) is or falls after the relevant due date for payment; is a Business Day in the place of the specified office of the Paying Agent at which the Senior Bond, Receipt or Coupon is presented for payment; and is a TARGET2 Day. In this Condition, Business Day means, in relation to any place, a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in that place and TARGET2 Day means any day on which the TARGET2 System is open. 6.5 Fractions In respect of any payment to Senior Bondholders, any fraction of one euro will be rounded up to the nearest cent. 6.6 Exchange of Talons On and after the Payment Date on which the final Coupon comprised in any Coupon sheet matures, the Talon comprised in the Coupon sheet may be surrendered at the specified office of any Paying Agent in exchange for a further Coupon sheet (including any appropriate further Talon), subject to the provisions of Condition 9 (Prescription). Each Talon shall, for the purposes of these Conditions, be deemed to mature on the Payment Date on which the final Coupon comprised in the relative Coupon sheet matures. 6.7 Initial Paying Agents The names of the initial Paying Agents and their initial specified offices are set out at the end of these Conditions. The Issuer reserves the right, subject to the prior written approval of the relevant Bond Trustee, at any time to vary or terminate the appointment of any Paying Agent and to appoint additional or other Paying Agents provided that: there will at all times be a Principal Paying Agent; 62

69 (c) there will at all times be at least one Paying Agent (which may be the Principal Paying Agent) having its specified office in a European city which so long as the Senior Bonds are listed on the Irish Stock Exchange shall be a city (if any) required by the Irish Stock Exchange; and there will at all times be a Paying Agent in a jurisdiction within continental Europe, other than the jurisdiction in which the Issuer is incorporated. Notice of any termination or appointment and of any changes in specified offices will be given to the Senior Bondholders promptly by the Issuer in accordance with Condition 13 (Notices). 7. REDEMPTION AND PURCHASE 7.1 Final Redemption Unless previously redeemed, or purchased and cancelled, the Senior Bonds shall be redeemed in full on the Final Maturity Date. 7.2 Redemption in Instalments Each Senior Bond shall, subject to the exercise of one or more of the other redemption and purchase provisions of this Condition 7 (in whole or in part as the case may be in accordance with this Condition 7), be repaid in semi-annual instalments such that on each Payment Date, the aggregate Principal Amount Outstanding of the Senior Bonds then outstanding will be as set out next to that Payment Date in the table below (as the same may be amended following any partial redemption of the Senior Bonds in accordance with this Condition 7, the Senior Bond Payment Schedule): Aggregate payments ( ) Payment Date Principal Payment Senior Interest Payment Principal Amount Outstanding ( ) 467,000, Jun ,071, ,000, Dec-16 1,722, ,804, ,277, Jun-17 1,036, ,652, ,240, Dec-17 4,410, ,776, ,830, Jun-18 1,239, ,550, ,590, Dec-18 6,786, ,669, ,803, Jun-19 1,852, ,401, ,951, Dec-19 7,419, ,505, ,532, Jun-20 1,918, ,252, ,613, Dec-20 8,804, ,306, ,809, Jun-21 2,588, ,029, ,220, Dec-21 9,619, ,114, ,601, Jun-22 2,482, ,802, ,118, Dec-22 9,333, ,885, ,784, Jun-23 2,729, ,583, ,055, Dec-23 9,610, ,657, ,444, Jun-24 2,909, ,374, ,535, Dec-24 9,848, ,400, ,686, Jun-25 3,069, ,116, ,617, Dec-25 9,903, ,176, ,713, Jun-26 3,149, ,875, ,564,

70 30-Dec-26 9,890, ,929, ,673, Jun-27 3,263, ,632, ,410, Dec-27 9,992, ,680, ,418, Jun-28 3,647, ,403, ,770, Dec-28 10,519, ,405, ,251, Jun-29 4,086, ,122, ,165, Dec-29 11,001, ,146, ,163, Jun-30 4,197, ,842, ,965, Dec-30 10,836, ,859, ,128, Jun-31 3,930, ,562, ,198, Dec-31 11,021, ,580, ,177, Jun-32 3,893, ,299, ,284, Dec-32 10,710, ,284, ,574, Jun-33 4,048, ,012, ,525, Dec-33 10,762, ,019, ,763, Jun-34 4,338, ,737, ,424, Dec-34 11,084, ,734, ,340, Jun-35 3,903, ,450, ,437, Dec-35 10,254, ,450, ,182, Jun-36 3,888, ,199, ,294, Dec-36 10,126, ,171, ,167, Jun-37 4,503, ,926, ,663, Dec-37 11,016, ,906, ,647, Jun-38 5,281, ,638, ,366, Dec-38 12,210, ,598, ,155, Jun-39 5,775, ,312, ,380, Dec-39 12,924, ,258, ,455, Jun-40 6,371, ,973, ,084, Dec-40 13,811, ,886, ,272, Jun-41 7,418, ,589, ,854, Dec-41 15,314, ,492, ,540, Jun-42 8,559, ,167, ,980, Dec-42 17,069, ,041, ,910, Jun-43 9,514, ,690, ,396, Dec-43 18,376, ,538, ,019, Jun-44 10,521, ,175, ,498, Dec-44 19,773, , ,724, Jun-45 11,618, , ,106, Dec-45 21,106, , Each Senior Bond then outstanding will receive its pro rata share of the relevant Principal Payment as set out in the Senior Bond Payment Schedule and its Principal Amount Outstanding will be its pro rata share of the Principal Amount Outstanding set out in the Senior Bond Payment Schedule, in each case, in respect of the relevant Payment Date. 64

71 7.3 Mandatory Early Redemption Termination of a Concession Agreement If one or both of the Concession Agreements are terminated (other than (i) for a reason attributable to the Issuer or (ii) as a result of the destruction of all or 25 per cent. or more of the Project), then the Issuer shall, as soon as reasonably practicable give notice thereof to the Senior Bondholders, the Bond Trustee and the Security Agent in accordance with Condition 13 (Notices) (which notice shall be irrevocable), and upon receipt of Compensation following termination: immediately pay such Compensation into the General Account; and redeem each class of the Senior Bonds in full on the Redemption Date, which Redemption Date shall be no less than six (6) Business Days and no more than ten (10) Business Days after receipt of such Compensation, at their Principal Amount Outstanding, together with accrued but unpaid interest to (but excluding) such date (rounding the resulting figure to the nearest cent, a half cent being rounded upwards). 7.4 Mandatory Early Redemption Equity Cure Upon receipt of an Equity Cure Amount into the General Account in accordance with Condition 11.1 (Equity Cure), the Issuer shall, as soon as is reasonably practicable, give notice to the Bond Trustee, the Security Agent and the Senior Bondholders in accordance with Condition 13 (Notices) (which notice shall be irrevocable) of a mandatory redemption of the Senior Bonds and the Redemption Date, which Redemption Date shall be the first Payment Date falling after receipt of the Equity Cure Amount as aforesaid and, on the Redemption Date, redeem (subject to clause 7 of the Common Terms Agreement and paragraph below), an aggregate Principal Amount Outstanding of the Senior Bonds in an amount equal to the Equity Cure Amount (the Relevant Prepayment Amount) together with, in all cases, accrued but unpaid interest on the Relevant Prepayment Amount to (but excluding) such date (rounding the resulting figure to the nearest cent, a half cent being rounded upwards). Any redemption amount made under paragraph of this Condition 7.4 shall be made pro rata across the Senior Bonds and, upon any such redemption as aforesaid, the Issuer shall deliver to the Security Agent, the Bond Trustee and the Senior Bondholders a revised Senior Bond Payment Schedule, on the basis that the Equity Cure Amount had reduced subsequent Principal Payments on a pro rata basis and Senior Interest Payments had been reduced accordingly. 7.5 Redemption for Taxation Reasons If the Issuer certifies to the Bond Trustee in accordance with paragraph below (upon which certificate the Bond Trustee may rely absolutely and without enquiry or liability as being sufficient evidence of the satisfaction of the conditions precedent set out below and in which event it shall be conclusive and binding on the Senior Bondholders, the Receiptholders and the Couponholders) immediately before the giving of the notice referred to below that: (i) (ii) as a result of any change in, or amendment to, the laws or regulations of a Relevant Jurisdiction (as defined in Condition 8.2 (Interpretation) or any change in the application or official interpretation of the laws or regulations of a Relevant Jurisdiction, which change or amendment becomes effective after 9 March 2016, on the next Payment Date the Issuer would be required to pay additional amounts as provided or referred to in Condition 8 (Taxation); and the requirement cannot be avoided by the Issuer taking reasonable measures available to it, the Issuer may at its option, having given not less than 15 days notice to the Senior Bondholders in accordance with Condition 13 (Notices) (which notice shall be irrevocable specifying the date fixed for redemption (the Redemption Date)), redeem on a Payment Date (i) all the Senior Bonds, but not some only, or, (ii) only those Senior Bonds in respect of which additional amounts are required to be paid (in both cases, Tax Redemption Senior 65

72 Bonds) at any time at their Principal Amount Outstanding, together with interest accrued to but excluding the Redemption Date, provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer would be required to pay such additional amounts, were a payment in respect of the Tax Redemption Senior Bonds then due. (c) Prior to the publication of any notice of redemption pursuant to this Condition 7.5, the Issuer shall deliver to the Bond Trustee an Officer s Certificate stating that the requirement referred to in (i) above will apply on the next Payment Date and cannot be avoided by the Issuer taking reasonable measures available to it. If the Tax Redemption Senior Bonds do not constitute all of the Senior Bonds then outstanding, upon redemption, the Issuer shall supply to the Bond Trustee, the Security Agent and the Senior Bondholders a revised Senior Bond Payment Schedule, on the basis that the Principal Amount Outstanding of the Tax Redemption Senior Bonds reduced subsequent Principal Payments on a pro rata basis and Senior Interest Payments were reduced accordingly. 7.6 Redemption at the option of the Issuer Subject to clause 7 of the Common Terms Agreement, the Issuer may, having given: (i) not less than 15 nor more than 30 days notice to the Senior Bondholders in accordance with Condition 13 (Notices); and (ii) written notice to the Bond Trustee and the Principal Paying Agent not less than 15 days before the giving of the notice referred to in paragraph (i), which notices shall be irrevocable and shall specify the date fixed for redemption (the Redemption Date) redeem all (but not some only) of the Senior Bonds at their Early Redemption Amount, together with interest accrued to the Redemption Date. In these Conditions: Early Redemption Amount means, for each Senior Bond, the aggregate of: its Principal Amount Outstanding; and the Senior Make-whole Premium. Senior Make-whole Premium means the amount in euro rounded to the nearest euro cent (half a euro cent being rounded upwards), as determined by the Issuer (acting on the advice of a reputable financial institution), equal to the excess (if any) of the sum of the then present values of the outstanding Principal Payments and Senior Interest Payments to (and including) the Final Maturity Date, over the Principal Amount Outstanding of the Senior Bonds. For the purposes of this paragraph, the present values of the outstanding Principal Payments and Senior Interest Payments shall be calculated by discounting the relevant Principal Payments and Senior Interest Payments at a rate equal to: (i) (ii) a swap rate for the weighted average life of the outstanding Principal Payments in respect of the Senior Bonds derived from the screen EUSA (as published by Bloomberg) five Business Days prior to the date of redemption, plus 0.50 per cent. 7.7 Purchases The Issuer or any of the Issuer s Subsidiaries may at any time purchase Senior Bonds (provided that all unmatured Receipts and Coupons and unexchanged Talons appertaining to the Senior Bonds are purchased with the Senior Bonds) in any manner and at any price. The Bond Trust Deed shall contain limitations on, inter alia, the right to attend Senior Bondholder meetings and vote on Senior Bondholder resolutions in relation to any Senior Bonds of either class which are being held by or on behalf of or for the benefit of the Issuer, the Shareholders or any of a Shareholder s other Subsidiaries. 66

73 7.8 Cancellations All Senior Bonds which are redeemed by the Issuer shall be cancelled. All Senior Bonds which are purchased by or on behalf of the Issuer or any of the Issuer s Subsidiaries may, but need not, be cancelled at the election of the Issuer. Any Senior Bonds so cancelled may not be subsequently reissued or resold. 7.9 Notices Final Upon the expiry of any notice as is referred to in Condition 7.5 (Redemption for Taxation Reasons) or 7.6 (Redemption at the option of the Issuer) above, the Issuer shall be bound to redeem the Senior Bonds to which the notice refers in accordance with the terms of such paragraph. 8. TAXATION 8.1 Payment without Withholding All payments of principal, premium and interest in respect of the Senior Bonds by or on behalf of the Issuer shall be made without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature (Taxes) imposed or levied by or on behalf of any of the Relevant Jurisdictions, unless the withholding or deduction of the Taxes is required by law, statute, treaty, regulation or administrative practice of any of the Relevant Jurisdictions. In that event, the Issuer will pay such additional amounts as may be necessary in order that the net amounts received by the Senior Bondholders, Receiptholders or Couponholders after the withholding or deduction shall equal the respective amounts which would have been receivable in respect of the Senior Bonds, Receipts or Coupons, as the case may be, in the absence of the withholding or deduction; except that no additional amounts shall be payable in relation to any payment in respect of any Senior Bond, Receipt or Coupon: (i) (ii) (iii) (iv) held by or on behalf of a holder who is liable for such taxes, duties, assessments or governmental charges in respect of the Senior Bonds by reason of it having some connection with Spain (other than: (A) the mere receipt, ownership, holding or disposition of Senior Bonds; (B) by reason of the receipt of any payments in respect of any Senior Bond; or (C) the exercise or enforcement of rights under any Senior Bonds); any withholding or deduction in respect of the Senior Bonds where such withholding or deduction is imposed on a payment to an individual or a residual entity within the meaning of the European Council Directive 2003/48/EC and is required to be made pursuant to such Directive or any other Directive implementing the conclusions of the ECOFIN Council meeting of November 26 and 27, 2000 on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such Directives; held by or on behalf of a holder who does not provide to the Issuer or an agent acting on behalf of the Issuer the information concerning such holder as may be required in order to comply with the procedures that may be implemented to comply with any interpretation of Royal Decree 1065/2007 eventually made by the Spanish tax authorities; or where any withholding or deduction is required pursuant to an agreement described in Section 1471 of the U.S. Internal Revenue Code of 1986 (the Code) or otherwise imposed pursuant to Sections 1471 through 1474 of the Code, any regulations or agreements thereunder, any official interpretations thereof, or (without prejudice to the provisions of this Condition 8) any law implementing an intergovernmental approach thereto. 8.2 Interpretation In these Conditions: Relevant Date means the date on which the payment first becomes due but, if the full amount of the money payable has not been received by the Principal Paying Agent or the Bond Trustee on or before the due date, it means the date on which, the full amount of the money having been so received, notice 67

74 to that effect has been duly given to the Senior Bondholders in accordance with Condition 13 (Notices); and Relevant Jurisdiction means in the case of payments by, or on behalf of, the Issuer, the Kingdom of Spain or any political subdivision or any authority thereof or therein having power to tax or any other jurisdiction or any political subdivision or any authority thereof or therein having power to tax to which the Issuer becomes subject in respect of payments made by it of principal and interest on the Senior Bonds, Receipts and Coupons. 8.3 Additional Amounts Any reference in these Conditions to any amounts of principal, premium or interest in respect of the Senior Bonds shall be deemed also to refer to any additional amounts which may be payable under this Condition or under any undertakings given in addition to, or in substitution for, this Condition pursuant to the Bond Trust Deed. 8.4 Tax credits (c) (d) If any additional amounts are paid by the Issuer under this Condition for the benefit of any Senior Bondholder as a result of the Issuer not having received such information, in a timely manner, as may be necessary to allow payments on such Senior Bonds to be made free and clear of Spanish withholding taxes, including a duly executed and completed Payment Statement from the relevant Paying Agent, pursuant to the Law 10/2014 of 26 June, Royal Decree 1065/2007 of 27 July, as amended or restated, each of the Senior Bondholders will, upon the Issuer s request, use its reasonable endeavours to co-operate with the Issuer in completing any procedural formalities necessary for obtaining the refund of that Taxes from the corresponding Spanish tax authorities (including, if applicable, the delivery by the Bondholders of an in-force certificate of residency, duly issued by the relevant tax authorities of the country of residency of the Bondholders). If any additional amounts are paid by the Issuer as aforesaid, and such Senior Bondholder in its sole discretion, determines in good faith that it has obtained (and has derived full use and benefit from) a credit against, a relief or remission for, or repayment of, any tax, then, if and to the extent that such Senior Bondholder in its sole opinion, determines in good faith that (i) such credit, relief, remission or repayment is in respect of or calculated with reference to the additional amounts paid pursuant to this Condition; and (ii) its tax affairs for its tax year in respect of which such credit, relief, remission or repayment was obtained have been finally settled, such Senior Bondholder shall, to the extent that it can do so without prejudice to the retention of the amount of such credit, relief, remission or repayment, pay to the Issuer such amount as such Senior Bondholder shall in its sole opinion, determine in good faith to be the amount which will leave such Senior Bondholder (after such payment) in no worse after tax position than it would have been in had the additional payment in question not been required to be made by the Issuer. If any Senior Bondholder makes any payment to the Issuer pursuant to this Condition and such Senior Bondholder in its sole opinion, subsequently determines in good faith that the credit, relief, remission or repayment in respect of which such payment was made was not available or has been withdrawn or that it was unable to use such credit, relief, remission or repayment in full, the Issuer shall reimburse such Senior Bondholder such amount as such Senior Bondholder in its sole opinion, determines in good faith is necessary to place it in the same after tax position as it would have been in if such credit, relief, remission or repayment had been obtained and fully used and retained by such Senior Bondholder, such amount not exceeding in any case the amount paid by the Senior Bondholder to the Issuer. Nothing in this Condition 8.4 shall interfere with the right of any Senior Bondholder to arrange its tax or any other affairs in whatever manner it thinks fit, oblige any Senior Bondholder to claim any credit, relief, remission or repayment in respect of any payment made under this Condition in priority to any credit, relief, remission or repayment available to it nor oblige any Senior Bondholder to disclose any information relating to its tax or other affairs or any computations in respect thereof. 68

75 9. PRESCRIPTION Senior Bonds, Receipts and Coupons (which for this purpose shall not include Talons) will become void unless presented for payment within periods of 10 years (in the case of principal and premium) and 5 years (in the case of interest) from the Relevant Date in respect of the Senior Bonds or, as the case may be, the Coupons, subject to the provisions of Condition 6 (Payments and Exchanges of Talons). There shall not be included in any Coupon sheet issued upon exchange of a Talon any Coupon which would be void upon issue under this paragraph or Condition 6 (Payments and Exchanges of Talons). 10. ENFORCEMENT 10.1 Exercise Subject to the provisions of the Bond Trust Deed and the STID, if any Event of Default occurs and is continuing, the Security Agent at its discretion may exercise its rights to enforce all or any part of the Security or to take any kind of Enforcement Action (including directing the Bond Trustee to accelerate the Senior Bonds) subject to being indemnified and/or secured and/or prefunded to its satisfaction. The enforcement of the Security is provided for under the Security Documents and the Security shall be enforced by the Security Agent for its benefit and for the benefit of the other Secured Creditors in accordance with the terms of the Security Documents Action by the Senior Bondholders No Senior Bondholder, Receiptholder or Couponholder shall be entitled to proceed directly against the Issuer and/or to direct the Security Agent to enforce the Security unless the Bond Trustee, having become bound so to proceed, fails so to do within a reasonable period and the failure is continuing. Any proceeds received by a Senior Bondholder, Couponholder or Receiptholder pursuant to any such proceedings shall be paid to the Bond Trustee promptly following receipt thereof for application pursuant to the Bond Trust Deed and the STID. 11. REMEDY RIGHTS 11.1 Equity Cure (i) (ii) (iii) (c) If a Compliance Certificate delivered under clause 5.2 (Compliance Certificate) of the Common Terms Agreement for any period shows that an Event of Default under clause 6.2 (Breach of Financial Covenant) of the Common Terms Agreement has occurred, the Shareholders may at their sole discretion pay or procure the payment of Additional Equity into the General Account (and not any other Project Account) in an amount (the Equity Cure Amount) which, shall be at least equal to the amount that would be necessary to restore the Senior Historical DSCR Ratio to at least 1.05:1 (an Equity Cure Right) assuming for these purposes that the Equity Cure Amount had been applied in redemption of the Senior Bonds at the beginning of the Relevant Period and that there was a reduction in Senior Debt Service in an amount equal to the interest that would have been saved as a result of such redemption. Additional Equity (if any) made available further to the Contingent Equity Agreement shall not be taken into account for the purposes of determining the Equity Cure Amount. An Equity Cure Right may not be exercised: in respect of more than two consecutive Relevant Periods; more than seven times prior to the Senior Discharge Date; or more than three times in any five year period. Any Equity Cure Amount shall be provided on or prior to the date falling 20 Business Days after the delivery of the relevant Compliance Certificate (or if challenged under clause

76 (Challenge and Review) of the Common Terms Agreement, re-stated Compliance Certificate) setting out that an Event of Default has occurred under clause 6.2 (Breach of Financial Covenant) of the Common Terms Agreement (or if challenged under clause 5.3 (Challenge and Review) of the Common Terms Agreement, re-stated Compliance Certificate). (d) (e) On payment of the Equity Cure Amount into the General Account in accordance with paragraph above, the Senior Historical DSCR shall be deemed to be at such a level on the date of the relevant Compliance Certificate as though no breach had ever occurred and any related Event of Default shall be deemed not to occur or have occurred, as applicable, provided that the Issuer applies an amount equal to the Equity Cure Amount in mandatory redemption of all or some only of the Senior Bonds in accordance with Condition 7.4 (Mandatory Early Redemption Equity Cure). For the avoidance of doubt, any Equity Cure Amount provided under this Condition 11 shall be disregarded for the purposes of determining whether the Restricted Payment Conditions have been satisfied such that a transfer to the Distributions Account may be made. 12. REPLACEMENT OF BONDS, RECEIPTS AND COUPONS Should any Senior Bond, Receipt or Coupon be lost, stolen, mutilated, defaced or destroyed it may be replaced at the specified office of the Principal Paying Agent or the Paying Agent in Luxembourg (if any) upon payment by the claimant of the expenses incurred in connection with the replacement and on such terms as to evidence and indemnity as the Issuer may reasonably require. Mutilated or defaced Senior Bonds, Coupons or Receipts must be surrendered before replacements will be issued. 13. NOTICES 13.1 Notices to Senior Bondholders The Issuer shall, to the extent required by applicable law, regulations or listing rules in effect from time to time, also ensure that notices are duly published in a manner which complies with the rules of the Irish Stock Exchange or any other Stock Exchange on which the Senior Bonds are admitted to trading from time to time. Any such notice shall be deemed to have been given on the date of the first publication or, where required to be published in more than one place or on more than one system, on the date on which publication in all required platforms has been made. If publication as provided above is not practicable, a notice shall be given in such other manner, and shall be deemed to have been given on such date, as the Bond Trustee may approve. Couponholders and Receiptholders will be deemed for all purposes to have notice of the contents of any notice given to the Senior Bondholders in accordance with this paragraph Notices from Senior Bondholders Except as otherwise provided in these Conditions, notices to be given by any Senior Bondholders, Couponholders or Receiptholders shall be in writing and given by lodging the same, together with the relevant Senior Bonds, with the Principal Paying Agent or, if the Senior Bonds are held in a Clearing System, may be given through the Clearing System in accordance with the standard rules and procedures. 14. MEETINGS OF SENIOR BONDHOLDERS, MODIFICATION, WAIVER, AUTHORISATION AND DETERMINATION 14.1 STID Proposals These Conditions and the terms of the Senior Bond Documents may only be amended or waived, or any consents given, in accordance with the procedures set out in the STID Senior Class A1 Bondholder Representative By subscribing or purchasing Senior Class A1 Bonds, the Senior Class A1 Bondholders appoint Allianz Global Investors GmbH to represent the interests of the Senior Class A1 70

77 Bondholders to vote the Senior Class A1 Bonds in a vote of (i) Secured Creditors under the STID (ii) Senior Bondholders under the Bond Trust Deed. The Bond Trustee and the Security Agent shall be entitled to assume that Allianz Global Investors GmbH s appointment under this Condition 14.2 is valid and continuing until notified in writing to the contrary by Allianz Global Investors GmbH or by a successor appointed in accordance with Condition 14.2(c) and the Bond Trustee and the Security Agent shall be entitled to rely on any notification of a change in identity of the Senior Class A1 Bondholder Representative effected in compliance with this Condition 14.2 without further investigation or liability to any person. (c) The holders of more than 50 per cent. of the aggregate Principal Amount Outstanding of the Senior Class A1 Bonds (provided that such Senior Bondholders establish their holding to the satisfaction of the Bond Trustee (including, without limitation, by blocking their holding in the relevant Clearing System)) may by notice in writing to the Bond Trustee and the Security Agent terminate the appointment of the then current Senior Class A1 Bondholder Representative. Following such termination, the holders of more than 50 per cent. of the aggregate Principal Amount Outstanding of the Senior Class A1 Bonds (provided that such Senior Bondholders establish their holding to the satisfaction of the Bond Trustee (including, without limitation, by blocking their holdings in the relevant Clearing System)) may by notice in writing to the Bond Trustee and the Security Agent appoint a successor Senior Class A1 Bondholder Representative. Such notice must set out the identity and contact details of the Senior Class A1 Bondholder Representative and be signed by the Senior Class A1 Bondholder Representative and such appointing Senior Class A1 Bondholders. Any successor Senior Class A1 Bondholder Representative shall agree to be bound by the terms of the STID and the Bond Trust Deed. (d) For so long as a Senior Class A1 Bondholder Representative is appointed, the Bond Trustee shall rely and act on written instructions provided by the Senior Class A1 Bondholder Representative as to the exercise of its rights pursuant to Condition 10 without enquiry or liability Meetings of Senior Bondholders The Bond Trust Deed contains provisions for convening meetings of the Senior Bondholders convening as a single class to consider any matter affecting their interests, including the sanctioning by Extraordinary Resolution (as defined in Schedule 3 to the Bond Trust Deed) of a modification or waiver of these Conditions or the Senior Bond Documents. Such a meeting may be convened by the Issuer or the Bond Trustee and shall be convened by the Bond Trustee if requested by a class of Senior Bondholders holding not less than 20 per cent. of the Principal Amount Outstanding of the relevant class of Senior Bonds (subject to being indemnified and/or prefunded and/or secured to its satisfaction). A meeting of Senior Bondholders may only be convened in respect of the Senior Bondholders convening as a single class. The Bond Trust Deed also contains provisions for the Senior Bondholders to consider and vote in relation to a STID Proposal Modification, Waiver, Authorisation and Determination The Bond Trustee may agree or may instruct the Security Agent to agree, without the consent of the Senior Bondholders or Couponholders or Receiptholders but, subject to the STID, to any Security Agent Discretion Matter. Any such modification, authorisation, determination or waiver shall be binding on the Senior Bondholders and, such modification, authorisation, determination or waiver shall be notified by the Issuer to the Senior Bondholders as soon as practicable in accordance with Condition 13 (Notices) Instructions to Security Agent The Bond Trust Deed and the STID contain provisions as to the manner in which the Bond Trustee may instruct the Security Agent in connection with these Conditions and the Senior Bond Documents. 71

78 14.6 Bond Trustee to have Regard to Interests of each Class of Senior Bondholders as a Class In connection with the exercise by it of any of its trusts, powers, authorities and discretions (including, without limitation, any modification, waiver, authorisation, determination or substitution), the Bond Trustee shall have regard to the interests of each class of Senior Bondholders together as a single class but shall not have regard to any interests arising from circumstances particular to individual Senior Bondholders, Receiptholders or Couponholders (whatever their number) and, in particular but without limitation, shall not have regard to the consequences of any such exercise for individual Senior Bondholders, Receiptholders or Couponholders (whatever their number) resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory or any political sub-division thereof and neither Bond Trustee shall be entitled to require, nor shall any Senior Bondholder, Receiptholder or Couponholder be entitled to claim, from the Issuer, either Bond Trustee or any other person any indemnification or payment in respect of any tax consequence of any such exercise upon individual Senior Bondholders, Receiptholders or Couponholders except to the extent already provided for in Condition 8 (Taxation) and/or any undertaking given in addition to, or in substitution for, Condition 8 (Taxation) pursuant to the Bond Trust Deed Notification to the Senior Bondholders Any modification, abrogation, waiver, authorisation, determination or substitution shall be binding on the Senior Bondholders, the Receiptholders, the Couponholders and, unless the Bond Trustee agrees otherwise, any modification or substitution shall be notified by the Issuer to the Senior Bondholders as soon as practicable thereafter in accordance with Condition 13 (Notices). 15. BOND TRUSTEE AND SECURITY AGENT 15.1 Indemnification of the Bond Trustee and Security Agent The Bond Trust Deed contains provisions for the indemnification of the Bond Trustee and for its relief from responsibility, including provisions relieving it from taking action unless indemnified and/or secured and/or prefunded to its satisfaction. The STID contains provisions for the indemnification of the Security Agent and for its relief from responsibility, including provisions relieving it from taking action unless indemnified and/or secured and/or prefunded to its satisfaction Bond Trustee contracting with the Issuer The Bond Trust Deed also contains provisions pursuant to which the Bond Trustee is entitled, inter alia, to enter into or be interested in any contract or financial or other transaction or arrangement with the Issuer or any other party to any Transaction Document (each a Relevant Company) or any person or body corporate associated with a Relevant Company and to act as bond trustee for the holders of any other securities issued or guaranteed by, or relating to, the Issuer and/or any of the Issuer s other Subsidiaries, to exercise and enforce its rights, comply with its obligations and perform its duties under or in relation to any such contract, transaction or arrangement as is referred to in or, as the case may be, any such trusteeship without regard to the interests of, or consequences for, the Senior Bondholders, Receiptholders or Couponholders, and (c) retain and shall not be in any way liable to account for any profit made or share of brokerage or commission or remuneration or other amount or benefit received thereby or in connection therewith. Security Agent contracting with the Issuer. The STID also contains provisions pursuant to which the Security Agent is entitled, inter alia, to enter into or be interested in any contract or financial or other transaction or arrangement with the Issuer or any other party to any Transaction Document (each a Relevant Company) or any person or body corporate associated with a Relevant Company and to act as security agent or trustee for the holders of any other securities issued or guaranteed by, or relating to, the Issuer and/or any of the Issuer s other Subsidiaries, to exercise and enforce its rights, comply with its obligations and perform its duties under or in relation to any such contract, transaction or arrangement as is referred to in or, as the case may be, any such trusteeship without regard to the interests of, or consequences for, the Senior Bondholders, Receiptholders or Couponholders, and (c) retain and shall not be in any way liable to account for any profit made or share of brokerage or commission or remuneration or other amount or benefit received thereby or in connection therewith. 72

79 16. FURTHER ISSUES Subject always to these Conditions and the Senior Bond Documents, the Issuer is at liberty from time to time without the consent of the Senior Bondholders, Receiptholders or Couponholders (but subject to compliance with the provisions of these Conditions) to create and issue further securities ranking pari passu and having terms and conditions the same as either class of the Senior Bonds (Further Senior Bonds) in all respects save for the amount and date of the first payment of interest thereon and so that the same shall be consolidated and form a single series with the relevant class of the Senior Bonds. Such Further Senior Bonds shall be constituted by a deed supplemental to the Bond Trust Deed. 17. RIGHTS OF THIRD PARTIES No rights are conferred on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of the Senior Bonds, but this does not affect any right or remedy of any person which exists or is available apart from that Act. 18. GOVERNING LAW AND SUBMISSION TO JURISDICTION 18.1 Governing Law The Bond Trust Deed, the Senior Bonds, the Receipts and the Coupons and any non-contractual obligations arising out of or in connection with them are governed by, and will be construed in accordance with, English law. The status of the Senior Bonds as described in Condition 2 (Status) is governed by, and shall be construed in accordance with, Spanish law Jurisdiction of English Courts The Issuer has, in the Bond Trust Deed, irrevocably agreed for the benefit of the Bond Trustee, the Senior Bondholders, the Receiptholders and the Couponholders that the courts of England are to have exclusive jurisdiction to settle any disputes which may arise out of or in connection with the Bond Trust Deed, the Senior Bonds, the Receipts or the Coupons and any non-contractual obligations arising out of or in connection with them and accordingly has submitted to the exclusive jurisdiction of the English courts. The Issuer has, in the Bond Trust Deed, waived any objection to the courts of England on the grounds that they are an inconvenient or inappropriate forum. The Bond Trustee, the Senior Bondholders, the Receiptholders and the Couponholders may take any suit, action or proceeding arising out of or in connection with the Bond Trust Deed, the Senior Bonds, the Receipts or the Coupons respectively (together referred to as Proceedings) against the Issuer in any other court of competent jurisdiction and concurrent Proceedings in any number of jurisdictions Appointment of Process Agent 19. STID The Issuer has, in the Bond Trust Deed, irrevocably and unconditionally appointed Cintra Global Holding Ltd., with registered office as at the Issue Date at The Sherard Building, Edmund Halley Road, Oxford, Oxfordshire OX4 4DQ, UK, as its agent for service of process in England in respect of any Proceedings and has undertaken that in the event of such agent ceasing so to act it will appoint such other person as the Bond Trustee may approve as its agent for that purpose. Each Senior Bondholder, as a Secured Creditor, will be subject to the terms of, and receive the benefit of, the STID as if each Senior Bondholder were a party to the STID. By subscribing or purchasing Senior Class A2 Bonds, the Senior Class A2 Bondholders appoint the Bond Trustee to be the Secured Creditor Representative of the Senior Class A2 Bondholders and to represent the interests of the Senior Class A2 Bondholders in accordance with the provisions of the Bond Trust Deed and the STID. 73

80 SUMMARY OF PROVISIONS RELATING TO THE SENIOR BONDS IN GLOBAL FORM Each Class of Senior Bonds is initially in the form of the Temporary Global Bond, each of which has been deposited on the Issue Date with a common safekeeper for Euroclear and Clearstream, Luxembourg. The Senior Bonds have been issued in new global note (NGN) form. On 13 June 2006 the European Central Bank (the ECB) announced that bonds in NGN form are in compliance with the Standards for the use of EU securities settlement systems in ESCB credit operations of the central banking system for the euro (the Eurosystem), provided that certain other criteria are fulfilled. At the same time the ECB also announced that arrangements for bonds in NGN form will be offered by Euroclear and Clearstream, Luxembourg as of 30 June 2006 and that debt securities in global bearer form issued through Euroclear and Clearstream, Luxembourg after 31 December 2006 will only be eligible as collateral for Eurosystem operations if the NGN form is used. The Senior Bonds are intended to be held in a manner which will allow Eurosystem eligibility. This simply means that the Senior Bonds have been deposited with one of the ICSDs as common safekeeper and does not necessarily mean that the Senior Bonds will be recognised as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the Eurosystem either upon issue or at any or all times during their life. Such recognition will depend upon satisfaction of the Eurosystem eligibility criteria. Each Temporary Global Bond will be exchangeable in whole or in part for interests in the relevant Permanent Global Bond not earlier than 40 days after the Issue Date upon certification as to non-u.s. beneficial ownership. No payments will be made under a Temporary Global Bond unless exchange for interests in the relevant Permanent Global Bond is improperly withheld or refused. In addition, interest payments in respect of the Senior Bonds cannot be collected without such certification of non-u.s. beneficial ownership. Each Permanent Global Bond will become exchangeable in whole, but not in part, for bonds in definitive form (Definitive Bonds) in the denomination of 100,000 each at the request of the bearer of each Permanent Global Bond if Euroclear or Clearstream, Luxembourg is closed for business for a continuous period of 14 days (other than by reason of legal holidays) or announces an intention permanently to cease business or any Event of Default occurs. Whenever a Permanent Global Bond is to be exchanged for Definitive Bonds, the Issuer shall procure the prompt delivery (free of charge to the bearer) of such Definitive Bonds, duly authenticated and with Coupons attached, in an aggregate principal amount equal to the principal amount of the relevant Permanent Global Bond to the bearer of such Permanent Global Bond against the surrender of the relevant Permanent Global Bond to or to the order of the Principal Paying Agent within 30 days of the bearer requesting such exchange. If: Definitive Bonds have not been delivered by 5.00 p.m. (London time) on the thirtieth day after the bearer has duly requested exchange of a Permanent Global Bond for Definitive Bonds; or a Permanent Global Bond (or any part of it) has become due and payable in accordance with the Conditions or the date for final redemption of the Senior Bonds has occurred and, in either case, payment in full of the amount of principal falling due with all accrued interest thereon has not been made to the bearer in accordance with the terms of the relevant Permanent Global Bond on the due date for payment, then the relevant Permanent Global Bond (including the obligation to deliver Definitive Bonds) will become void at 5.00 p.m. (London time) on such thirtieth day (in the case of above) or at 5.00 p.m. (London time) on such due date (in the case of above) and the bearer of the relevant Permanent Global Bond will have no further rights thereunder. 74

81 DESCRIPTION OF THE COMMON TERMS AGREEMENT The following is a summary of certain provisions of the Common Terms Agreement. This summary does not purport to be complete and should be read in conjunction with, and is qualified in its entirety by, the full text of the relevant Finance Documents. In particular, any documents to be entered into after the date of this Prospectus are subject to completion and/or immaterial amendment. Capitalised terms used in this summary and which are not defined herein shall have the meaning ascribed to them in the Glossary of this Prospectus. 1. INFORMATION COVENANTS 1.1 Financial Statements The Issuer shall supply to the Secured Creditors in sufficient copies: audited financial statements (consolidated if appropriate) of the Issuer (Annual Financial Statements), and related accountants reports, within 180 days after the end of each Financial Year; and unaudited management accounts (consolidated if appropriate) of the Issuer for each Financial Half Year (Semi-Annual Financial Statements), within 90 days after the end of such Financial Half Year. 1.2 Form of Financial Statements The Issuer shall procure that each set of Financial Statements supplied by it under the Common Terms Agreement is prepared in accordance with the Accounting Standards and includes a cashflow statement, a profit and loss statement and a balance sheet; and gives a true and fair view of, in the case of any Annual Financial Statements, or, otherwise fairly represents its financial condition (consolidated or otherwise) as at the date to which those Financial Statements were drawn up and the results of its operations during such period. 1.3 Notification of Default The Issuer shall notify the Bond Trustee in writing and the Information Recipients in accordance with Clause 17.2 of the STID of any Default (and the steps, if any, being taken to remedy it) immediately upon becoming aware of its occurrence. 1.4 Updated Base Case The Issuer may, at any time, prepare an updated Base Case (each an Updated Base Case) which must be prepared by reference to the Financial Model, but which may include modifications to the Assumptions as it deems fit. The Issuer shall, in relation to each Updated Base Case: (i) (ii) ensure that the modifications to the Assumptions are made in good faith and after due and careful consideration and shall deliver an Officer s Certificate at the same time as it delivers the Updated Base Case certifying the same; and ensure that, as applicable: (A) (B) the Technical Adviser (acting reasonably) approves the modifications to Capex Costs expected to be incurred; the Traffic Adviser (acting reasonably) approve the modifications of the Assumptions relating to the AADT; and 75

82 (C) the auditor performs the appropriate procedures on the Financial Model to the extent that there is a modification in the methodology or formulae used in the Financial Model. (c) (d) Any Updated Base Case so prepared shall be delivered to the Information Recipients as soon as reasonably practicable. Any Updated Base Case so prepared will be required to be approved by the Senior Debtholders on a Negative Approval basis within a period of fifteen Business Days from the date of delivery of the Updated Base Case to, inter alios, the Information Recipients, and once so approved as aforesaid will be considered thereafter as the Base Case for the purpose of the Conditions. 1.5 Investor Report The Issuer shall, within 30 days of each Payment Date, supply to the Information Recipients an electronic report in substantially the form set out in Schedule 2 (an Investor Report). 1.6 Budget and Adviser Verification The Issuer shall, no later than the date falling 15 days before the start of each Financial Year, prepare and supply to the Information Recipients an electronic copy of a budget in substantially the form set out in Schedule 3 (a Budget). The Issuer shall ensure that the Budget: (i) (ii) (iii) (iv) is based on Assumptions which, to the best of its knowledge and belief, are reasonable; is consistent with the provisions of the Transaction Documents in all material respects; is prepared in good faith and with due care; fairly represents its expectation as to the matters covered in it and accurately specifies its best estimate of all costs and expenses anticipated by it to be incurred to exploit and maintain the Project in the manner contemplated by the Transaction Documents. 1.7 Issuer Information So far as permitted by any applicable law, regulation, order or any binding confidentiality obligations, the Issuer shall supply to the Information Recipients: promptly upon request by a Secured Creditor Representative, an Officers Certificate confirming that, to the best of the signatory s knowledge: (i) (ii) the contents of the certificate are accurate in all material respects; and as at the date of such certificate, no Default has occurred or is continuing, or if a Default has occurred and is continuing, steps (which shall be specified, if any) are being taken to remedy such Default; (c) as soon as reasonably practicable after becoming aware of the same, details of any litigation, arbitration or administrative proceedings which are current or threatened in writing against the Issuer, where such proceedings if adversely determined, would have or would be reasonably likely to have a Material Adverse Effect; as soon as reasonably practicable after becoming aware of the same, details of any disputes under the Project Contracts, where such dispute has or would be reasonably likely to have, a Material Adverse Effect; and 76

83 (d) as soon as reasonably practicable after becoming aware of the same, details of any change to its shareholders. 1.8 Investor Website (c) Except as provided below, the Issuer shall maintain a website which shall be accessible to the Secured Creditors (and other Information Recipients) (the Investor Website). The Secured Creditors (and other Information Recipients) shall, on request in writing, be given access to this website through a password provided to them by or on behalf of the Issuer. Without prejudice to its obligations to maintain an Investor Website, the Issuer may designate a third party to operate and manage the Investor Website on its behalf. The Issuer shall ensure that all information that is required to be supplied by the Issuer to the Secured Creditors (and other Information Recipients) (or any of them) under and pursuant to the Senior Bond Documents, the Senior Note Documents or the Junior Finance Documents, where applicable, is published on the Investor Website. The Issuer shall also ensure that a notice is published in accordance with the rules of the stock exchange on which the Senior Bonds or the Senior Note may be listed stating that such information as is required to be published on the Investor Website under and pursuant to the Senior Bond Documents, the Senior Note Documents and the Junior Finance Documents, where applicable is available for viewing by the relevant Secured Creditors (and other Information Recipients). The Issuer shall be deemed to have complied with its obligations under paragraph above upon the date which is the later of the: (i) (ii) day of publication of the information on the Investor Website; and the day on which notice is published in accordance with the rules of the stock exchange on which the Senior Bonds and the Senior Note may be listed (if any) stating that such information that is required to be published on the Investor Website has been published. If any such publication under paragraph (i) or (ii) above is made later than 5.00pm (Madrid time), the day of publication under such paragraphs shall be deemed to be the next Business Day. (d) (e) The Issuer shall ensure that Secured Creditors (and other Information Recipients) are notified (which may be by alert from the Investor Website or otherwise) of any information that is published on such Investor Website. Any requirement to notify or supply information to the Secured Creditors (and other Information Recipients) will be satisfied upon the sending of any such notice to the relevant Secured Creditors (and other Information Recipients) notifying them of the publication of any such information on the Investor Website. The Issuer shall as soon as reasonably practicable upon becoming aware of its occurrence, notify the Secured Creditors (and other Information Recipients) in writing if: (i) (ii) the Investor Website cannot be accessed for a period of five Business Days; or the Investor Website or any information on the website is infected by any electronic virus or similar software for a period of five Business Days. (f) (g) If the circumstances in paragraphs (e)(i) or (ii) above occur, the Issuer shall supply all information required to be delivered to the Secured Creditors to the Information Recipients and shall notify the Secured Creditors that such information is available to them at the registered offices of the Information Recipients. The parties acknowledge that the use of the Investor Website as aforesaid and integrity and security of data uploaded to it cannot be guaranteed and the Issuer shall not be liable to any Secured Creditor (and other Information Recipients) in connection with the use of the Investor Website. 77

84 2. GENERAL COVENANTS 2.1 Status, Powers and Authority The Issuer shall maintain its existence as a company, duly incorporated and validly existing under the laws of its jurisdiction of incorporation and the power and authority to own its assets and carry on its business as it is being conducted from time to time. The Issuer shall ensure that it has (or will have at all relevant times) the power to enter into, perform and deliver the Transaction Documents to which it is or will be a party and the transactions contemplated by those Transaction Documents and that it has taken (or will take at all relevant times) all necessary action to authorise its entry into, performance of and delivery of the Transaction Documents to which it is or will be a party and the transactions contemplated by those Transaction Documents. 2.2 Authorisations The Issuer shall promptly: obtain, comply with and do all that is necessary to maintain in full force and effect, any Authorisation required under any law or regulation of any of its Relevant Jurisdictions to: (i) (ii) (iii) enable it to perform its obligations under the Transaction Documents; ensure the legality, validity, enforceability or admissibility in evidence of any Transaction Document; and carry on its business where failure to do so would not have or would not reasonably be likely to have a Material Adverse Effect; and supply certified copies of any such Authorisation to the Security Agent as soon as reasonably practicable upon written request of the Security Agent 2.3 Constitutional Documents The Issuer may not, without the prior written consent of the Security Agent, change its constitutional documents, save for any amendment which is required to be made pursuant to mandatory provisions of law or otherwise which could not be expected to be prejudicial to the interests of the Secured Creditors. 2.4 Compliance with laws The Issuer shall comply in all material respects with all Authorisations, laws and regulations to which it or the Project may be subject. 2.5 Environmental Compliance The Issuer shall: comply with all Environmental Laws; obtain and ensure compliance with all requisite Environmental Permits; and (c) implement procedures to monitor compliance with and prevent liability under any Environmental Law, in each case, where failure to do so would have or would be reasonably likely to have a Material Adverse Effect. 78

85 2.6 Binding Obligations The Issuer shall ensure that the obligations expressed to be assumed by it in each Transaction Document to which it is a party are legal, valid, binding and enforceable obligations. Without limiting the generality of paragraph above, the Issuer shall ensure that each Security Document to which it is a party creates the Security Interests over the Secured Assets which that Security Document purports to create and those Security Interests are valid and effective and are not subject to any prior or pari passu Security Interests, other than any Permitted Security. 2.7 Non-Conflict The Issuer shall ensure that the entry into and performance by it of, and the transactions contemplated by, the Transaction Documents to which it is party do not and will not conflict with: (c) any law or regulation applicable to it; its constitutional documents; or any agreement or instrument binding upon it or any of its assets or constitute a default or termination event (however described) under any such agreement or instrument, to the extent that such conflict would have or be reasonably likely to have a Material Adverse Effect. 2.8 Compliance The Issuer shall not, and shall use its best endeavours to ensure that none of its directors, officers, agents, employees or other person acting on behalf of the Issuer shall: (i) (ii) (iii) (iv) use any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; make any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; violate any provision of the U.S. Foreign Corrupt Practices Act of 1977 or the UK Bribery Act 2010 or any anti-bribery or anti-corruption law or regulation to which it is subject in any jurisdiction; or make, offer or promise to make, or authorise the payment or giving of any bribe, rebate, payoff, influence payment, facilitation payment, kickback or other unlawful payment or gift of money or anything of value prohibited under any law or regulation to which it is subject. The Issuer shall use its best endeavours to ensure that its operations are conducted at all times in compliance with applicable financial record keeping and reporting requirements and, to the extent applicable, all money laundering statutes, the rules and regulations in any Relevant Jurisdiction and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency having jurisdiction over it. 2.9 Taxation The Issuer shall pay and discharge all Taxes imposed upon it or its assets within the time period allowed without incurring penalties unless and only to the extent that: such payment is being contested in good faith; adequate reserves are being maintained for those Taxes and the costs required to contest them and such reserves have been disclosed in its latest Financial Statements supplied under the Common Terms Agreement; 79

86 (c) (d) such payment can be lawfully withheld; and failure to pay those Taxes does not have or is not reasonably likely to have a Material Adverse Effect Merger The Issuer shall not enter into any amalgamation, demerger, merger, consolidation or corporate reconstruction other than any which is or which arises as part of a Permitted Transaction Change of Business The Issuer undertakes to carry on only the Permitted Business Acquisitions Except as permitted under paragraph below, the Issuer shall not: (i) (ii) acquire a company or any shares or securities or a business or undertaking (or, in each case, any interest in any of them); or incorporate a company. Paragraph above does not apply if the relevant acquisition or incorporation is or arises as part of: (i) (ii) a Permitted Acquisition; or a Permitted Transaction Joint Ventures Except as permitted under paragraph below, the Issuer shall not: (i) (ii) enter into, invest in or acquire (or agree to acquire) any shares, stocks, securities or other interest in any Joint Venture; or transfer any assets or lend to or guarantee or give an indemnity for or give any Security Interest for the obligations of a Joint Venture or maintain the solvency of or provide working capital to any Joint Venture (or agree to do any of the foregoing). Paragraph above does not apply to a Joint Venture which is or which arises as part of: (i) (ii) a Permitted Acquisition; or a Permitted Transaction Pari Passu ranking The Issuer shall do nothing to cause: (c) the ranking of the Senior Bonds to be otherwise than as described in these Conditions; the ranking of the Senior Note to be otherwise than as described in the Senior Notes; or the ranking of the Senior Finance Document Liabilities, the Junior Finance Document Liabilities, the Senior Secured Liabilities, the Junior Secured Liabilities and the Shareholder Liabilities to be otherwise than as described in clause 2 (Ranking and Priority) of the STID. 80

87 2.15 Negative Pledge Except as permitted under paragraph below: (i) (ii) the Issuer shall not create or permit to subsist any Security Interest over any of its assets; and the Issuer shall not: (A) (B) (C) (D) sell, transfer or otherwise dispose of any of its assets on terms whereby they are or may be leased to or re-acquired by the Issuer; sell, transfer or otherwise dispose of any of its receivables on recourse terms; enter into any arrangement under which money or the benefit of a bank or other account may be applied, set off or made subject to a combination of accounts; or enter into any other preferential arrangement having a similar effect, in circumstances where the arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset (any such arrangement or transaction, Quasi-Security). Paragraph above does not apply to any Security Interest or Quasi-Security which is or which arises as part of: (i) (ii) (iii) Permitted Security; a Permitted Disposal; or a Permitted Transaction Disposals Except as permitted under paragraph below, the Issuer shall not enter into a single transaction or a series of transactions, whether related or not and whether voluntary or involuntary, to sell, lease, transfer or otherwise dispose of any asset. Paragraph above does not apply to any sale, lease, transfer or other disposal which is or which arises as part of: (i) (ii) (iii) a Permitted Disposal; a Permitted Payment; or a Permitted Transaction Arm s Length Basis Except as permitted by paragraph below, the Issuer shall not enter into any transaction with any person, except on arm s length terms and for fair market value. Paragraph above does not apply to any transaction which is or which arises as part of: (i) (ii) (iii) the payment of fees, costs and expenses payable under the Transaction Documents in the amounts set out in, or determined in accordance with, the Transaction Documents; a Permitted Transaction falling under paragraph (c) of the definition thereof; or any other transaction expressly permitted by the Finance Documents. 81

88 2.18 Loans or Credit Except as permitted under paragraph below, the Issuer shall not be a creditor in respect of any Financial Indebtedness. Paragraph above does not apply to any loan or credit which is or which arises as part of: (i) (ii) a Permitted Loan; or a Permitted Transaction No Guarantees or Indemnities Except as permitted under paragraph below, the Issuer shall not incur or allow to remain outstanding any guarantee in respect of any obligation of any person. Paragraph above does not apply to a guarantee which is or which arises as part of: (i) (ii) a Permitted Guarantee; or a Permitted Transaction Restricted Payments Except as permitted under paragraph (c) below, the Issuer shall not make a Restricted Payment unless the payment is made from amounts standing to the credit of the Distribution Account. The Issuer shall not make any transfer to the Distribution Account unless: (i) (ii) (iii) each of the Restricted Payment Conditions is satisfied and a Compliance Certificate has been delivered in accordance with the Common Terms Agreement confirming the same; the transfer is in an amount which is not more than the Distributable Amount; and the time at which the transfer is made from the General Account to the Distribution Account does not fall within a period in which a Restricted Payment may not be made pursuant to paragraph (e) of Challenge and Review above. (c) Paragraph above does not apply to a payment which is or which arises as part of: (i) (ii) paragraph,, or (c) of the definition of Permitted Payment; or a Permitted Transaction Restricted Investments Except as permitted under paragraph below, the Issuer shall not invest in, own or otherwise participate in any investments other than those which are necessary for the performance of the Project. Paragraph above does not apply to any Permitted Investments Financial Indebtedness Except as permitted under paragraph below, the Issuer shall not incur or allow to remain outstanding any Financial Indebtedness. Paragraph above does not apply to Financial Indebtedness which is or which arises as part of: (i) Permitted Financial Indebtedness; or 82

89 (ii) a Permitted Transaction Amendments to Finance Documents The Issuer shall not amend, vary, novate, supplement, supersede, waive or terminate any term of a Finance Document, except in accordance with the STID Project Contracts The Issuer shall at all times comply with and perform all of its obligations under and in connection with the Project Contracts to which it is a party, to the extent that a failure to comply or perform would have or be reasonably likely to have a Material Adverse Effect. The Issuer shall not make any amendments to any term or waive, assign, transfer or suspend all or any part of a Project Contract or enter into any other material contract or other material commercial arrangement unless: (i) (ii) (iii) (iv) It is minor and administrative in nature; it is required to do so by law or regulation; it is permitted to do so under the terms of the Common Documents; it is required for the purposes of carrying out the Permitted Business, and the Issuer has delivered an Officer s Certificate confirming the same to the Security Agent Project Accounts The Issuer shall ensure that: (i) (ii) each Project Account is opened, maintained and funded in accordance with the Account Bank Agreement; and each Project Account is subject to valid Security under the Security Documents. The Issuer shall not open or maintain any bank accounts other than the Project Accounts, the Distribution Account and, for a period of 10 (ten) Business Days after the Issue Date, the Existing Accounts Capex and Expropriation The Issuer shall ensure that: (i) (ii) (iii) (iv) any amounts payable by it in respect of Reserved Capex Costs are funded through Additional Equity made available in accordance with the Contingent Equity Agreement or drawings under the Reserved Capex Letter of Credit; any amounts payable by it in respect of Reserved Expropriation Costs are funded through Additional Equity made available in accordance with the Contingent Equity Agreement or drawings under the Reserved Expropriation Letter of Credit; any amounts payable by it in respect of Capex Costs which are not Reserved Capex Costs are funded from amounts standing to the credit of the Capex Reserve Account; and any amounts payable by it in respect of Expropriation Costs which are not Reserved Expropriation Costs are funded from amounts standing to the credit of the Expropriation Reserve Account. 83

90 (c) The Issuer shall ensure that the aggregate amount available for drawing under each of the Reserved Capex Letter of Credit and Reserved Expropriation Letter of Credit is at least equal to the Required Level from time to time in effect. If the issuer of either the Reserved Capex Letter of Credit or the Reserved Expropriation Letter of Credit (as applicable) is no longer an Acceptable Bank, the Issuer must, within 30 days of the same occurring: (d) (e) (i) (ii) procure that a replacement Reserved Capex Letter of Credit or the Reserved Expropriation Letter of Credit (as applicable) is issued by an Acceptable Bank; or make a demand for the remaining amount available under the Reserved Capex Letter of Credit or the Reserved Expropriation Letter of Credit (as applicable) and credit the same into the Capex Reserve Account or the Expropriation Reserve Account (as applicable). The Issuer hereby authorises the Security Agent to make a demand on its behalf under either the Reserved Capex Letter of Credit or the Reserved Expropriation Letter of Credit in circumstances when the Issuer is entitled or required to make such a demand. The Issuer may request that the Required Level in respect of Reserved Capex Costs and/or Reserved Expropriation Costs be reduced. Any such request must be accompanied by a report from, in the case of the Reserved Capex Costs, the Technical Adviser and, in the case of the Reserved Expropriation Costs, the Expropriation Adviser, confirming that in the opinion of the relevant Adviser, the aggregate liability of the Issuer in respect of Reserved Capex Costs or Reserved Expropriation Costs (as the case may be) is no more than the proposed Required Level. Any such request must, prior to taking effect, be approved on a Negative Approval basis within 15 Business Days of request Intellectual Property Rights The Issuer shall ensure that, as soon as reasonably practicable, it becomes the sole legal and beneficial owner of or has licence or another right to use on customary commercial terms all the Intellectual Property Rights which are material in the context of the Permitted Business and which are required by it in order to carry on the Permitted Business as it is being conducted, save where failure to so own or have licence or other rights to use such Intellectual Property Rights will have or would not be reasonably likely to have, a Material Adverse Effect. The Issuer shall not, in carrying on the Permitted Business, infringe any Intellectual Property Right of any third party in any respect where such infringement will have, or would be reasonably likely to have, a Material Adverse Effect Insurance The Issuer shall maintain Insurance with an Insurance Provider on and in relation to its business and assets as required under the Concession Agreements and for the conduct of the Permitted Business which, in the reasonable opinion of the directors of the Issuer, are sufficient and customary for companies carrying on similar businesses in accordance with good industry practice and for compliance with all requirements of law in Spain 2.29 Centre of Main Interests The Issuer shall conduct its business and affairs such that, at all times, its centre of main interests for the purposes of Council Regulation (EC) No. 1346/2000 of 29 May 2000 (the EU Insolvency Regulation) or any law replacing and superseding the EU Insolvency Regulation from time to time, including Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015, shall be in Spain (or, in the case of any substitution, the jurisdiction of incorporation of the substitute Issuer) and it shall not have any establishment (as defined in the Insolvency Regulation) other than in Spain (or, in the case of any substitution, the jurisdiction of incorporation of the substitute Issuer). 84

91 2.30 Further Assurance The Issuer shall promptly do all such acts or execute all such documents (including pledges, assignments, transfers, mortgages, charges, notices and instructions) as the Security Agent may specify (and in such form as the Security Agent may require in favour of the Security Agent or any of its nominees): (i) (ii) (iii) to perfect the Security Interest created or intended to be created under or evidenced by the Finance Documents (which may include the execution of a mortgage, charge, assignment, pledge or other Security Interest over all or any of the assets which are, or are intended to be, the subject of any Security Document) or for the exercise of any rights, powers and remedies of the Security Agent or the Secured Creditors provided by or pursuant to the Finance Documents or by law; to confer on the Security Agent or confer on the Secured Creditors a Security Interest over any property or assets of the Issuer (as applicable) located in any jurisdiction equivalent or similar to the Security Interest intended to be conferred by or pursuant to any Security Document; and/or to facilitate the realisation of the assets which are, or are intended to be, the subject of any Security Document. The Issuer shall take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, protection or maintenance of any Security Interest conferred or intended to be conferred on the Security Agent or the Secured Creditors by or pursuant to the Security Documents or to facilitate the realisation of the assets which are, or are intended to be, the subject of any Security Documents Credit Rating The Issuer shall use its best endeavours to maintain a credit rating from at least one Rating Agency for each class of the Senior Bonds and the Senior Notes. The Issuer shall use its best endeavours to cooperate with the Rating Agency in connection with any reasonable request for information in respect of the maintenance of a rating of each class of the Senior Bonds and the Senior Notes and with any review of its business that may be undertaken by the Rating Agency after the Issue Date Accounting Reference Date The Issuer may not change its Accounting Reference Date unless: the Security Agent has received, at the cost and expense of the Issuer, such information as it requires to enable an accurate comparison to be made between any Financial Statements received for the period prior to such change and Financial Statements received (or to be received) for the period after such change; and following such change, the basis for the calculation of the Ratios by reference to the relevant periods shall be amended in such a way as not to materially prejudice the interests of the Secured Creditors Auditors The Issuer shall, as soon as reasonably practicable, notify the Secured Creditors of any change to its Auditor. 85

92 2.34 Replacement of Advisers The Security Agent may send a written notice to the Issuer requiring it to replace the Technical Adviser, the Expropriation Adviser, the Insurance Adviser or the Traffic Adviser, if the relevant Adviser is not performing its role to the standard it is required to observe under the Finance Documents. Following such notice the Issuer shall respond in writing as soon as reasonably practicable confirming either: (i) (ii) the steps that it is taking to ensure that the relevant Adviser meets the standard of performance reasonably expected of it by the Security Agent; or the steps that it shall take to replace the relevant Adviser with a person demonstrably capable of performing such role and which is of international repute and with similar experience in transactions and projects of a similar nature to the Project. The Issuer may request at any time, by means of a notice to the Information Recipients in the manner required by the Finance Documents, that the Senior Debtholders approve on a Negative Approval basis, within ten days from the date of the relevant notice, the replacement of the Technical Adviser, the Expropriation Adviser, the Insurance Adviser or the Traffic Adviser with another person demonstrably capable of performing such role and which is of international repute and with similar experience in transactions and projects of a similar nature to the Project. 3. RATIOS 3.1 Determination of Ratios The Issuer shall, in respect of each Testing Date, calculate each Ratio on the basis of: (i) (ii) in the case of the Senior Historical DSCR and the Global Historical DSCR the relevant Financial Statements of the Issuer in respect of the Relevant Period ending on such Testing Date; and in the case of the Senior Forecasted DSCR and the Global Forecasted DSCR, the Financial Model re-run on the basis of the Assumptions, updated, if necessary in accordance with this paragraph in respect of the Relevant Period commencing on such Testing Date. The Issuer shall, in calculating the Senior Forecasted DSCR and the Global Forecasted DSCR in accordance with this paragraph, re-run the Financial Model on the basis of the Assumptions except that, subject as provided in paragraph (c) below: (i) (ii) (iii) (iv) (v) Capex Costs shall be updated to reflect the amount of Capex Costs actually incurred up to that Testing Date and expected to be incurred on and after that Testing Date; Expropriation Costs shall be updated to reflect the amount of Expropriation Costs actually incurred up to that Testing Date and expected to be incurred on or after that Testing Date; Gross Revenues shall be updated to reflect Gross Revenues actually received up to that Testing Date; tax rates shall be updated to reflect tax rates then in effect (or, if different in respect of future periods, tax rates that will then be in effect) and updating of other Economic Assumptions; and traffic rates shall be updated to reflect historical and forecasted AADT up to that Testing Date. (c) If the aggregate amount of incurred Capex Costs and expected Capex Costs used in re-running the Financial Model as described in paragraph above is more than 5 per cent. higher or lower than the aggregate amount of such incurred Capex Costs and expected Capex Costs set out in the Base Case (or, if different, the most recently approved amount under this paragraph (c)) then the amount of incurred 86

93 Capex Costs and expected Capex Costs must (where relevant) be first approved by the Technical Adviser as being costs actually incurred or, in the case of expected Capex Costs, which a reasonable and prudent operator of the Project would expect to incur. If this paragraph (c) applies, the relevant Compliance Certificate must, where appropriate, be countersigned (where relevant) by the Technical Adviser confirming its approval. (d) (e) If either the AADT or the expected AADT used in re-running the Financial Model as described in paragraph above is 10 per cent. above the corresponding AADT set out in the Base Case (or, if different, the most recently approved amount under this paragraph (d) then the relevant level of AADT must (where relevant) be first approved by the Traffic Adviser as being AADT actually recorded, or, in the case of expected AADT, that which a reasonable and prudent operator of the Project would expect to record. If this paragraph (d) applies, the relevant Compliance Certificate must, where appropriate, be countersigned (where relevant) by the Traffic Adviser confirming its approval. The Issuer must ensure that each Ratio calculated under this paragraph is calculated: (i) (ii) (iii) (iv) based on such historic information and forecasts which it believes to be reasonable and, in respect of such historic information, to reflect accurately actual results; in a manner consistent with the provisions of the Concession Agreements, the Transaction Documents and the current Budget in all material respects; to the best of its knowledge and belief, in good faith and with due care; and otherwise in accordance with this paragraph. (f) (g) Any amount to be determined shall, if necessary, be converted into Euro at the actual rate of exchange achieved by the Issuer in respect of the receipt or payment or, in the case of any Project Cost not yet payable or any Gross Revenues not yet received, at the Projected Spot Rate of Exchange on the date of projected receipt or payment. For the purpose of determining any Ratio for a Relevant Period ending less than one year after the Issue Date, Senior Debt Service and Debt Service shall be calculated by annualising actual Senior Debt Service and actual Debt Service from (and including) the Issue Date to (but excluding) the end of the Relevant Period. 3.2 Compliance Certificate The Issuer shall, at the same time as it delivers each set of Financial Statements following a Testing Date, supply to the Secured Creditors a Compliance Certificate in respect of that Testing Date in the form set out in the Schedule to the Common Terms Agreement. Such Compliance Certificate shall confirm: (i) (ii) the level of each of the Ratios for the Relevant Period; that each of the Ratios has been calculated in accordance with the requirements of the covenants concerning the Ratios in the Common Terms Agreement, specifying the results of such calculations and attaching a copy of: (A) (B) the computations (in reasonable detail) made in respect of the calculation of such Ratios; and the financial statements on which the calculations of such Ratio have been based; (iii) whether the Issuer is electing to use an Equity Cure Right for the period ending on that most recent Testing Date; 87

94 (iv) (v) (vi) whether the Issuer will be required to make a withdrawal from the Junior Ratio Enhancement Account and apply this in payment towards the Junior Loan in accordance with the Account Bank Agreement; the level of the Capex Reserve Account Minimum Balance for the corresponding Payment Date; the level of the Expropriation Reserve Account Minimum Balance for the corresponding Payment Date; (vii) the level of the Senior Debt Service Reserve Account Minimum Balance for the corresponding Payment Date; (viii) (ix) the Required Level of each of the Reserved Capex Letter of Credit and the Reserved Expropriation Letter of Credit for the corresponding Payment Date; in respect of the Junior Loan: (A) (B) (C) the PIK Interest, outstanding PIK Interest and principal amount of the Junior Loan for the corresponding Payment Date; the Junior Cash Pay Interest and Junior Cash Sweep Amount on the next Payment Date; and whether a Junior Loan Payment Lock-up is outstanding; (x) (xi) (xii) whether or not the Issuer has elected to exercise its rights to pay part or all of the outstanding PIK interest in accordance with clause 8.4 of the Junior Facility Agreement and, if so elects to exercise its rights as aforesaid, in respect of what amount; whether the Restricted Payment Conditions have been met, and, if so, the maximum amount of the Restricted Payment; and the EBITDA for the Relevant Period. Each Compliance Certificate shall confirm that, to the best of the knowledge of the Authorised Officer signing such certificate: (i) (ii) the contents of the Compliance Certificate are accurate in all material respects as at the date of that Compliance Certificate; and no Potential Event of Default or Event of Default has occurred or is continuing, or if a Potential Event of Default or an Event of Default has occurred and is continuing, the steps (if any) that are being taken to remedy (or prevent) such Event of Default. 3.3 Challenge and Review If, within ten days following the delivery of a Compliance Certificate in accordance with the Common Terms Agreement, the same has not been approved by the Senior Debtholders on a Negative Approval basis, the Issuer shall, as soon as reasonably practicable following notification of the same by a Secured Creditor Representative (hereinafter referred to as a challenge), provide to the Information Recipients for approval by the Senior Debtholders on a Negative Approval basis a restated Compliance Certificate (a Restated Compliance Certificate) and re-calculate the Ratios for the Relevant Period with such changes (if any) as may be required to ensure that the Ratios are calculated in accordance with the Common Terms Agreement (and the Compliance Certificate is prepared in accordance with the Common Terms Agreement). The Senior Debtholders may only not approve the Compliance Certificate if they consider (acting reasonably and having provided due justification) that 88

95 (i) (ii) it has not been prepared, and the Ratios have not been calculated, in each case in accordance with the Common Terms Agreement; or they consider (acting reasonably and having provided due justification) that there is a material error in: (A) (B) (C) the computations made in respect of the calculation of the Ratios contained in the Compliance Certificate; the financial statements on which the calculations of such Ratio have been based; or any of the information required to support the updates to the Assumptions in accordance with the Common Terms Agreement. (c) (d) (e) If, within ten days of the Information Recipients receipt of a Restated Compliance Certificate, that Restated Compliance Certificate has not been approved by the Senior Debtholders on a Negative Approval basis, the Issuer must provide a further Restated Compliance Certificate in accordance with paragraph above. The Issuer s and the Senior Debtholders respective rights under this paragraph (c) and paragraph above shall subsist until the Issuer, at its own cost, appoints and instructs the Technical Adviser or such other expert as may be agreed by the Issuer and approved by the Senior Debtholders (within three (3) days of details of such expert being notified to the Senior Debtholders in accordance with the Conditions) on a Negative Approval basis (the person so appointed or instructed, the Independent Expert) to investigate the relevant statement(s), computation(s) or ratio(s) that is/are the subject of the challenge. Any Independent Expert appointed pursuant to paragraph (c) above shall undertake to provide a report of its conclusions to the Issuer and the Secured Creditors within 30 days of receipt of instructions pursuant to paragraph (c) above, which report shall be binding and conclusive as to the challenge in respect of which that Independent Expert is appointed. The Issuer shall deliver such report to the Secured Creditors in accordance with this Agreement. The Issuer may not make a Restricted Payment or make any transfer to the Distributions Account or make any payment of interest or repayment of principal on the Junior Loan during the period starting on (and including) the date on which the Compliance Certificate is delivered to (but excluding) the later of: (i) (ii) the date falling ten days from such date; and in the event of a challenge by the Senior Debtholders in accordance with the provisions of paragraph above: (A) where no Independent Expert is required to be instructed, the date falling ten days after the Secured Creditor s receipt of a Restated Compliance Certificate; and (B) where an Independent Expert is required to be instructed, the date on which the Independent Expert announces its conclusions and the Issuer has, to the extent necessary and as soon as reasonably practicable following the conclusion of the challenge and review process, delivered a further Restated Compliance Certificate reflecting such conclusions (f) Any Restated Compliance Certificate delivered under this Clause shall, for all purposes, be deemed to be the Compliance Certificate for the relevant Testing Date. 4. EVENTS OF DEFAULT The Common Terms Agreement provides that the occurrence of each of the following events or circumstances will constitute an Event of Default. 89

96 4.1 Non Payment The Issuer does not pay any principal, premium, interest or other amount due and payable by it in respect of the Senior Bonds, the Senior Notes or the Junior Loan unless such default (i) is due to an administrative or technical error and (ii) continues for a period of more than five Business Days. Provided that the Issuer applies relevant amount in accordance with clause 9.2 (Junior Ratio Enhancement Account-Payment out) of the Account Bank Agreement, non-payment and capitalisation of interest in respect of the Junior Loan in accordance with clause 8 of the Junior Facility Agreement shall, notwithstanding the provisions of paragraph above, not constitute an Event of Default under paragraph above. 4.2 Breach of Financial Covenant The Senior Historical DSCR as at the relevant Testing Date as stated in a Compliance Certificate is less than the 1:1.05, provided that an Event of Default under this paragraph may be cured by exercise of any Equity Cure Right. 4.3 Breach of Other Obligations The Issuer does not comply with any provision under the Finance Documents (other than those in respect of Non Payment and Breach of Financial Covenant above). No Event of Default under paragraph above shall occur if the failure to comply is capable of remedy and is remedied within 20 Business Days (or such later date as agreed by the Security Agent) of the earlier of: (i) (ii) the Security Agent giving notice to the Issuer; and the Issuer becoming aware of the failure to comply. 4.4 Insolvency The Issuer: (i) (ii) (iii) (iv) is unable or admits inability to pay its debts as they fall due; is deemed, or declared by a court of competent jurisdiction, to be insolvent or unable to pay its debts as they fall due under Spanish law; suspends or threatens (by way of written notice) to suspend making payments on its debts as a whole generally as they fall due; or by reason of actual or anticipated financial difficulties, commences negotiations with its creditors generally with a view to rescheduling any of its indebtedness. A moratorium is declared in respect of all or substantially all indebtedness of the Issuer. If a moratorium occurs, the ending of the moratorium shall not remedy any Event of Default caused by that moratorium. 4.5 Insolvency Event Any Insolvency Event occurs in respect of the Issuer. Paragraph shall not apply to any Insolvency Event if the same is: (i) any winding-up petition which is: (A) being contested in good faith by the Issuer; or 90

97 (B) frivolous or vexatious and is discharged, stayed or dismissed within 20 Business Days of commencement or, if earlier, the date on which it is advertised; (ii) any petition for bankruptcy or winding-up petition where the Issuer demonstrates to the reasonable satisfaction of the Security Agent, that either: (A) (B) no reason for declaration of bankruptcy of the Issuer exists and that the Issuer does not qualify as being insolvent or unable to pay its debts as they fall due under Spanish law and it has sufficient funds available to it to meet any liability related to the petition; or the Issuer provides the Security Agent with an opinion of a reputable counsel addressed to the Security Agent and in form and substance satisfactory to the Security Agent proving to the satisfaction of the Security Agent that the petition or filing is groundless and, in either case, the same is discharged, stayed or dismissed within 20 Business Days of commencement or, if earlier, the date on which it is advertised; (iii) (iv) any step or procedure which forms part of a Permitted Transaction; or in respect of any action, legal proceedings or step over or relating to assets of the Issuer (other than any Insolvency Proceedings), the aggregate value of which does not exceed 1,500,000 (Indexed). 4.6 Creditors processes; attachment A distress, attachment, execution or other similar legal process is levied, enforced or sued out on or against any part of the assets of the Issuer and is not discharged or stayed within 20 Business Days provided that the aggregate amount of assets involved in any such distress, attachment, execution or legal process equals or exceeds 10,000,000 (Indexed) or its equivalent. Any mortgage, charge, pledge, lien or other encumbrance, present or future, created or assumed by the Issuer in respect of an obligation, the principal amount of which equals or exceeds 10,000,000 (Indexed) or its equivalent is enforced (including by the taking of possession or the appointment of a receiver, administrative receiver, administrator manager or other similar person). 4.7 Unlawfulness and Invalidity (c) It is or becomes unlawful for the Issuer to perform any of its material obligations under any Finance Document and such events continue for 20 Business Days without remedy. Any Security Interest created or expressed to be created or evidenced by any Security Document ceases to be effective or any subordination created under the Security Trust and Intercreditor Deed is or becomes unlawful and, in each case, such events continue for 20 Business Days without remedy. It is or becomes unlawful for the Issuer to perform any of its material obligations under any Project Contract (other than the Concession Agreements) or any such Project Contract ceases to be lawful or valid and such events continue for 20 Business Days without remedy. 4.8 STID and breach by the Shareholder Subject to paragraph (c) below, any party to the STID (other than a Secured Creditor or the Issuer): (i) (ii) fails to comply with the provisions of, or does not perform its obligations under, the STID; or has provided a representation or warranty that is incorrect in any material respect. 91

98 Subject to paragraph (c) below, any Shareholder: (i) fails to comply with the provisions of, or does not perform its obligations under, any Transaction Document to which it is a party (other than the Contingent Equity Agreement); or (ii) has provided a representation or warranty under a Transaction Document to which it is a party that is incorrect in any material respect. (c) Paragraphs and above shall not apply if the non-compliance or circumstances giving rise to the misrepresentation are capable of remedy, and are remedied within 20 Business Days of the earlier of: (i) (ii) the Security Agent giving notice to the Issuer and/or that party; and the Issuer and/or that party becoming aware of the non-compliance or misrepresentation. 4.9 Termination, Repudiation and Rescission of Agreements The Issuer: (i) (ii) (iii) rescinds or purports to rescind or repudiates or purports to repudiate a Finance Document; evidences an intention to rescind or repudiate a Finance Document; or otherwise terminates or purports to terminate a Finance Document. A party (other than the Grantor) to a Project Contract (other than a Concession Agreement): (i) (ii) (iii) rescinds or purports to rescind or repudiates or purports to repudiate a Project Contract; evidences an intention to rescind or repudiate a Project Contract; or otherwise terminates or purports to terminate a Project Contract, provided that no Event of Default shall occur under paragraph of this paragraph if, within 20 Business Days of the same occurring, the Issuer provides to the Information Recipients a timetable and steps to replace the relevant party and/or affected Project Contract (the Replacement Plan), the Replacement Plan is subsequently approved in writing by the Technical Adviser as being suitable for replacing the relevant party and/or affected Project Contract, and, following approval of the Replacement Plan, the Issuer complies in all material respects with the Replacement Plan. In such circumstances, no consent of the Senior Debtholders, the Junior Lenders nor any other person will be required by the Issuer to effect the relevant Replacement Plan (whether or not consent is otherwise required by any other provision of these Conditions). (c) Any Finance Document ceases to be in full force and effect or any subordination created under the STID ceases to be legal, valid, binding, enforceable or effective and, in each case, if capable of remedy such events continue for 20 Business Days without remedy Cessation of business The Issuer suspends or ceases to carry on (or publicly announces an intention to suspend or cease to carry on) all or substantially all of its business except as a result of a Permitted Disposal or Permitted Transaction. No Event of Default shall occur under this paragraph if the event occurs as a result of a Concession Agreement being terminated other than for a reason attributable to the Issuer causing a requirement for mandatory early redemption under Condition 7.3 of the Terms and Conditions of the Senior Bonds, under clause 9.3 of the Senior Note Purchase Agreement and under Clause 7.6 of the Junior Facility Agreement as a result of the termination of a Concession Agreement. 92

99 4.11 Concession Agreements (c) (d) A Concession Agreement ceases to be lawful and valid or becomes void or unenforceable. A Concession Agreement is repudiated. A Concession Agreement is terminated or becomes capable of termination for a reason attributable to the Issuer. No Event of Default shall occur under paragraphs (c) above if as a result of such event, a Concession Agreement is terminated other than for a reason attributable to the Issuer causing a requirement for mandatory early redemption under Condition 7.3 of the Terms and Conditions of the Senior Bonds, under clause 9.3 of the Senior Note Purchase Agreement and under Clause 7.6 of the Junior Facility Agreement as a result of the termination of a Concession Agreement Nationalisation, abandonment and destruction (c) (d) (e) The authority or ability of the Issuer to conduct its business is wholly curtailed by any expropriation, nationalisation, restriction or other action by or on behalf of any governmental, regulatory or other authority. The authority or ability of the Issuer to conduct its business is wholly curtailed by any seizure or intervention by or on behalf of any governmental, regulatory or other authority. The Issuer voluntarily abandons all or a significant part of the Project. Either Concession Agreement is terminated (whether by its terms or by the Issuer) following the destruction of all or 25 per cent. or more of the Project. No Event of Default shall occur under paragraphs (d) above if as a result of such event, a Concession Agreement is terminated other than for a reason attributable to the Issuer causing a requirement for mandatory early redemption under Condition 7.3 of the Terms and Conditions of the Senior Bonds, under clause 9.3 of the Senior Note Purchase Agreement and under Clause 7.6 of the Junior Facility Agreement as a result of such termination Material Proceedings Any litigation, arbitration, administration, governmental, regulator or other investigations, proceedings or disputes are commenced against the Issuer or in respect of its assets or revenues which, in any such case, has or would be reasonably likely to have a Material Adverse Effect. The Issuer fails to comply with the requirements of any final non-appealable judgment or award which equals or exceeds 1,000,000 (Indexed) or its equivalent Security Interests Any Security Interest created or expressed to be created or evidenced under the Security Documents is not or ceases to be legal, valid, binding and enforceable and effective in accordance with its terms. No Event of Default shall occur under paragraph above if (i) the same is remedied, or (ii) a Security Interest is granted which is, in the opinion of the Security Agent, similar in all material respects, in each case within 60 days of the same occurring Change of Control A Change of Control Event occurs which results in the Senior Bonds and/or the Senior Notes if then having an Investment Grade Rating, being downgraded to a sub Investment Grade Rating; or if then having a sub Investment Grade Rating, being downgraded one notch, or (c) if then not rated, not subsequently being assigned an Investment Grade Rating, in each case within 90 days of the Change of Control Event occurring. 93

100 A Shareholder transfers its interest in the Issuer otherwise than in accordance with the Concession Agreements or with the approval of the Grantor. 5. PARI PASSU TREATMENT 5.1 When this clause applies This Clause applies until the Senior Discharge Date 5.2 Mandatory prepayment Equity Cure Amount This Subclause applies if, as a result of the same circumstances arising or event occurring, the Issuer is required to: (i) (ii) redeem one or both classes of Senior Bonds under Condition 7.4 (Mandatory Early Redemption Equity Cure Amount); and/or redeem the Senior Notes under clause 9.4 (Mandatory Early Redemption Equity Cure Amount) of the Senior Note Purchase Agreement. If this Subclause applies: (i) (ii) the amount of the Equity Cure Amount which would have otherwise been applied in redemption of the Senior Bonds, or as the case may be, the Senior Note, will be applied pro rata across each class of the Senior Bonds and the Senior Notes then outstanding; and the Issuer must redeem the relevant principal amount of the Senior Bonds and the Senior Notes to be redeemed on the same date. (c) For the purposes of paragraph (i) above, the relevant pro rata amount shall be determined taking into account principal and accrued interest payable in respect of each class of Senior Bonds and the Senior Note on the date set for redemption. 5.3 Mandatory prepayment Termination of Concession This Subclause applies if, as a result of the same circumstances arising or event occurring, the Issuer is required to: (i) (ii) (iii) redeem one or both classes of Senior Bonds under Condition 7.3 (Mandatory Early Redemption Termination of a Concession Agreement); and/or redeem the Senior Notes under clause 9.3 (Mandatory Early Redemption Termination of a Concession Agreement) of the Senior Note Purchase Agreement; and/or repay the Junior Loans under clause 7.6 (Mandatory Early Prepayment Termination of a Concession Agreement) of the Junior Facility Agreement. If Subclause applies: (i) (ii) 5.4 Voluntary prepayment the Issuer must redeem the Senior Bonds and the Senior Notes on the same date; and promptly after the Senior Bonds and the Senior Notes have been redeemed in full (together with accrued interest payable at the time of redemption), the Issuer will repay the Junior Loans in full if so required in accordance with the terms of the Junior Facility Agreement. This Subclause applies if, as a result of the same circumstances arising or event occurring, the Issuer elects to: 94

101 (i) (ii) (iii) redeem the Senior Bonds under Condition 7.6 (Redemption at the option of the Issuer); and/or redeem the Senior Notes under clause 9.6 (Redemption at the option of the Company) of the Senior Note Purchase Agreement; and/or repay the Junior Loans under clause 7.2 (Voluntary prepayment) of the Junior Facility Agreement. If this Subclause applies: (i) (ii) (iii) the Issuer must redeem the Senior Bonds and the Senior Notes on the same date; the Issuer may not prepay the whole or any part of the Junior Loans unless the prepayment is funded by Additional Equity (other than Additional Equity made available further to the Contingent Equity Agreement or the Junior Facility Agreement) or by Financial Indebtedness of the type referred to in, and incurred in accordance with, paragraph (f) of the definition of Permitted Financial Indebtedness; and the Issuer must provide an Officer s Certificate to the Senior Bondholders, the Senior Noteholders and, if applicable, the Junior Lenders confirming that is has sufficient funds available to it to redeem and prepay the relevant principal amounts (together, where relevant, with accrued interest and Make-whole Premium). 5.5 Mandatory prepayment and cancellation Junior Facility Agreement Subject to paragraph below, the Issuer may not: (i) (ii) cancel the whole or part of the Available Junior Facility; or prepay the whole or part of the Junior Loan, unless it has been authorised to do so in writing by the Security Agent Paragraph (i) does not apply to any prepayment of the whole or part of any Junior Loan made under and in accordance with: (i) (ii) the subparagraphs 5.3(ii) or 5.4 (Voluntary Prepayment) above; or clauses 7.5 (Mandatory prepayment Junior Facility Cash sweep) and 8.4 (Junior equity cure right) of the Junior Facility Agreement. 95

102 DESCRIPTION OF THE OTHER FINANCE DOCUMENTS The following is a summary of certain provisions of the Finance Documents. This summary does not purport to be complete and should be read in conjunction with, and is qualified in its entirety by, the full text of the relevant Finance Documents. In particular, any documents to be entered into after the date of this Prospectus are subject to completion and/or immaterial amendment. Capitalised terms used in this summary and which are not defined herein shall have the meaning ascribed to them in the Glossary of this Prospectus. Security Trust and Intercreditor Deed The Issuer, the Bond Trustee, the Senior Note Purchasers, the Junior Agent, the Junior Lenders, the Security Agent, the Account Bank, the Principal Paying Agent and the Initial Shareholders entered into the STID on the Issue Date. The STID regulates (i) the ranking and priority of claims of the Secured Creditors; (ii) the exercise, acceleration and enforcement of rights by the Secured Creditors; and (iii) the giving of consents and waivers and the making of modifications to the Finance Documents. Ranking and Priority Each of the parties to the STID has agreed that the Finance Document Liabilities owed by the Issuer and the Shareholders to the Secured Creditors shall rank in right and priority of payment in the following order and are postponed and subordinated to any prior ranking Finance Document Liabilities as follows: first, the Senior Finance Document Liabilities; and second, the Junior Finance Document Liabilities. In respect of the Security, each of the Parties to the STID has agreed that the Secured Liabilities (but only to the extent that such Security is expressed to secure those Secured Liabilities) shall rank in right and priority in the following order: first, the Senior Secured Liabilities; and second, the Junior Secured Liabilities. Each Secured Creditor (other than the Security Agent) has agreed with the other Secured Creditors that at any time prior to the Senior Discharge Date (in the case of the Senior Secured Creditors) and at any time prior to the Junior Discharge Date (in the case of the Junior Secured Creditors), that it will not, inter alia: permit or require the Issuer to discharge any of the Finance Document Liabilities owed to it; accelerate, or permit or require the Issuer to accelerate, cancel, pay, prepay, repay, redeem, purchase, terminate early or voluntarily terminate or otherwise acquire any of the Finance Document Liabilities; (c) waive, amend or take any action which would have the effect of waiving or amending any provision of a Finance Document to which it is a party; (d) take, accept or receive the benefit of any security, guarantee, indemnity, collateral (including cash collateral) or other assurance against financial loss from the Issuer in respect of any of the Finance Document Liabilities owed to it; and (e) take, receive or recover from the Issuer by set off, any right of combination of accounts, proceedings of any kind or in any other manner whatsoever any Secured Liabilities owed to, in each case save as permitted in accordance with the terms of the STID and the Finance Documents. Enforcement Action Under the STID, none of the Secured Creditors (other than the Security Agent) will be entitled to take Enforcement Action against the Issuer except as expressly permitted by the STID and the Finance Documents. After notification of the occurrence of an Event of Default which is continuing, in accordance with the STID the Security Agent should deliver an Enforcement Notice to enforce all or any part of the Security or to take any other kind of Enforcement Action if so requested by any Creditor Representative (other than the Junior Agent), by notice promptly requesting an Enforcement Instruction from the Qualifying Secured Creditors as to whether the Security Agent should deliver an Enforcement Notice to enforce all or part of the Security or to take any other kind of Enforcement. An Enforcement Instruction Notice may be passed at a meeting held in compliance with the Quorum Requirement (where voting instructions are given and not subsequently revoked by one or more Qualifying Secured Creditors, representing, in aggregate, at least 66 2/3 % of the Qualifying Secured Debt) and whose decisions must be passed by the Majority Requirement (meaning that voting instructions in favour of the resolution have been given and not subsequently revoked by Qualifying Secured Creditors representing, in 96

103 aggregate, 66 2/3 % of the Qualifying Secured Debt owed to such Qualifying Secured Creditors that voted during the relevant period). Post-enforcement Priorities of Payment At any time after an Enforcement Notice has been delivered by the Security Agent, all amounts from time to time received or recovered by the Security Agent pursuant to the Finance Documents shall be held by the Security Agent on trust to apply them in accordance with the Post-enforcement Priorities of Payment. For more information on this payment waterfall see Overview of the Senior Bonds Post-enforcement Priorities of Payment. Amendments and Waivers The STID contains detailed provisions setting out the voting and instruction mechanics in respect of Ordinary Voting Matters; and Extraordinary Voting Matters. The Issuer shall be entitled to request the Security Agent to approve any amendment or waiver, the grant or consent or the giving of determination or direction as to the exercise of any right or discretion under any Finance Document by delivering a STID Proposal to the Security Agent, the Secured Creditor Representatives and the Senior Debtholders and each other affected Secured Creditor. The Security Agent may, in its sole discretion, concur with the Issuer in respect of any Security Agent Discretion Matter and will be under no obligation to exercise its discretion in respect of any STID Proposal designated by the Issuer as a Security Agent Discretion Matter. The STID Proposal will certify whether it is a Security Agent Discretion Matter, an Ordinary Voting Matter or an Extraordinary Voting Matter and whether it gives rise to an Entrenched Right. Any STID Proposal which does not give rise to a Junior Secured Creditor Entrenched Right or a Senior Secured Creditor Entrenched Right may be approved acting in accordance with the terms set out in the STID Decision Making Protocol. Ordinary Voting Matters The Quorum Requirement in respect of an Ordinary Voting Matter shall initially be one or more Qualifying Secured Creditors representing, in aggregate, at least 20% of the Qualifying Secured Debt of the Qualifying Secured Creditors provided that, if the Quorum Requirement has not been met on or before the Business Day immediately preceding the last day of the Decision Period, the Quorum Requirement shall be reduced to one or more Qualifying Secured Creditors representing, in aggregate, 10% of the Qualifying Secured Debt of the Qualifying Secured Creditors, and the Decision Period shall be extended for a period of a further five Business Days from the expiry of the initial Decision Period. If the Quorum Requirement for an Ordinary Voting Matter is satisfied, the majority required to pass a resolution in respect of an Ordinary Voting Matter (an Ordinary Resolution) shall be one or more Qualifying Secured Creditors (or, if the Qualifying Secured Creditors are the Junior Lenders and there is more than one Junior Lender, two or more Qualifying Secured Creditors) representing, in aggregate, more than 50% of the Qualifying Secured Debt that votes during the relevant Decision Period. Extraordinary Voting Matters The Quorum Requirement in respect of an Extraordinary Voting Matter shall initially be one or more Qualifying Secured Creditors (or, if the Qualifying Secured Creditors are the Junior Lenders and there is more than one Junior Lender, two or more Qualifying Secured Creditors) representing, in aggregate, at least 50% of the Qualifying Secured Debt of the Qualifying Secured Creditors provided that, if the Quorum Requirement has not been met on or before the Business Day immediately preceding the last day of the Decision Period, the Quorum Requirement shall be reduced to one or more Qualifying Secured Creditors representing, in aggregate, 10% of the Qualifying Secured Debt of the Qualifying Secured Creditors, and the Decision Period shall be extended for a period of a further five Business Days from the expiry of the initial Decision Period. If the Quorum Requirement for an Extraordinary Voting Matter is satisfied, the majority required to pass a resolution in respect of an Extraordinary Voting Matter (an Extraordinary Resolution) shall be one or more 97

104 Qualifying Secured Creditors (or, if the Qualifying Secured Creditors are the Junior Lenders and there is more than one Junior Lender, two or more Qualifying Secured Creditors) representing, in aggregate, at least 66 2/3 % of the Qualifying Secured Debt that is voted during the relevant Decision Period. Account Bank Agreement The Finance Documents require the Issuer to operate the Project Accounts in accordance with an English law governed Account Bank Agreement dated on the Issue Date between, among others, the Issuer, the Account Bank, the Bond Trustee and the Security Agent. Under the Account Bank Agreement, the Issuer appointed Banco Santander, S.A. as the Account Bank and must maintain the General Account, Capex Reserve Account, Expropriation Reserve Account, Junior Ratio Enhancement Account, Senior Debt Service Reserve Account and Insurance and Disposal Proceeds Account, in the name of the Issuer at the Account Bank. All amounts payable to or receivable by the Issuer including but not limited to income from the Project must be promptly paid into the General Account, subject to certain exceptions including in the case of amounts required to be paid into other Project Accounts. The Issuer may only withdraw from the General Account for the purposes and in the order specified in the Account Bank Agreement. For more information on this payment waterfall see Overview of the Senior Bonds Pre-enforcement Priorities of Payment. Bond Trust Deed The Issuer and Bond Trustee entered on 9 March 2016 into an English law governed Bond Trust Deed under which, among other things, the Bonds were constituted and the Issuer covenanted to the Bond Trustee (which will hold the benefit of the covenant on trust for the Bondholders) to pay the principal and interest on the Bonds in accordance with the Conditions. The Bond Trust Deed was supplemented on the Issue Date. Senior Note Purchase Agreement The Senior Note Purchase Agreement was entered into by the Issuer and each of the Purchasers listed in Schedule A to the Senior Note Purchase Agreement on 9 March The purpose of the Senior Note Purchase Agreement is to set out the conditions, in accordance with the STID, under which the Company issues and sells to each Senior Note Purchaser and under which conditions each Senior Note Purchaser purchases from the Company, at the Issue Date, Senior Notes in an aggregate principal amount of 40,000,000 at a price equal to 100 per cent. of the principal amount. The Senior Notes, and any non-contractual obligations arising out of or in connection with them, are governed by the laws of England. The Senior Note Purchase Agreement was supplemented on the Issue Date. Junior Facility Agreement Pursuant to the Junior Facility Agreement entered into on 16 March 2016, the Original Junior Lenders will grant to the Issuer a loan facility. The Issuer will be able to utilise the Junior Facility Agreement by drawing down a single Junior Loan, subject to the conditions set out therein. The rate of interest of the Junior Loan for each Interest Period shall be payable at a fixed rate of interest of 7 per cent. per annum from the Utilisation Date to the date which is the ninth anniversary of the Issue Date and at a fixed rate of interest of 10 per cent. per annum from and including the date which is the ninth anniversary of the Issue Date until the Junior Facility Final Maturity Date. Interest shall be paid by the Company on each Payment Date or, if any amount of interest on the Junior Loan required to be paid cannot be paid in full on the relevant Payment Date in accordance with the Pre-enforcement Priorities of Payment or as a result of there being a Junior Loan Payment Lock-up, shall accrue and be capitalised on such Payment Date at a PIK Rate, which is 2 per cent. per annum higher than the relevant Junior Rate of Interest. A Junior Loan Payment Lock-up will occur if certain requirements are not met, including the Senior Historical DSCR being 1.20:1 or less. If there are sufficient funds available in accordance with the Pre-enforcement Priorities of Payment and there is no Junior Loan Payment Lock-up, the Issuer shall repay the Junior Loan in an amount equal to the Junior Cash Sweep Amount on each Payment Date, otherwise the Issuer shall repay the Junior Loan in full on the Junior Facility Final Maturity Date. The Junior Facility Agreement will permit the Junior Lenders to suspend or in 98

105 certain circumstances cancel the Junior Loan on the occurrence of specified prepayment events or an event of default. However, the rights of the Junior Lenders and the Issuer will be subject to the terms of the STID. The Junior Facility Agreement requires the Issuer to gross up any payments which are subject to withholding taxes and to compensate the Junior Lenders for any break costs on a prepayment. Option Agreement The Issuer, the Junior Lenders and the Shareholders, among others, entered into the Option Agreement on the Issue Date under which (i) each Junior Lender has granted to the Shareholders an option to purchase its participation under the Junior Facility Agreement (the Debt Option) at the Debt Option Price; and (ii) each Shareholder has granted to the Junior Lenders an option to purchase its shares at the Issuer (the Share Option) at the Share Option Price subject to and in accordance with the terms of the agreement. The Debt Option may be exercised by the Shareholders by serving a notice on the Junior Agent at any time from (and including) 17 March The Share Option may be exercised by the Junior Agent (if so instructed by the Junior Lenders in accordance with the Junior Facility Agreement) by serving a Share Option Exercise Notice on each Shareholder at any moment from (and including) 17 March 2026 and, in limited circumstances, before that date. 99

106 SUMMARY OF ADVISERS REPORTS This summary should be read in conjunction with, and is qualified in its entirety by, the full text of the relevant Report. Each of the Reports was prepared at the request of the Issuer. Each Adviser takes responsibility for the contents of the full text of the relevant Report. The Reports described below were prepared for the Issuer s use on the basis of contractual terms of reference agreed upon by the Issuer and the relevant Adviser to meet specific requirements and which may not be appropriate to meet the objectives of any potential investor or any other third party. TRAFFIC REPORT Traffic Adviser Steer Davies Gleave (Steer Davies Gleave or SDG) is an independent transport planning consultancy headquartered in London. Having being established in 1979, the company has more than 300 staff employed worldwide with an annual turnover of more than 30m. Steer Davies Gleave has very wide experience in providing support in transport infrastructure transactions. SDG is well known in this field, with a specialist team experienced in carrying traffic and revenue analysis for roads as for airports, rail, transit and ferries. Steer Davies Gleave has worked on more than 400 toll road assignments and over the past years has supported the issue of bonds on a number of very significant projects. SDG was appointed by Ausol in June 2015 to provide traffic forecasts for the Concessions. SDG undertook an assessment of the historical traffic data and the main drivers of these traffic flows in the provinces of Malaga and Cadiz, which form part of the autonomous community of Andalusia. The Traffic Report is included as Annex B to this Prospectus. The Socio-Economic Context Population The population in the corridor comprised by Ausol I and Ausol II (i.e. the municipalities of Torremolinos, Benalmadena, Fuengirola, Mijas and Marbella in respect of Ausol I and the municipalities of Estepona, Manilva and San Roque in respect of Ausol II) has been growing at a rate of 2.9 and 3.0 per cent. per annum respectively over the period, of which domestic residents accounted for approximately 1 per cent. and EU and international immigrants accounted for the remainder. A forecast for the next two decades released by the Andalusian Statistical and Cartography Office (Instituto de Estadística y Cartografía de Andalucía, IECA) predicts approximately 0.4 per cent. population growth per annum between 2015 and 2035 in the corridor comprised by Ausol I and Ausol II. Within these municipalities, Mijas and Manilva are expected to have an annual population growth well above the average of the rest of the corridor at 1.3 per cent. and 0.9 per cent. per annum, respectively. GDP GDP in Andalusia in 2014 was 141,704 million, ranking third in comparison to other regions. In terms of GDP per capita, the region lags behind the Spanish average GDP per capita ( 16,884 compared with 22,780, source: INE) despite an increase of 218 when compared to 16,666 in As of the date of the report, GDP figures are still far from pre-crisis levels with Andalusian GDP per capita in 2014 being 16,884 compared to 18,400 in National and regional GDP is shown to have been growing rapidly over the period prior to the recession ( ), averaging at 3 to 4 per cent. per annum. Since 2008 GDP experienced negative growth until 2013 when the GDP of Spain and Andalusia grew by 1.4 and 1.3 per cent. respectively, a signal that better economic conditions might be returning. GDP in Spain and Andalusia is expected to rise by 3.3 and 2.8 per cent. respectively in 2015 and by 3.0 and 2.7 per cent.respectively in 2016 (source: Bank of Spain and Funcas). According to a report from Bank of Spain, 100

107 economic growth will be driven in the near future by growth in domestic demand; rise in employment rates; (c) robust growth in the tourism sector; and (d) recovery of industrial production levels. Employment Among the regions, Andalusia employment figures were affected to a greater extent by the economic downturn mainly because of its economic structure, characterised by a greater dependence on the construction and tourism industries to the whole economy. In 2007, the tertiary sector amounted to 70 per cent. of the gross value added (GVA) whereas construction almost doubled its contribution to the total GVA between 1997 and 2007 (7.6 to 14.7 per cent., respectively). As a consequence of the economic downturn, the unemployment rate increased significantly to 26.3 per cent. in 2009 from approximately 15 per cent. in The negative trend has continued so that in 2013 the unemployment rate reached 36 per cent., ten percentage points above the national average for that year. Current macroeconomic data suggests that employment figures are improving. In 2014, employment grew in the region and outperformed national statistics (2.4 vs. 1.2 per cent.) and the unemployment rate decreased to 34.2 per cent. during the first quarter of Unemployment rates are expected to decrease to 20.2 per cent. in 2016 at a national level and to 32 per cent. in Andalusia. SDG assumes that unemployment levels in the region, around ten per cent. points higher than the rest of Spain, will have a significant impact on the levels of commuter traffic. Tourism During the last few years, Andalusia has ranked second in tourism in Spain, with approximately 8 million foreign visitors each year and more than 20 million visitors, including national tourists, each year (source: IECA). Tourism figures have experienced a steady growth during , reaching its peak in 2007 with 25.8 million tourists. Following the economic downturn, the number of tourists dropped by 15 per cent. to 21.9 million in 2009, a level that remained stable until Since 2012, a positive trend can be observed, both in national and international tourist figures. Data from the first quarter of 2015 suggests that the growth rate of tourist arrivals will continue to grow in the near future. Among the factors explaining the recent boom in tourism in the area, the following should be highlighted: depreciation of the euro against major currencies such as the dollar and sterling; political or economic instability in competing tourist destinations such as Tunisia or Greece; an increase in household spending; and the completion of the expansion and renovation works carried out at Malaga airport together with an increase in regular flights and destinations (e.g. Russia, Poland, Canada, Hungary, Bulgaria and Slovakia). Traffic Growth SDG has assumed the future likely growth in travel in the Concessions will depend on the growth experienced by some of the factors likely to have an effect on the traffic and, a capture model based on how the project is expected to be more attractive as the congestion on the road alternatives increases. Background Growth SDG has estimated that the traffic growth for light vehicles will be as follows: short term ( ) traffic growth in line with tourism and GDP growth, with elasticities of 0.38 and 0.60 respectively; and long term (from 2019 onwards) traffic growth closely tied with GDP evolution, with an elasticity of 0.97 that will be subsequently reduced to 0.7 at the end of the relevant Concession periods. 101

108 Traffic growth for heavy vehicles is also expected to vary over the short and long term. In the short term ( ), SDG estimates traffic will increase with a 1:1 elasticity to Industrial Production. In the long term (from 2019 onwards), SDG assume that GDP and Industrial Production will grow in parallel, therefore it is forecast that traffic growth for heavy vehicles will grow in line with GDP with an elasticity of 1.0, being constant until the end of the Concession period The economic outlook is expected to significantly improve over the next two years, driven by supportive financial conditions, the depreciation of the euro, lower oil prices and strengthening trading partner growth. In this context, GDP growth is forecast to accelerate to 3.0 per cent. in 2015 and 2.6 per cent. in 2016 by Consensus Forecasts. Tourism is expected to grow driven by an increase in household consumption at the national level (by 3.2 per cent. in 2015 and 2.7 per cent. in 2016) and an increase influx of visitors from the U.S., the United Kingdom and other countries in Europe where economies are performing well. Industrial Production is forecast to grow slightly above than GDP levels in the short/medium term. Long term GDP projections have been taken from OECD reports showing an average annual GDP increase of around 2.2 per cent. between 2017 and 2020, an annual increase of 1.7 per cent. between 2021 and 2027 and 1.6 per cent. annual growth for the period. Traffic Capture The N-340/A-7 runs parallel to the Concessions and offers a free dual carriageway alternative for traffic in the corridor. This route therefore provides direct competition for the travel market and may influence motorway capture rates in the future. The Traffic Capture Model has been developed to calculate the traffic attracted from the free N-340 alternative to the Concession in future years. This model uses four inputs: Traffic volumes: it is segmented for each individual sector by vehicle type (light and heavy), toll facility (troncal and lateral) and time of year (summer and non-summer). Tolls: SDG has assumed that tolls will remain constant in real prices for the duration of the Concession. (c) Time: SDG has observed historical traffic flows and speed for different sections along the free N-340 alternative and has derived a volume-delay function with the aim of predicting the additional delays on the free N-340 alternative when traffic increases. (d) Value of Time: SDG has estimated users willingness to pay (or Value of Time) in the area, based on data collected by TARYET, S.L. in May 2010 and its own independent benchmarking and has also assumed that Value of Time will remain constant in real terms, a conservative approach taking into account that a sensitivity analysis shows that Value of Time increases in real terms in line with the assumed GDP forecast with an elasticity of 0.5. Conclusions The following conclusions can be summarised from the traffic report prepared by SDG: AADT during the period between 2002 and 2007 grew at a compound average growth rate of 6.8 per cent. and 10.8 per cent. in Ausol I and Ausol II, respectively. Between 2008 and 2013, traffic levels experienced decreases at a compound average rate of 10.3 per cent. The number of users has started to grow again over the last two years, at a lower pace in the case of 2014 (3.5 per cent. and 2.3 per cent. for Ausol I and II respectively) and at pre-crisis levels in Population growth has been significant over the first decade of the Concession, reflecting the developments linked principally to tourism. Population is nevertheless expected to grow at a significantly lower pace in comparison to previous periods. The economic downturn and fall in tourism have had a significant impact on traffic levels, which halved during the period in respect of Ausol I (10,000 daily vehicles in 2013 compared to 20,365 in 2007) and decreased by 37 per cent. in respect of Ausol II (from 19,072 in 2007 to 12,000 in 2013). 102

109 Growth in traffic levels resumed in 2014 and was expected to continue in 2015 and successive years alongside economic growth (GDP and tourism levels). Traffic growth in the short term (from 2015 to 2018) is expected to be related to GDP evolution, tourism and levels of Industrial Production. Traffic growth in the long term (from 2019 onwards) is expected to be solely related to the GDP evolution. The address of Steer Davies Gleave is Upper Ground, SE1 9PD. London, United Kingdom. As of the date of this Prospectus, Steer Davies Gleave has no material interest in the Company or its Shareholders and has consented to the inclusion of this summary in the Prospectus. A complete version of this Traffic Report is included in Annex B to this Prospectus. TECHNICAL REPORT Technical Adviser Ove Arup and Partners Ltd (Arup) was founded in 1946 and has developed into an international firm of consultants providing planning, engineering and project management services in every field related to transport, building, civil and industrial works. Arup has gained considerable experience in assisting clients, contractors and financial arrangers for privately financed projects in the transportation sector. Arup has been advising funding groups on highway PPP projects since the 1970s. Technical Study of Infrastructure and of Current Operating and Major Maintenance Models Arup has been appointed to conduct a review of the OPEX (ordinary maintenance, supervision and toll collection) and CAPEX (renovation and extraordinary maintenance) projections required under the terms of the Concessions with respect to the Project. In relation to the technical operating parameters set out in the Concession Agreements, Arup reports satisfactory compliance. The main conclusions reached by Arup are set out below. The Concession Agreements The documents comprising the Concession Agreements do not contain the prescriptive performance requirements in relation to routine maintenance, lifecycle replacement or handback requirements that are typically included in concession agreements. The terminology used in these particular Concession Agreements is more general and subjective, as it is only required to be maintained in perfect condition or in full working order. It is Arup s understanding that there is a lack of clarity around the contractual requirements with regards to the asset maintenance. Operation and Maintenance Review The report states that Ausol s routine operation and maintenance activities are well run and the tolling operation is working efficiently to meet the needs of the traffic and Concession requirements. Arup also understands that the Grantor is satisfied with the operation and maintenance performance of the Project as there have been no performance deductions. Ausol operates the Concessions by itself, meaning that general routine operation and maintenance activities are not outsourced to a third party (except for some certain specialist activities such as in relation to UPS/Generators or tunnel testing). By self-operating the Concessions, Arup states that Ausol is exposed to the operation and maintenance risks which are retained at the Concession level. Arup understands that Ausol s organisation structure and level of personnel are adequate and fit for the purposes of the Concessions, as it has successfully managed the operation and maintenance activities over more than ten years. Arup notes that the number of toll collection staff appears to be appropriate for the number of toll plazas and the volume of traffic using the road, even though Arup recognises that it is difficult to benchmark toll collection staff numbers on a reliable basis given the increasing trend towards electronic tolling systems. 103

110 There are no records of operation and maintenance performance as there are no contractual standards to comply with. The authorities inspect the Project on a monthly basis and, to date, the Company states that these authorities have not imposed any performance penalties, considering this to be evidence of its satisfactory performance. Environmental Review Arup s report notes that the current management of the operational aspects of the highways appears broadly in compliance with the relevant aspects of the Equator Principles. There are also mechanisms in place to ensure that such compliance is maintained over time. According to Arup s report, Ausol appears to be knowledgeable about the national legal requirements for environmental protection and monitoring and has obtained the relevant consents and permits required for the operational activities in respect of the Project. Ausol continues to operate within conditions applied with regular monitoring and reporting to the appropriate authority. In order to carry out its activities, Ausol implemented a certified management system which embraces environmental aspects and includes appropriate mechanisms for monitoring, reporting, checking and auditing, corrective action and improvement on a continuous basis. Finally, Arup also understands that improvements in stakeholder engagement could be achieved through the publication of the environmental and social information routinely gathered and reported internally and to the relevant authorities. Lifecycle Review Ausol has a master Lifecycle (CAPEX) Programme which covers the renewal of each of the principal replaceable elements at the appropriate time in its design life over the full Concession period. The approach to lifecycle replacement interventions is consistent with typical practice on similar concessions. The Company has rigorous asset management systems in place which provide a mechanism for robust planning of future works and for the treatment of any urgent defects that may arise. There is an open-ended requirement to implement capacity enhancements where traffic flows increase to the point of reducing the level of service to a certain threshold and the costs of such capacity improvement works must be borne by Ausol. According to Arup s report, based on a traffic study, the Benalmadena Bypass is likely to require widening works during the Concessions period and a sum of money has been set aside for this purpose. In addition, SDG has conducted a sensitivity test for the requirements for further bypass widening. This test concluded that widening of the Estepona bypass will be necessary in 2055 and widening of the Marbella bypass will be expected to take place in 2060, both cases beyond the end of the Concession period. In Arup s view, the overall lifecycle CAPEX allowance for the Concessions is at an appropriate level, following the Arup s high level review of the pavement lifecycle interventions and other asset renewals. The most costly intervention is expected to be the pavement repairs, although Arup notes that the frequency of intervention and its associated costs appear reasonable. The unit rate of lifecycle CAPEX for the two Concessions is at the typical level for concessions of this type and is considered to be reasonable. To conclude, Arup understands that the details provided in the Lifecycle CAPEX programme and the annual Technical Note are typical details employed by concessionaires in the planning of such works and are considered to be appropriate. 104

111 General Status of the Infrastructure A visual inspection of Ausol I was carried out between 20 and 21 July 2015 by technical personnel of Arup. Arup s overall conclusion is that the structures are being maintained to a good standard both in terms of routine and lifecycle maintenance. Regarding the Project s pavement conditions, Arup states that the pavement surveys provided are suitable and extensive for a road of this type despite the fact that it remains to be clarified what thresholds are used to assess the data and determine the need for interventions. With regards to the renewals programme, Arup recommends a sensitivity test for re-surfacing at 10-year intervals rather than the current 12-year interval programme. The address of Ove Arup & Partners Ltd is The Arup Campus, Blythe Gate, Blythe Valley Park, B90 8AE. Solihull, United Kingdom. As of the date of this Prospectus, Arup has no material interest in the Company or its Shareholders and has consented to the inclusion of this summary in the Prospectus. The Technical Report is not included in this Prospectus (or in any appendix thereto) and will not otherwise be made available to prospective investors or Senior Bondholders. Upon written demand to the Issuer and entry into an appropriate release letter, the Technical Report may be released to a prospective investor on a non-reliance basis. EXPROPRIATION REPORT Expropriation Adviser Getinsa-Payma, S.L. (Getinsa-Payma) has its registered address at Ramón de Aguinaga, 8, Madrid, Spain, with additional offices in Dammam (Saudi Arabia), Alger (Algeria), Makati City (Philippines), Lima (Peru), Santo Domingo (Dominican Republic), Ankara (Turkey), Hanoi (Vietnam), Warszawa (Poland) and Santiago (Chile). Getinsa-Payma has a largely experience managing expropriation projects for large projects and public infrastructures in Spain, counting Aena (former 100% state-owned company that operates the majority of airports in Spain), Ministerio de Fomento (Ministry of Public Works) and ADIF (state-owned company in charge of the administration of railway infrastructures in Spain) among its clients. Getinsa-Payma s role in these projects mainly consists of the identification of land plots likely to be subject to expropriation procedures as well as the research on the relevant owners affected and valuation of such properties. During the last ten years, Getinsa-Payma has been involved in projects that have generated turnover of 20 million. The personnel of Getinsa-Payma involved in the report is briefly set out below: Clemente Gonzálvez Abietar is the chief of the Getinsa-Payma s expropriation department, with more than 25 years of experience. Raúl Lázaro Sánchez is a lawyer working in the expropriation department of Getinsa-Payma with more than 15 years of experience. Carlos Orrico Muñoz is a lawyer with more than 10 years of experience. Francisco Vizuete Pintor holds a degree in Agricultural Technical Engineering and has over 15 years of experience in the sector. Object The aim of the Expropriation Report issued by Getinsa-Payma was to review the status, as at 23 September 2015, of the expropriation cases where Ausol, as concessionaire, has an interest and to estimate the financial and temporal risk vis-à-vis any obligation to pay expropriation compensation, regulated by the Spanish expropriation regulations. The Expropriation Report has been updated through supplementary notes 105

112 dated 4 December 2015 and 9 February 2016, the information expressed in this summary being as of 9 February 2016 unless otherwise expressed. Scope The total number of expropriation cases is 909, 884 of which have been settled with the corresponding payment by Ausol of the fair price for those cases and related interest accrued, while the remaining 25 cases are currently pending a ruling by the Provincial Compulsory Expropriation Jury or a binding court decision by the courts (being the High Court of Justice of Andalusia and the Spanish Supreme Court) as to the fair price to be paid in respect of those cases. A review and economic/temporal estimate of these cases are the main objective of the Expropriation Report. Evaluation of the processing of cases It is Getinsa-Payma s opinion that Ausol has correctly processed the relevant actions through the official, predominantly court, channels and that the relevant regulations have been observed at all times. Notwithstanding the more specific opinions and conclusions referred to below, the practice followed by Ausol in the expropriation cases corresponds to objective technical and legal principles, as opposed to the subjective nature observed regarding some of the individual parties affected. Getinsa-Payma believes that such objectivity guarantees the principle of proportionality, striking a fair balance between public interest and the rights of private individuals, as established in Article 33.3 of the Spanish Constitution, ensuring individuals receive fair compensation in terms of the value of the assets they have forfeited. Evidence of the application of this principle in the proceedings is demonstrated by the number of agreements reached via official channels between Ausol and the expropriated parties in respect of the value of the assets and corresponding rights (97 per cent. of all cases were settled by mutual agreement and acceptance of the rulings made by the Provincial Compulsory Expropriation Juries). The fair approach adopted by Ausol is supported when one considers that the initial period of the proceedings ( ) was a time during which land and construction prices were rapidly rising, above all in the Costa del Sol. It is important to bear in mind the time at which the expropriation process took place. Proceedings commenced at a time when the economy was in a phase of expansion. Price rises in real estate and particularly in the Costa del Sol region resulted in appellants basing their claims on the valuation of urban development expectations more or less exclusively based on the attractive geographic location of the relevant properties. The state of the economy has changed radically since, as the economy has been since in a recession caused to a great extent by the real estate business. This has had such an impact on the value of land that new legislation has been drafted in Spain. Law 6/1998 established a method for the valuation of non-developable and non-zoned developable land which allowed valuers a considerable margin in their operations, ultimately prevailing over the actual status of the land. This was replaced by Royal Legislative Decree 2/2008 under which the operational margin is limited and (although an evaluation may be carried out on the proximity of the land to populations or business centres and be based on expectations) restrictions are imposed in order to avoid, for the purposes of compensation, any confusion between different classifications of land. Nonetheless, courts must assess the relevant fair price in accordance with the applicable legislation at the time the expropriation process began, in this case according to Law 6/1998. Conclusions Of the total 909 official expropriation cases, agreements were reached with the expropriated parties in 884 cases (97 per cent. of the total), with both the fair price and interest accrued as part of the corresponding proceedings paid by the time the Expropriation Report was finalised. Further cases have been completed between a previous expropriation report dated 9 June 2015 and the date of the present Expropriation Report dated 23 September 2015 and the supplemental notes to it dated 4 December 2015 and 9 February 2016, which for the purposes of these conclusions are considered as finalised, as the expropriation compensation and the relevant legal interests have been calculated and paid. The remaining 25 cases (3 per cent. of the total), reveal a general trend on the part of the High Court of Justice of Andalusia to uphold the fair price valuation rulings issued by the Provincial Compulsory Expropriation Juries, thereby confirming the approach taken by the Spanish Supreme Court in terms of the presumption of veracity, accuracy and objectivity. 106

113 This approach puts Ausol in an advantageous position and reduces its risk in relation to cases pending judicial resolution because the onus is on the expropriated parties to counter-claim against the original rulings of the Provincial Compulsory Expropriation Juries. The estimates were made on a case-by-case basis, taking into account the specific circumstances of each case with particular focus, as appropriate, on the judicial evidence and bearing in mind, when establishing the risk involved in each case, the sums which have already been paid out. An estimate on a case-by-case basis was also made regarding the expected years for payment, with a particular focus on the current status of each proceeding and calculating any interest accordingly. As of 9 February 2016, the overall risk estimated within the Expropriations Report totals an amount of 28,816, (of which 16,286, relates to principal and 12,529, to interest calculated until the estimated date of payment). This amount is to be paid in accordance with the calendar included within the Expropriation Report. As of the date of this Prospectus, Getinsa-Payma has no material interest in the Company or its Shareholders and has consented to the inclusion of this summary in the Prospectus. The Expropriation Report is not included in this Prospectus (or in any appendix thereto) and will not otherwise be made available to prospective investors or Senior Bondholders. Upon written demand to the Issuer and entry into an appropriate release letter, the Expropriation Report may be released to a prospective investor on a non-reliance basis. INSURANCE REPORT Insurance Adviser Aon Gil y Carvajal, S.A. Correduría de Seguros, Sociedad Unipersonal is the insurance adviser of Ausol. Aon Gil y Carvajal, S.A. Correduría de Seguros, Sociedad Unipersonal has its address at Rosario Pino 14, Madrid, Spain. Aon Gil y Carvajal, S.A., Correduría de Seguros, Sociedad Unipersonal (Aon) is a wholly-owned subsidiary of AON Group, a leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services established in Aon has 72,000 employees in more than 120 countries. Ignacio Muguiro Loring is an Account Director for Construction and Energy Accounts with over 12 years experience working with Aon that has participated in the preparation of the report. Mr. Muguiro holds a Business Administration Degree from the Oviedo University and is Licensed Property and Casualty broker by the State of New York Insurance Department. Insurance Report Aon has prepared a report on the insurance policies of Ausol. In summary, the insurance due diligence aimed to determine the exposure and identify any future threats to the balance sheet of the Project, as well as to provide an estimation of the possible anticipated costs of future insurance programmes, recommendations as to the structure of the insurance and risk management programmes and indicate the appropriateness of the insurance policies subscribed by the parties in relation to the Project. The report considered operation on the roads to be a low-medium risk (risks derived from the management of the business such as decision-making or changes in investment policies). According to the report, the risks inherent to the Project are, among others, the following: physical damage to any facilities, equipment, machinery, materials and goods under operation; business interruption/loss of profit; and (c) third party liabilities, in respect of claims from third parties. Aon considers that these risks are mainly transferable to third parties through a proper insurance programme including coverage for property damage, business interruptions and third party liabilities. In relation to insurance risk exposure, the report came to the following conclusions: 107

114 the Project currently has the normal and expected type of insurance coverage in place. The coverage limits have been established by an appropriate risk assessment/analysis and comply with the Concession Agreements insurance requirements; risk retention levels are reasonable; and an insurance programme in line with general market standards has been in place since the operational phase of the relevant Concession began. As of the date of this Prospectus, Aon has no material interest in the Company or its Shareholders and has consented to the inclusion of this summary in the Prospectus. The Insurance Report is not included in this Prospectus (or in any appendix thereto) and will not otherwise be made available to prospective investors or Senior Bondholders. Upon written demand to the Issuer and entry into an appropriate release letter, the Insurance Report may be released to a prospective investor on a non-reliance basis. 108

115 TAXATION EUROPEAN UNION DIRECTIVE ON TAXATION OF SAVINGS INCOME Under the EU Savings Directive, EU Member States are required to provide to the tax authorities of other EU Member States details of certain payments of interest or similar income paid or secured by a person established in a Member State to or for the benefit of an individual resident in another EU Member State or certain limited types of entities established in another EU Member State. For a transitional period, Austria is required (unless during that period it elects otherwise) to operate a withholding system in relation to such payments (subject to a procedure whereby, on meeting certain conditions, the beneficial owner of the interest or other income may request that no tax be withheld). The end of the transitional period is dependent upon the conclusion of certain other agreements relating to information exchange with certain other countries. A number of non-eu countries and territories including Switzerland have adopted similar measures (a withholding system in the case of Switzerland). On 24 March 2014, the Council of the European Union adopted a Council Directive (the Amending Directive) amending and broadening the scope of the requirements described above. The Amending Directive requires EU Member States are required to apply these new requirements from 1 January The changes will expand the range of payments covered by the EU Savings Directive, in particular to include additional types of income payable on securities. The Amending Directive will also expand the circumstances in which payments that indirectly benefit an individual resident in a Member State must be reported. This approach will apply to payments made to, or secured for, persons, entities or legal arrangements (including trusts) where certain conditions are satisfied, and may in some cases apply where the person, entity or arrangement is established or effectively managed outside of the European Union. However, on 10 November 2015, the Council of the European Union adopted a Council Directive (the Overruling Directive) repealing the Savings Directive from 1 January 2017 in the case of Austria and from 1 January 2016 in the case of all other Member States (subject to on-going requirements to fulfil administrative obligations such as the reporting and exchange of information relating to, and accounting for withholding taxes on, payments made before those dates and certain other transitional provisions in the case of Austria). This is to prevent overlap between the Savings Directive and a new automatic exchange of information regime to be implemented under Council Directive 2011/16/EU on Administrative Cooperation in the field of Taxation (as amended by Council Directive 2014/107/EU). The Overruling Directive also provides that Member States will not be required to apply the new requirements of the Amending Directive. If a payment were to be made or collected through an EU Member State (or any non-eu country or territory which has adopted similar measures in order to conform to the EU Savings Directive) which applies a withholding tax system as referred to above and an amount of, or in respect of, tax were to be withheld from that payment, neither the Issuer nor any Agent (as defined in Terms and Conditions of the Senior Bonds ) nor any other person would be obliged to pay additional amounts with respect to any Bond as a result of the imposition of such withholding tax. The Issuer will be required to maintain a Agent in an EU Member State (if any) that would not be obliged to withhold or deduct tax pursuant to the relevant national legislation implementing, or introduced in order to conform to, the EU Savings Directive (so long as there was such a member state). Potential investors who are in any doubt as to their tax position should consult their own independent tax advisers. US FOREIGN ACCOUNT TAX COMPLIANCE WITHHOLDING TO ENSURE COMPLIANCE WITH TREASURY DEPARTMENT CIRCULAR 230, PROSPECTIVE PURCHASERS ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF U.S. FEDERAL TAX ISSUES IN THIS OFFERING CIRCULAR IS NOT INTENDED OR WRITTEN TO BE RELIED UPON, AND CANNOT BE RELIED UPON, BY ANY PERSON FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON SUCH PERSON UNDER THE INTERNAL REVENUE CODE; (B) SUCH DISCUSSION IS INCLUDED HEREIN BY THE ISSUER IN CONNECTION WITH THE PROMOTION OR MARKETING (WITHIN THE MEANING OF CIRCULAR 230) BY THE ISSUER OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN; AND (C) PROSPECTIVE PURCHASERS SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISER. 109

116 Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, and U.S. Treasury regulations promulgated thereunder that took effect on 28 January 2013, as amended from time to time (together FATCA) impose a new reporting regime and potentially a 30% withholding tax with respect to certain payments to (i) any non-u.s. financial institution (a foreign financial institution, or FFI (as defined by FATCA)) that does not become a participating FFI by entering into an agreement with the U.S. Internal Revenue Service (IRS) to provide the IRS with certain information in respect of its account holders and investors or is not otherwise exempt from or in deemed compliance with FATCA; and (ii) any investor (unless otherwise exempt from FATCA) that does not provide information sufficient to determine whether such investor is a U.S. person or should otherwise be treated as holding a United States Account of the Issuer (a Recalcitrant Holder). FATCA implementation is being phased in from 1 July 2014 for payments from sources within the United States and is currently proposed to apply to foreign passthru payments (a term not yet defined) made by an FFI to a non-participating FFI or Recalcitrant Holder no earlier than 1 January This withholding would potentially apply to payments in respect of: (i) any Senior Bonds issued or materially modified on or after the grandfathering date, which is 1 July 2014; and (ii) any Senior Bonds characterised as equity or which do not have a fixed term for U.S. federal tax purposes, whenever issued. The United States and a number of other jurisdictions announced their intention to enter into intergovernmental agreements to facilitate the implementation of FATCA (each, an IGA). In some cases such IGAs have been signed; in other cases, negotiations are still ongoing. Pursuant to FATCA and the Model 1 and Model 2 IGAs released by the United States, most FFIs in an IGA signatory country should be treated as Reporting FIs that would generally not be subject to withholding under FATCA on any payments they receive. Further, an FFI in a Model 1 Intergovernmental Agreement (Model 1 IGA) jurisdiction should not be required to withhold under FATCA or an IGA (or any law implementing an IGA or agreement with the IRS relating to FATCA) (any such withholding being a FATCA Withholding) from payments it makes (except, in certain limited circumstances). Under the Model 1 IGA, a Reporting FI would still be required to report certain information in respect of its accountholders and investors to its home government, unless it is treated as exempt from having financial accounts for FATCA purposes. As announced in Notice and Notice , the U.S. IRS is maintaining a list of jurisdictions that will be treated as having in effect or agreed in substance an IGA, even though that IGA may not have entered into force as of 1 July The United States and Spain have entered into an agreement (the U.S.-Spain IGA) based largely on the Model 1 IGA. Subject to complying with Spanish law implementing the US-Spain IGA, the Issuer is currently not expected to suffer any FATCA Withholding. Although the Issuer will attempt to satisfy any obligations imposed on it to avoid the imposition of FATCA Withholding, no assurance can be given that the Issuer will be able to satisfy these obligations. The imposition of any FATCA withholding taxes on the Issuer (for example, if it fails to comply with its obligations under the Spanish legislation implementing the US-Spain IGA) could materially affect the Issuer s financial ability to make payments or could reduce such payments on the Senior Bonds. No other funds will be available to the Issuer to make up any such shortfall. The Issuer is not expected to be required to make any FATCA Withholding from the payments it makes. There can be no assurance, however, that the Issuer would not in the future be required to deduct FATCA Withholding from future payments. Accordingly, the Issuer and financial institutions through which payments on the Senior Bonds are made may be required to withhold FATCA Withholding if: (i) any FFI through or to which payment on such Senior Bonds is made is not a participating FFI, a Reporting FI, or otherwise exempt from or in deemed compliance with FATCA; or (ii) an investor is a Recalcitrant Holder. If a FATCA Withholding were to be made from interest, principal or other payments made in respect of the Senior Bonds, neither the Issuer nor any paying agent nor any other person would, pursuant to the conditions of the Senior Bonds, be required to pay any additional amounts as a result of the FATCA Withholding. As a result, investors may receive less interest or principal than expected. Whilst the Senior Bonds are in global form and held within the ICSDs, it is expected that FATCA will not affect the amount of any payments made under, or in respect of, the Senior Bonds by the Issuer, any paying agent and the common depositary, given that each of the entities in the payment chain beginning with (but excluding) the Issuer and ending with (but including) the participants in the ICSDs is a major financial institution whose business is dependent on compliance with FATCA and that any alternative approach introduced under an intergovernmental agreement will be unlikely to affect the Senior Bonds. The documentation expressly contemplates the possibility that the Senior Bonds may go into definitive form and therefore that they may be taken out of the ICSDs. If this were to happen, then a non-fatca compliant holder could be subject to FATCA Withholding. However, definitive Senior Bonds will be printed only in remote circumstances. 110

117 However, FATCA may affect payments made to custodians or intermediaries in the subsequent payment chain leading to the ultimate investor if any such custodian or intermediary generally is unable to receive payments free of FATCA Withholding. It may also affect payment to any ultimate investor that is a financial institution that is not entitled to receive payments free of withholding under FATCA, or an ultimate investor that fails to provide its broker (or other custodian or intermediary from which it receives payment) with any information, forms, other documentation or consents that may be necessary for the payments to be made free of FATCA Withholding. Investors should choose the custodians or intermediaries with care (to ensure that each is compliant with FATCA or other laws or agreements related to FATCA), and provide each custodian or intermediary with any information, forms and/or other documentation or consents that may be necessary for such custodian or intermediary to make a payment free of FATCA Withholding. Investors should consult their own tax adviser to obtain a more detailed explanation of FATCA and how FATCA may affect them. FATCA IS PARTICULARLY COMPLEX AND ITS APPLICATION TO THE ISSUER, THE SENIOR BONDS AND THE HOLDERS IS SUBJECT TO CHANGE. EACH HOLDER OF BONDS SHOULD CONSULT ITS OWN TAX ADVISER TO OBTAIN A MORE DETAILED EXPLANATION OF FATCA AND TO LEARN HOW FATCA MIGHT AFFECT EACH HOLDER IN ITS PARTICULAR CIRCUMSTANCE. SPANISH TAXATION Introduction The following summary describes the main Spanish tax implications arising in connection with the acquisition and holding of the Senior Bonds by individuals or entities who are the beneficial owners of the Senior Bonds (the Senior Bondholders and each a Senior Bondholder). The information provided below does not purport to be a complete analysis of the tax law and practice currently applicable in Spain and does not purport to address the tax consequences applicable to all categories of investors, some of which may be subject to special rules. All the tax consequences described in this section are based on the general assumption that the Senior Bonds are initially registered for clearance and settlement in Euroclear and/or Clearstream. Prospective purchasers of the Senior Bonds should consult their own tax advisers as to the tax consequences, including those under the tax laws of the country in which they are resident, of purchasing, owning and disposing of Senior Bonds. Furthermore, prospective investors should also note that the appointment by an investor in any Bond, or any person through which an investor holds any Bond, of a custodian, collection agent or similar person in relation to such Bond in any jurisdiction may have tax implications. Prospective investors should consult their own tax advisors in relation to the tax consequences for them of any such appointment. The summary set out below is based upon Spanish law as in effect on the date of this Prospectus and is subject to any change in such law that may take effect after such date, including changes with retroactive effect. In particular, prospective investors or Senior Bondholders are advised to consider the recently enacted tax reform approving three different Laws regarding the Personal Income Tax (PIT), the Non-Resident Income Tax (NRIT), the Corporate Income Tax (CIT) and the Value Added Tax which will affect the taxation of the Senior Bonds as well as the developments of the Law 10/2014, dated 26 June 2014 (Law 10/2014). This information has been prepared in accordance with the following Spanish tax legislation in force at the date of this Prospectus: (c) of general application, Additional Provision One of Law 10/2014 which also applies to debt instruments issued by Spanish-resident companies and Spanish public entities having corporate form, as well as Royal Decree 1065/2007, dated 27 July 2007, as amended by Royal Decree 1145/2011, dated 29 July 2011; for individuals resident for tax purposes in Spain which are subject to PIT, Law 35/2006, dated 28 November 2006, on PIT, as amended, and Royal Decree 439/2007, dated 30 March 2007, enacting the PIT Regulations, as amended, along with Law 19/1991, dated 6 June 1991, on Wealth Tax, as amended, and Law 29/1987, dated 18 December 1987, on Inheritance and Gift Tax (IGT), as amended; for legal entities resident for tax purposes in Spain which are subject to CIT, Law 27/2014, dated 27 November 2014, applicable to tax periods starting on 1 January 2015, and Royal Decree 634/2015, dated 10 July 2015, promulgating the CIT Regulations, as amended; and 111

118 (d) for individuals and entities who are not resident for tax purposes in Spain which are subject to NRIT, Royal Legislative Decree 5/2004, dated 5 March 2004, promulgating the Consolidated Text of the NRIT Law, as amended, along with Law 19/1991, dated 6 June 1991, on Wealth Tax, as amended, and Royal Decree 1776/2004, dated 30 July 2004, promulgating the NRIT Regulations, as amended, and Law 29/1987, dated 18 December 1987, on IGT, as amended. Indirect taxation Whatever the nature and residence of the Bondholder, the acquisition and transfer of Senior Bonds is exempt from indirect taxes in Spain, i.e. exempt from Transfer Tax and Stamp Duty, in accordance with the Consolidated Text of such tax promulgated by Royal Legislative Decree 1/1993, dated 24 September 1993, and exempt from Value Added Tax, in accordance with Law 37/1992, dated 28 December 1992, as amended. Direct taxation The Issuer understands that the Senior Bonds should be deemed as financial assets with an explicit yield for Spanish tax purposes, according to article 91 of the PIT Regulations and article 63 of the CIT Regulations. Individuals with tax residency in Spain Personal Income Tax (Impuesto sobre la Renta de las Personas Físicas) Both interest periodically received and income derived from the transfer, redemption or repayment of the Senior Bonds constitute a return on investment obtained from the transfer of a person s own capital to third parties in accordance with the provisions of article 25.2 of the PIT Law, and must be included in the investor s PIT savings taxable base. Income included in the base is taxed at a flat rate of 19% on the first 6,000, 21% on the following 44,000 and 23% for any amount in excess of 50,000. No withholding on account of PIT should be imposed on interest paid by the Issuer (or on income derived from the redemption or early repayment of the Senior Bonds also paid by the Issuer) to holders of the Senior Bonds who are Spanish PIT taxpayers subject to the fulfilment of the relevant requirements (including that the Paying Agent provides the Issuer, in a timely manner, with a duly executed and completed Payment Statement), as further described in Compliance with certain requirements in connection with income payments. However, income derived from the transfer of the Senior Bonds may be subject, under certain circumstances, to a withholding on account of PIT at the current rate of 19%. Intermediaries or depositary entities of the Senior Bonds may also levy this 19% withholding tax on any income derived from the Senior Bonds by holders who are Spanish PIT taxpayers. In any event, the individual holder may credit the withholding against his or her final PIT liability for the relevant tax year. Wealth Tax (Impuesto sobre el Patrimonio) According to Royal Decree-law 13/2011, dated 16 September 2011, as amended, and Law 48/2015, dated 29 October 2015, all Spanish-resident individuals are liable for Wealth Tax in 2016, in accordance with the applicable Spanish regional and state rules. This tax is levied on the net worth of an individual s assets and rights. General marginal rates range between 0% and 3.75% and some reductions could apply. Individuals with tax residency in Spain who are under the obligation to pay Wealth Tax must take into account the amount of the Senior Bonds which they hold as at 31 December in each year, when calculating their Wealth Tax liabilities. Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones) Individuals who are resident in Spain for tax purposes who acquire ownership or other rights over any Senior Bonds by inheritance, gift or legacy are subject to IGT in accordance with the applicable Spanish regional and state rules. Effective tax rates range between 0% and 81.6% for 2016, depending on relevant factors. 112

119 Legal entities with tax residency in Spain Corporate Income Tax (Impuesto sobre Sociedades) Both interest periodically received and income derived from the transfer, redemption or repayment of the Senior Bonds are subject to CIT, at the current general tax rate of 25%, in accordance with the rules for such tax. No withholding on account of CIT is imposed on interest due or on income derived from the redemption or repayment of the Senior Bonds by Spanish CIT taxpayers subject to the fulfilment of the relevant requirements, as described in Compliance with certain requirements in connection with income payments section below. With regard to income derived from the transfer of the Senior Bonds, in accordance with Section 61.s of the CIT Regulations, there is no obligation to withhold on income obtained by Spanish CIT taxpayers (which, for the sake of clarity, include Spanish tax resident investment funds and Spanish tax resident pension funds) from financial assets traded on organised markets in OECD countries. Upon admission to trading on the Irish Stock Exchange, the Senior Bonds should fulfil the requirements set forth in the legislation for exemption from withholding. The Directorate General for Taxation (Dirección General de Tributos), on 27 July 2004, issued a ruling indicating that in the case of issues made by entities resident in Spain, as in the case of the Issuer, application of the exemption requires that, in addition to being traded on an organised market in an OECD country, the Senior Bonds be placed outside Spain in another OECD country. We believe that the issue of the Senior Bonds will fall within this exemption as the Senior Bonds are to be sold outside Spain and in the international capital markets. Consequently, no withholding on account of CIT should be made on income derived from the transfer of the Senior Bonds by Spanish CIT taxpayers that provide relevant information to qualify as such. The above notwithstanding, amounts withheld, if any, may be credited by investors against their final CIT liability. Wealth Tax (Impuesto sobre el Patrimonio) Legal entities resident in Spain for tax purposes that acquire ownership or other rights over the Senior Bonds are not subject to Wealth Tax. Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones) Legal entities resident in Spain for tax purposes that acquire ownership or other rights over the Senior Bonds by inheritance, gift or legacy are not subject to IGT but generally may include totally or partially the market value of the Senior Bonds in their taxable income for CIT purposes. Individuals and legal entities that are not tax resident in Spain Investors that are not resident in Spain for tax purposes, acting in respect of the Senior Bonds through a permanent establishment in Spain Non-Resident Income Tax (Impuesto sobre la Renta de no Residentes) If the Senior Bonds form part of the assets affected to a permanent establishment in Spain of a person or legal entity that is not resident in Spain for tax purposes, the tax rules applicable to income deriving from such Senior Bonds are, generally, the same as those set forth above for Spanish CIT taxpayers. See Legal entities with tax residency in Spain Corporate Income Tax (Impuesto sobre Sociedades) section above. Ownership of the Senior Bonds by investors who are not resident in Spain for tax purposes will not in itself create the existence of a permanent establishment in Spain. Wealth Tax (Impuesto sobre el Patrimonio) If the Senior Bonds form part of the assets affected to a permanent establishment in Spain of a person or legal entity that is not resident in Spain for tax purposes, Wealth Tax does not become applicable. 113

120 Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones) If the Senior Bonds form part of the assets affected to a permanent establishment in Spain of a person or legal entity that is not resident in Spain for tax purposes, IGT applies in the same manner as described in Legal entities with tax residency in Spain Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones) section above. Investors that are not resident in Spain for tax purposes, not acting in respect of the Senior Bonds through a permanent establishment in Spain Non-Resident Income Tax (Impuesto sobre la Renta de no Residentes) Both interest due periodically deriving from the Senior Bonds and income derived from the transfer, redemption or repayment of the Senior Bonds, obtained by individuals or entities who are not resident in Spain for tax purposes and who do not act, with respect to the Senior Bonds, through a permanent establishment in Spain, are exempt from NRIT. No withholding on account of NRIT is levied on such income subject to the fulfilment of the relevant requirements, as described in Compliance with certain requirements in connection with income payments section below. Wealth Tax (Impuesto sobre el Patrimonio) In relation to fiscal year 2016, non-spanish tax resident individuals holding Senior Bonds will be subject to Wealth Tax to the extent that such Senior Bondholders own Senior Bonds (along with other property located in Spain and rights which could be exercised in Spain) valued at a combined net amount in excess of 700,000 as of 31 December. Spanish general Wealth Tax rates vary between 0.2% and 2.5%. Income deriving from the Senior Bonds is exempt from NRIT provided that conditions set forth under Law 10/2014 are met. So far this exemption applies, individuals who do not have tax residency in Spain who hold such Senior Bonds on the last day of the year are exempt from Wealth Tax; if this exemption does not apply, individuals who are not tax resident in Spain would be subject to Wealth Tax to the extent that the Senior Bonds are located in Spain or the rights deriving from the Senior Bonds can be exercised in Spain. Individuals that are not resident in Spain for tax purposes and who are resident in an EU or European Economic Area Member State may apply the rules approved by the autonomous region where the assets and rights with more value: (i) are located; (ii) can be exercised; or (iii) must be fulfilled. As such, prospective Senior Bondholders should consult their tax advisers. Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones) Individuals not resident in Spain for tax purposes who acquire ownership or other rights over the Senior Bonds by inheritance, gift or legacy will be subject to IGT. In case the individuals reside for tax purposes in a country with which Spain has entered into a double-tax treaty in relation to IGT, the provisions of the relevant doubletax treaty will apply. If no double-tax treaty in relation to IGT applies, applicable IGT effective tax rates would range between 0% and 81.6% for 2016, depending on relevant factors. Generally, individuals not resident in Spain for tax purposes are subject to in accordance with the applicable Spanish state rules. However, if the deceased, heir or the donee is resident in an EU or European Economic Area Member State, depending on the specific situation, the applicable rules will be those corresponding to the relevant autonomous regions according to the law. Accordingly, prospective Senior Bondholders should consult their tax advisers. Non-Spanish tax resident legal entities that acquire ownership or other rights over the Senior Bonds by inheritance, gift or legacy are not subject to IGT. Such acquisitions may be subject to NRIT (as described above), unless otherwise applicable under the provisions of any applicable double-tax treaty entered into by Spain. In general, double-tax treaties provide for the taxation of this type of income in the country of tax residence of the Senior Bondholder. 114

121 Compliance with certain requirements in connection with income payments Interest due on the Senior Bonds is not subject to Spanish withholding tax, provided that the conditions set forth in Additional Provision One of Law 10/2014 are met (including that the Senior Bonds are admitted to listing on the Irish Stock Exchange and that are initially registered at a foreign clearing and settlement entity that is recognised under Spanish regulations or under those of another OECD member state) and that the Paying Agent provides the Issuer, in a timely manner, with a duly executed and completed statement (a Payment Statement), in accordance with section 5 of article 44 of Royal Decree 1065/2007, dated 27 July 2007, as amended by Royal Decree 1145/2011, dated 29 July 2011, containing the following information: Identification of the Senior Bonds; Income payment date; (c) Total amount of the income paid in the relevant payment date; and (d) Total amount of income corresponding to Senior Bonds held through each clearing system located outside Spain (such as Euroclear and Clearstream). If the Paying Agent fails or for any reason is unable to deliver a duly executed and completed Payment Statement to the Issuer in a timely manner in respect of a payment of interest made by the Issuer under the Senior Bonds, the Issuer would be required to withhold tax from the relevant interest payments at the general withholding tax rate (currently, 19%). If on or before the 10th day of the month following the month when the interest is payable by the Issuer, the Paying Agent designated by the Issuer submits such information, the Issuer (or the Paying Agent acting on instructions from the Issuer) will refund the total amount of taxes withheld. Notwithstanding the foregoing, the Issuer has agreed that, in the event that withholding taxes were to be legally required, the Issuer would pay the additional amounts as may be necessary so that the Senior Bondholder receives the same amount the Senior Bondholder would have received in the absence of any such withholding or deduction, except as provided in Terms and Conditions of the Senior Bonds Taxation. In such a case, as set out in Terms and Conditions of the Senior Bonds Tax credits, Senior Bondholders will use their reasonable efforts to co-operate with the Issuer in completing any procedural formalities necessary for obtaining the refund of the withholding taxes to the Issuer and therefore mitigate the cost of the additional amounts paid. In the event that the current applicable procedures are modified, amended or supplemented by, amongst others, a Spanish law, regulation, interpretation or ruling of the Spanish Tax Authorities, the Issuer will inform the Senior Bondholders of those information procedures and of their implications, as the Issuer may be required to apply withholding taxes on interest payments under the Senior Bonds if the those information procedures are not satisfied. 115

122 SUBSCRIPTION AND SALE Banco Santander, S.A. (the Sole Bookrunner) has, pursuant to a placement agreement entered into with the Issuer on 9 March 2016 and supplemented on the Issue Date (the Placement Agreement), acted as Sole Bookrunner in connection with the issuance of the Senior Bonds. In addition, the Issuer has reimbursed the Sole Bookrunner for certain expenses in connection with the issue of the Senior Bonds. General The Sole Bookrunner has represented, warranted and agreed that it has complied and will comply in each case to the best of its knowledge and belief in all material respects with all applicable laws and regulations in each country or jurisdiction in which it purchases, offers, sells or delivers Senior Bonds or has in its possession or distributes the Prospectus or any such other material related to the Senior Bonds. The Sole Bookrunner will also ensure that no obligations are imposed on the Issuer in any jurisdiction as a result of the foregoing, unless otherwise agreed in writing with the Issuer. United States of America The Sole Bookrunner has represented and agreed that: the Senior Bonds are subject to U.S. tax law requirements and may not be offered, sold or delivered within the United States or its possessions or to a United States person, except in certain transactions permitted by U.S. Treasury regulations. Terms used in this paragraph have the meanings given to them by the U.S. Internal Revenue Code of 1986 and Treasury regulations promulgated thereunder; the Senior Bonds have not been and will not be registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in certain transactions exempt from the registration requirements of the Securities Act. Terms used in this paragraph have the meanings given to them by Regulation S under the Securities Act; and (c) it will not offer, sell or deliver Senior Bonds as part of their distribution at any time or otherwise until 40 days after the later of the commencement of the Offering and the Closing Date, within the United States or to, or for the account or benefit of, U.S. persons. The Sole Bookrunner has further agreed that it will send to each dealer to which it sells any Senior Bonds during the distribution compliance period a confirmation or other notice setting forth the restrictions on offers and sales of the Senior Bonds within the United States or to, or for the account or benefit of, U.S. persons. Terms used in this paragraph have the meanings given to them by Regulation S under the Securities Act. In addition, until 40 days after the commencement of the offering, an offer or sale of Senior Bonds within the United States by any dealer (whether or not participating in the offering) may violate the registration requirements of the Securities Act if such offer or sale is made otherwise than in accordance with an available exemption from registration under the Securities Act. United Kingdom The Sole Bookrunner has represented and agreed that: it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in any investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the Senior Bonds in circumstances in which Section 21(1) of the FSMA does not apply to the Issuer; and it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Senior Bonds in, from or otherwise involving the United Kingdom. Kingdom of Spain The Sole Bookrunner has represented and agreed that the Senior Bonds may not be sold, offered or distributed in Spain in circumstances which constitute a public offer of securities in Spain within the meaning of the 116

123 Securities Market Law approved by the Royal Legislative Decree 4/2015, of 23 October (texto refundido de la Ley de Mercado de Valores aprobado por el Real Decreto Legislativo 4/2015, de 23 de octubre) (the Securities Market Law) and further relevant legislation unless such sale, offer of distribution is made in compliance with the provisions of the Securities Market Law and any other applicable legislation. 117

124 1. Listing and Admission to Trading GENERAL INFORMATION Application has been made for each class of Senior Bonds to be listed on the Official List of the Irish Stock Exchange and admitted to trading on the regulated market of the Irish Stock Exchange. Admission is expected to take effect on or about 22 March Authorisation The Company has obtained all necessary consents, approvals and authorisations in connection with the issue and performance of their obligations under the Senior Bonds. The creation and issue of the Senior Bonds has been authorised by a resolution of the Board of Directors of the Company dated 8 March Expenses Related to Admission to Trading The total expenses related to admission to trading are estimated at approximately 20,000 including all fees payable to maturity. 4. Legal and Arbitration Proceedings Save as disclosed in Description of the Company and the Shareholders Tribunal, administrative and arbitration proceedings and Description of the Company and the Shareholders Expropriations, the Company is not or has not been involved in any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Company is aware) in the 12 months preceding the date of this document which may have or have in such period had a significant effect on the financial position or profitability of the Company. 5. Auditors Deloitte, S.L. is a registered auditor and is authorised by and is member of the Institute of Chartered Accounts Auditors of Spain under No. S0692. Deloitte, S.L. has audited the Company s financial statements, without qualification, in accordance with Spanish GAAP for the years ended 31 December 2014 and 2013 as stated in their audit reports incorporated by reference herein. 6. Significant Material Change Since 30 November 2015 there has been no significant change in the financial or trading position of the Company. Since 31 December 2014 there has been no material adverse change in the prospects of the Company. 7. Documents on Display For so long as any of the Senior Bonds are outstanding, copies of the following documents may be inspected in electronic format during normal business hours at the specified office of each Paying Agent and at the Company s registered office: (c) (d) (e) the deed of incorporation and the by-laws of the Company; the Bond Trust Deed; the Paying Agency Agreement; the most recently published stand-alone audited annual financial statements of the Company for the year ended 31 December 2014 and 31 December 2013; the unaudited stand-alone financial statements of the Company for the eleven months ended 30 November 2015; 118

125 (f) (g) (h) (i) (j) the Security Documents; the Account Bank Agreement; the Security Trust and Intercreditor Deed; the Common Terms Agreement; and the Master Definitions Agreement. A copy of this Prospectus and any document incorporated by reference in this Prospectus will also be electronically available for viewing on the website of the Irish Stock Exchange ( The Technical Report, the Expropriation Report and the Insurance Report are not included in this Prospectus (or in any appendix thereto) and will not otherwise be made available to prospective investors or Senior Bondholders. Upon written demand to the Issuer and entry into an appropriate release letter, the Technical Report, the Expropriation Report and/or the Insurance Report may be released to a prospective investor on a non-reliance basis. 8. Legend for any U.S. Person The Senior Bonds and any Coupons appertaining thereto will bear a legend to the following effect: Any United States person who holds this obligation will be subject to limitations under the United States income tax laws, including the limitations provided in Sections 165(j) and 1287 of the Internal Revenue Code. 9. ISIN and Common Code 10. Yield The Senior Bonds have been accepted for clearance through Euroclear and Clearstream, Luxembourg. The International Securities Identification Number for the Senior Class A1 Bonds is XS and the Common Code is The International Securities Identification Number for the Senior Class A2 Bonds is XS and the Common Code is The address of Euroclear is 1 Boulevard du Roi Albert II, B-1210 Brussels, Belgium and the address of Clearstream, Luxembourg is 42 Avenue J.F. Kennedy, L-1855 Luxembourg. Based on issue price of 100 per cent. of the respective principal amount of the Senior Bonds, the yield on the Senior Bonds is 3.75 per cent. on an annual basis. The yield is calculated at the Issue Date on the basis of the Issue Price. It is not an indication of future yield. 11. Potential Conflicts of Interest In the ordinary course of business, the Sole Bookrunner, the Paying Agents and their affiliates have engaged, and may in the future engage, in investment banking and/or commercial banking transactions with, and may perform services for, the Company, the Initial Shareholders and their respective affiliates and with companies involved directly or indirectly in the sectors in which the Company, the Initial Shareholders and their affiliates operate. Banco Santander, S.A. and/or certain of their affiliates act as lenders under the Existing Senior Facilities Indebtedness, the repayment of which was part funded by the issue of the Senior Bonds. In addition, Banco Santander, S.A. is a lender under the Junior Facilities Agreement. In addition, in the ordinary course of their business activities, the Sole Bookrunner and its affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities and/or instruments of the Company or its affiliates or any entity related to the Senior Bonds. The Sole Bookrunner or its affiliates that have a lending relationship with the Company, the Initial Shareholders or its affiliates routinely hedge their credit exposure consistently with their customary risk management policies by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in the Company s, the Initial Shareholders or its affiliates securities, including potentially the Senior Bonds offered hereby. Any such short positions could adversely affect future trading prices of the 119

126 Senior Bonds. The Sole Bookrunner and its affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments. For the purpose of this paragraph, the word affiliates also includes parent companies. 12. Post-Issuance Information Other than as provided in the Conditions, the Company will not provide any post-issuance information, unless required to do so by any applicable laws and regulations. 120

127 GLOSSARY AADT means annual average daily traffic. Acceptable Bank means a bank or financial institution which has the Requisite Rating. Account Bank means Banco Santander, S.A. or a bank or financial institution appointed as a replacement account bank in accordance with the Account Bank Agreement which is an Acceptable Bank. Account Bank Agreement means the account bank agreement dated on the Issue Date between, among others, the Issuer, the Account Bank and the Security Agent. Accounting Reference Date means 31 December. Accounting Standards means any generally accepted accounting principles in Spain, including IFRS. Accounts means: (c) (d) (e) (f) (g) the General Account; Capex Reserve Account; Expropriation Reserve Account; Junior Ratio Enhancement Account; Senior Debt Service Reserve Account; Insurance and Disposal Proceeds Account; and Distribution Account. Additional Equity means: any amount subscribed in cash for shares in the Issuer or any other capital contribution in cash made to the Issuer provided that: (i) (ii) repayment of such shares or contributions (if any) and payments of dividends or other distributions in respect of such shares or contributions (if any) is subject to the terms of the STID; and Security over the shares or contribution is granted to the Secured Creditors in accordance with the terms of the STID; or Shareholder Liabilities, which in each case is in addition to such amounts subscribed, committed or incurred on or before the Issue Date. Administrative Party means the Bond Trustee, the Security Agent, the Account Bank, the Junior Agent and any Appointee. Adviser means any of the Traffic Adviser, the Technical Adviser, the Expropriation Adviser or the Insurance Adviser. Affiliate means, in relation to any person, a person controlling, controlled by or under common control with such person. Annual Financial Statements means the audited financial statements (consolidated if appropriate) of the Issuer. 121

128 Appointee means any attorney, manager, agent, delegate, nominee, custodian co-trustee or other person appointed by the Bond Trustee or the Security Agent under the Finance Documents. Assumptions means each of the Economic Assumptions, the Technical Assumptions and the Traffic Assumptions. Auditor means Deloitte, S.L., or any other firm of auditors then appointed by the Issuer to audit its Financial Statements. Ausol I Concession means the administrative concession granted by means of public deed of administrative concession contract for the construction, conservation and operation of the Costa del Sol toll expressway between Málaga and Estepona by the Grantor in favour of the Issuer on 18 April 1996 before the Public Notary of Madrid, Mr. Antonio Román de la Cuesta Ureta, under number 1,171 as amended from time to time. Ausol II Concession means the administrative concession granted by means of public deed of administrative concession contract for the construction, conservation and operation of the Costal Del Sol toll expressway between Estepona and Guadiaro by the Grantor in favour of the Issuer on 28 July 1999 before the Public Notary of Madrid, Mr. Antonio Francés y de Mateo under number 3,002 of his protocol as amended from time to time. Authorisation means any authorisation, consent, approval, permit, resolution, licence, exemption, filing, notarisation or registration required by any court, governmental department or other regulatory body or pursuant to applicable law. Authorised Officer means an officer or other representative of the Issuer who has been duly authorised to deliver certificates and take any actions in connection with the Finance Documents and the Project Contracts and whose authorisation has been notified in writing to the Bond Trustee, the Senior Noteholder Representative, the Junior Agent and Security Agent. Bank Account Pledge means the Spanish law governed first ranking pledge over credit rights derived from Project Accounts granted by the Issuer in favour of the Senior Secured Creditors and the second ranking pledge over credit rights derived from bank accounts granted by the Issuer in favour of the Junior Secured Creditors on the Issue Date. Base Case means the initial base case delivered as a condition precedent by the Issuer on or before the Issue Date and, if the same is updated, the most recent Updated Base Case. Bond Trust Deed means the bond trust deed entered into between the Bond Trustee and the Issuer in respect of the Senior Bonds, as supplemented. Budget means an electronic copy of a budget in substantially the form set out in Schedule 3 of the Common Terms Agreement. Business Day means a day (other than a Saturday or a Sunday) on which banks are open for general business in London, Madrid and Málaga and which, in the case of any payment in euros, is a TARGET2 Day. Capex Reserve Account means the account opened with the Account Bank, designated as such and maintained by the Issuer, in each case, in accordance with the Account Bank Agreement. Capex Reserve Account Minimum Balance means: on the Issue Date 9,960,486.19; on each Payment Date after the Issue Date, the aggregate of: (i) 100 per cent. of the aggregate Capex Costs projected to be incurred by the Issuer during the next two six month periods from (but excluding) the corresponding Testing Date to (and including) the Testing Date falling 12 months thereafter (the First Anniversary); 122

129 (ii) (iii) 75 per cent. of the aggregate Capex Costs projected to be incurred by the Issuer during the two six month periods from (but excluding) the First Anniversary to (and including) the Testing Date 12 months thereafter (the Second Anniversary); and 50 per cent. of the aggregate Capex Costs projected to be incurred by the Issuer during the two six month periods from (but excluding) the Second Anniversary to (and including) the Testing Date 12 months thereafter, in each case, where such projected aggregate Capex Costs as set out in the Base Case or as confirmed by the Technical Adviser, provided that no account shall be taken of any Capex Costs in making the calculation above if they are Reserved Capex Costs and the liability of the Shareholders under the Contingent Equity Agreement to provide Additional Equity to the Issuer is sufficient to meet such Reserved Capex Costs; or the Reserved Capex Letters of Credit are in place for an aggregate amount at least equal to the liability of the Shareholders. For the purposes of determining the Capex Reserve Account Minimum Balance no account shall be taken of any amounts credited to the account following Additional Equity being provided under the Contingent Equity Agreement or a demand being made under the Reserved Capex Letter of Credit. Capex Costs means, in any period, amounts in respect of lifecycle maintenance incurred or expected to be incurred by the Issuer, in each case as set out in the Base Case or approved by the Technical Adviser under clause 5.1(c) of the Common Terms Agreement, including Reserved Capex Costs. Cash Equivalent Investments means at any time: bank accounts and certificates of deposit which pay interest either periodically or at maturity (imposiciones a plazos) maturing within one year after the relevant date of calculation and issued by an Acceptable Bank; any investment in marketable debt obligations issued or guaranteed by the government of: (i) (ii) (iii) the United States of America; the United Kingdom; or any member state of the European Economic Area or any Participating Member State provided that it has a credit rating of at least A- or higher by S&P or Fitch or at least A3 from Moody s, or by an instrumentality or agency of any of them having an equivalent credit rating, maturing within one year after the relevant date of calculation and not convertible or exchangeable to any other security; (c) commercial paper not convertible or exchangeable to any other security: (i) (ii) for which a recognised trading market exists; issued by a company incorporated in: (A) (B) (C) the United States of America; the United Kingdom; or provided that it has a credit rating at least A- or higher by S&P or Fitch or at least A3 from Moody s; (iii) (iv) which matures within six months after the relevant date of calculation; and which has a credit rating of at least A- from S&P or Fitch or at least A3 from Moody s; 123

130 (d) (e) any investment in money market funds which invest substantially all of their assets in securities of the types described in paragraphs and (c) above; and (iii) can be turned into cash on not more than 30 days notice; or any other debt security approved by the Security Agent in writing, in each case, denominated in euro and to which the Issuer is beneficially entitled at that time and which is not subject to any Security Interest (other than Security Interest arising under the Security Documents). A Change of Control Event shall be deemed to have occurred if any person (other than Ferrovial S.A. or an entity controlled by Ferrovial, S.A.) obtains control (directly or indirectly) (including following completion of the Share Option (as defined in the Option Agreement))of more than 50 per cent. of the voting rights of the Issuer, or obtains the right to appoint more than 50 per cent. of the board of directors of the Issuer, except, in any such case, where the event described in this definition of Change of Control Event had, prior to the occurrence thereof, been approved in accordance with the STID. Cintra means Cintra Infrastructuras, S.E., a sociedad anónima europea incorporated under the laws of the Kingdom of Spain, having its registered office at Plaza Manuel Gómez Moreno, 2, Edificio Alfredo Mahou, Madrid, Spain, with tax identification number A Cintra Service Agreement means the management services contract dated 10 March 2010 between the Issuer and Cintra. Common Documents means: (c) (d) (e) the Common Terms Agreement; the Master Definitions Agreement; the STID; the Security Documents; and the Account Bank Agreement. Common Terms Agreement means the common terms agreement dated on the Issue Date among the Issuer and the Bond Trustee and the other parties thereto. Compensation means: (c) (d) (e) any sum paid to the Issuer under a Concession Agreement on a termination of a Concession Agreement as compensation for such termination, including the RPA Termination Payment; all consideration received by the Issuer in respect of the partial or total nationalisation, expropriation or compulsory purchase of the Project or any interest in the Project; any sum payable to or for the account of the Issuer in respect of the release, inhibition, modification, suspension or extinguishment of any rights, easements or covenants enjoyed by or benefiting the Project, or the imposition of any restrictions affecting the Project, or the grant of any easement or rights over or affecting the Project or any part of them; and any sum payable to or for the account of the Issuer in respect of the refusal, revocation, suspension or modification of any authorisation or exemption subject to conditions, or any other official order or notice restricting the construction or operation of the Project, any other amount paid to the Issuer under a Concession Agreement in connection with its termination. but excluding Insurance Proceeds and any amount referred to in paragraph of the definition of Gross Revenues. 124

131 Compliance Certificate means a certificate in which the Issuer periodically provides certain financial information and statements to the Information Recipients as required by the Common Terms Agreement. Concession Agreement means each of the Ausol I Concession or the Ausol II Concession. Conditions means the terms and conditions of each class of the Senior Bonds set out in the Bond Trust Deed, as may from time to time be amended, modified, varied or supplemented in the manner permitted under the Bond Trust Deed and the STID and any reference to a particular specified Condition shall be construed accordingly. Contingent Equity Agreement means the contingent equity agreement dated on the Issue Date between, among others, the Shareholders, the Issuer and the Security Agent. Coupons means the coupons held by the Couponholders in accordance with the Conditions. Creditor means any Secured Creditor and any Shareholder. Debt Service means, in relation to any period, an amount equal to the aggregate of: Senior Debt Service; and Junior Cash Pay Interest for such period. Decision Period means the period of time within which the approval of the Security Agent is sought, in accordance with the terms of the Schedule 2 paragraph 2.2(d) of the STID. Default means: an Event of Default; or a Potential Event of Default. Determination Date means the date falling four Business Days before each Payment Date or other date on which amounts are due in respect of the Senior Debt. Distributable Amount means the amount standing to the credit of the General Account on each Determination Date after satisfying all prior transfers or payments under the Pre-enforcement Priorities of Payment provided that, if on that Determination Date no amounts may be withdrawn from the General Account in respect of paragraphs (ix) to (xv) of the Pre-enforcement Priorities of Payment as a result of the provisos thereto the Distributable Amount shall be zero. Distribution Account means the account opened, designated as such, opened and maintained by the Issuer, in each case, in accordance with the Account Bank Agreement. EBITDA means, in respect of any period: the aggregate of: (i) (ii) net turnover (being toll revenues less discounts); and other operating revenue; of the Issuer for that period; less the aggregate of: (i) (ii) the costs of supplies; personnel expenses; and 125

132 (iii) other operating and routine maintenance expenses, of the Issuer for that period but excluding, to the extent included in any of paragraphs (i) to (iii) above: (A) (B) (C) (D) the fees, costs and expenses in respect of credit cards; fees, costs and expenses payable by the Issuer in respect of Operational Bonds; amounts recharged to the Issuer respect of fees paid to the provider of a Reserved Capex Letter of Credit or a Reserved Expropriation Letter of Credit; fees, costs and expenses payable by the Issuer to, or in respect of, any Rating Agency; and the Sponsor Success Fee. Economic Assumptions means the assumptions in relation to the following economic data: (c) Taxes applicable to the Issuer under the Ley del Impuesto sobre Sociedades (source: Spanish National Statistics Institute (Instituto Nacional de Estadistica or INE); and the Spanish consumer price index (índice de precios de consumo, source: European Central Bank or the Bank of Spain); and EURIBOR (source: Reuters screen EURIBOR01 (or such other page that may replace that page or a successor service)). Enforcement Action means: in relation to any Secured Liability: (i) (ii) (iii) (iv) (v) the acceleration of any Secured Liability or the making of any declaration that any Secured Liability is prematurely due and payable (other than as a result of it becoming unlawful for any Secured Creditor to perform its obligations under, or of any voluntary or mandatory prepayment arising under, the Finance Documents); the making of any declaration that any Secured Liability is payable on demand; the making of a demand in relation to a Secured Liability that is payable on demand; the exercise of any right of set-off, account combination or payment netting against the Issuer in respect of any Secured Liability other than the exercise of any such right which is otherwise expressly permitted under the Finance Documents; and the suing for, commencing or joining of any legal or arbitration proceedings against the Issuer to recover any Secured Liability; (c) (d) the taking of any steps to enforce or require the enforcement of any Security; the entering into of any composition, compromise, assignment or arrangement with the Issuer; or the petitioning, applying or voting for, or the taking of any steps (including the appointment of any liquidator, receiver, administrator or similar officer) in relation to, the winding up, dissolution, administration or reorganisation of the Issuer or any of the Issuer s assets or any suspension of payments or moratorium of any indebtedness of the Issuer, or any analogous procedure or step in any jurisdiction, except that the taking of any action which is necessary (but only to the extent necessary) to preserve the validity, existence or priority of claims in respect of Secured Liabilities, including the registration of such claims 126

133 before any court or Governmental Authority and the bringing, supporting or joining of proceedings to prevent any loss of the right to bring, support or join proceedings by reason of applicable limitation periods shall not constitute Enforcement Action. Enforcement Instruction Notice means the notice delivered by the Security Agent or the Junior Agent to the Qualifying Secured Creditors upon notification of the occurrence of an Event of Default which is continuing in accordance with the terms set out in clause 10.1 of the STID. Enforcement Notice means the notice delivered by the Security Agent to the Issuer to take any Enforcement Action in accordance with the terms set out in clause 10.3 of the STID. Entrenched Right means the Senior Secured Creditor Entrenched Rights and the Junior Secured Creditor Entrenched Rights. Environment means humans, animals, plants and all other living organisms including the ecological systems of which they form part and the following media: (c) air (including, without limitation, air within natural or man-made structures, whether above or below ground); water (including, without limitation, territorial, coastal and inland waters, water under or within land and water in drains and sewers); and land (including, without limitation, land under water). Environmental Law means any applicable law or regulation which relates to: (c) the pollution or protection of the Environment; the conditions of the workplace; and the generation, handling, storage, use, release or spillage of any substance which, alone or in combination with any other, is capable of causing harm to the Environment, including, without limitation, any waste. Environmental Permits means any permit and other Authorisation required under any Environmental Law for the operation of the business of the Issuer conducted on or from the properties owned or used by the Issuer. Equity Cure Amount means the amount of Additional Equity paid by the Shareholders into the General Account in accordance with the terms set out in Condition 12.1 of the Conditions and section 11.4 of the Senior Note Purchase Agreement. Equity Cure Right means the right of the Shareholders to procure the payment of the Equity Cure Amount into the General Account in accordance with the terms set out in Condition 12.1 of the Conditions and section 11.4 of the Senior Note Purchase Agreement. Equity Documents means each Shareholder Liabilities Instrument; and the Contingent Equity Agreement. EU Insolvency Regulation means Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings, as amended. Euro, and EUR denote the single currency of the Participating Member States. Event of Default means any event or circumstance specified in clause 6 (Events of Default) in the Common Terms Agreement. 127

134 Excess Cashflow means, in relation to any period, Net Cashflow for that period, less: (c) Senior Debt Service for that period; any mandatory redemption in respect of the Senior Bonds or the Senior Note payable for that period; and Junior Cash Pay Interest for that period. Existing Accounts means the bank accounts of the Issuer (other than the Project Accounts and the Distribution Account) opened as at the Issue Date. Existing Security Interests means any Security Interests securing and entered into in connection with the Existing Senior Facilities Indebtedness. Existing Senior Facilities Indebtedness means the Financial Indebtedness owed by the Issuer under the senior facility agreement (and connected agreements) dated 17 June Exploitation Contracts means: each Initial Exploitation Contract; and each other contract by virtue of which the Issuer exploits its assets in order to generate revenues from third parties, other than solely by payment of a road user toll, and each contract entered into by the Issuer to replace, amend or restate any such contracts. Expropriation Adviser means Getinsa-Payma, S.L. or any other expropriation adviser appointed from time to time in accordance with the Common Documents. Expropriation Costs means any amounts payable or expected to be incurred by the Issuer in connection with the expropriation of land by the Issuer in connection with the Project including Reserved Expropriation Costs. Expropriation Reserve Account means the account opened with the Account Bank, designated as such and maintained by the Issuer, in each case, in accordance with the Account Bank Agreement. Expropriation Reserve Account Minimum Balance means: on the Issue Date 1,354,273.16; on each Payment Date after the Issue Date, the aggregate of: (i) (ii) (iii) 100 per cent. of the aggregate Expropriation Costs projected to be incurred by the Issuer during the next two six month periods from (but excluding) the corresponding Testing Date to (and including) the Testing Date falling 12 months thereafter (the First Anniversary); 75 per cent. of the aggregate Expropriation Costs projected to be incurred by the Issuer during the two six month periods from (but excluding) the First Anniversary to (and including) the Testing Date 12 months thereafter (the Second Anniversary); and 50 per cent. of the aggregate Expropriation Costs projected to be incurred by the Issuer during the two six month periods from (but excluding) the Second Anniversary to (and including) the Testing Date 12 months thereafter, in each case, where such projected aggregate Expropriation Costs have been confirmed by the Expropriation Adviser, provided that no account shall be taken of any Expropriation Costs in making the calculation above if they are Reserved Expropriation Costs and the liability of the Shareholders under the Contingent Equity Agreement to provide Additional Equity to the Issuer is sufficient to meet 128

135 such Reserved Expropriation Costs; or the Reserved Expropriation Letters of Credit are in place for an aggregate amount at least equal to the liability of the Shareholders. For the purposes of determining the Expropriations Reserve Account Minimum Balance no account shall be taken of any amounts credited to the account following Additional Equity being provided under the Contingent Equity Agreement or a demand being made under the Reserved Expropriation Letter of Credit. Extraordinary Resolution means a resolution duly passed in respect of an Extraordinary Voting Matter passed in accordance with the Bond Trust Deed of, in respect of a STID Proposal, in accordance with Schedule 2 paragraph 6.3 of the STID. Extraordinary Voting Matter means a modification, consent, waiver or determination which would: have the effect of changing or changes the voting mechanics, the Majority Requirement, the Quorum Requirement or the Decision Period relating to Extraordinary Voting Matters; change in any adverse respect the restrictions set out in, or relate to a consent having an adverse impact in respect of: (i) (ii) (iii) clauses 3 (Information Covenants), 4 (General Covenants), 5 (Ratios), 6 (Events of Default), or 7 (Pari Passu Treatment) of the Common Terms Agreement; Conditions 5 (Interest), 7 (Redemption and Purchase) and 10 (Enforcement) of the Senior Bonds; or clauses 8 (Interest), 9 (Payment and Prepayment of the Senior Notes) and 11.2 (Security Enforcement and Other Remedies) of the Senior Note Purchase Agreement; or (c) without prejudice to paragraph above and notwithstanding that the Entrenched Rights of a Secured Creditor may also be affected as provided for in paragraph (f) of clause 19.1 (Amendments and Waivers: Common Documents, Finance Documents) of the STID: (i) (ii) (iii) (iv) (v) (vi) (vii) have the effect of adversely changing any Priorities of Payments (including as a result of any amendment to the definitions referred to therein) or application thereof (including as a result of any change to a requirement set out in a Finance Document that certain payments, applications or distributions should be made in accordance with the Priorities of Payments) in respect of a Secured Creditor or otherwise adversely affect the ranking of a Secured Creditor; delay the date fixed for payment of principal, interest, Senior Make-Whole Premium or any other amount in respect of a Secured Creditor s debt; bring forward the date fixed for payment of principal or interest in respect of a Secured Creditor's debt; alter the amount of principal, interest, Make-Whole Premium or any other amount payable in respect of a Secured Creditor's debt; result in the exchange of the a Secured Creditor s debt for, or the conversion of such debt into, shares, notes or other obligations of any other person; change or relate to the currency of payment due under a Secured Creditor s debt; have the effect of changing or relate to the rights of a Secured Creditor to receive any sums owing to it for its own account in respect of fees, costs, charges, Losses, taxes, damages, proceedings, claims and demands in relation to any Finance Document to which it is a party; 129

136 (viii) (ix) (x) change or relate to any existing obligation of the Issuer to gross up any payment in respect of a Secured Creditor s debt in the event of the imposition of withholding taxes; result in an increase in a Secured Creditor s obligations or liabilities, or would adversely modify a Secured Creditor s rights, under or in connection with any Finance Document; or have the effect of materially changing the nature or the scope of, or would release any Security, unless equivalent replacement security is taken at the same time, together with in each case, any defined terms used therein. Finance Lease means any lease or hire purchase contract which would, in accordance with the Accounting Standards, be treated as a finance or capital lease. Final Discharge Date means the later of the Senior Discharge Date and the Junior Discharge Date. Final Maturity Date means the Senior Debt Final Maturity Date and/or the Junior Facility Final Maturity Date, as the context requires. Finance Documents means the Senior Finance Documents and the Junior Finance Documents. Finance Document Liabilities means the Junior Finance Document Liabilities and the Senior Finance Document Liabilities. Financial Half Year means each half of the Financial Year of the Issuer ending on 30 June in each year. Financial Indebtedness means any indebtedness for or in respect of: (c) (d) (e) (f) (g) moneys borrowed and debit balances at banks or other financial institutions; any documentary or standby letter of credit; any acceptance under any acceptance credit or bill discounting facility with recourse (or dematerialised equivalent); any bond or note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument; the amount of any liability in respect of Finance Leases; receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis to the Issuer); any Treasury Transaction (and, when calculating the value of that Treasury Transaction, only the marked to market value (or, if any actual amount is due as a result of the termination or close-out of that Treasury Transaction, that amount) shall be taken into account); (h) any counter-indemnity obligation in respect of any guarantee, indemnity, bond, standby or documentary letter of credit or other instrument issued by a bank or financial institution; (i) (j) any amount raised by the issue of shares which are redeemable (other than at the option of the Issuer) or are otherwise classified as borrowings under Accounting Standards; any amount of any liability under an advance or deferred purchase agreement if (i) one of the primary reasons behind entering into the agreement is to raise finance or to finance the acquisition or construction of the asset or service in question; or (ii) the agreement is in respect of the supply of assets or services and payment is due more than 90 days after the date of supply; 130

137 (k) (l) any amount raised under any other transaction (including any forward sale or purchase, sale and sale back or sale and leaseback agreement) having the commercial effect of a borrowing or otherwise classified as borrowings under the Accounting Standards (other than any trade credit or indemnity granted in the ordinary course of the Issuer s business and upon terms common for such business); and the amount of any liability in respect of any guarantee for any of the items referred to in paragraphs to (k) above, but in each case without double counting. Financial Model means the financial model prepared by the Issuer on or before the Issue Date in connection with the issue of the Senior Bonds as audited by the Financial Model Auditor. Financial Model Auditor means the entity appointed as financial model auditor from time to time in accordance with the Common Documents. Financial Statements means the Annual Financial Statements or the Semi-Annual Financial Statements as applicable. Financial Year means the annual accounting period of the Issuer ending on 31 December in each year. Fitch means Fitch Ratings Ltd. or any successor to its rating business. Further Senior Bonds are bonds which are issued by the Issuer ranking pari passu and having terms and conditions the same as one of the existing classes of the Senior Bonds or the same in all respects save for the amount and date of the first payment of interest thereon and so that the same shall be consolidated and form a single series with the relevant class of the Senior Bonds. Further Senior Notes are notes which are issued by the Issuer ranking pari passu and having terms and conditions the same as the Senior Note or the same in all respects save for the amount and date of the first payment of interest thereon. General Account means the account designated as such, opened and maintained by the Issuer in accordance with the Account Bank Agreement. Global Forecasted Debt Service Coverage Ratio or Global Forecasted DSCR means, on each Testing Date in respect of the Relevant Period for that Testing Date, the ratio of: forecast Net Cashflow; to forecast Debt Service, in each case, for that Relevant Period. Global Historical Debt Service Coverage Ratio or Global Historical DSCR means, on each Testing Date in respect of the Relevant Period for that Testing Date the ratio of: actual Net Cashflow; to actual Debt Service, in each case, for that Relevant Period. Governmental Authority means the Grantor and any other entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. Grantor means the Spanish Ministerio de Fomento or any successor in its capacity as grantor under the Concession Agreements. 131

138 Gross Revenues means, in relation to any period (without counting any item more than once), all moneys received by the Issuer in that period, including: (c) (d) (e) (f) as toll payments in respect of a Concession Agreement; from the Grantor as a result of the operation of the financial balance mechanism (including, without limitation, under Royal Decree 163/2000, of 6 April) and which are accounted for as revenues in accordance with the accounting standards applicable to the Issuer; under an Exploitation Contract; Insurance Proceeds in respect of loss of profit or business interruption; as a refund of Tax; or as interest earned on the Project Accounts, but excluding any Compensation. IFRS means international accounting standards within the meaning of EC Regulation No. 1606/2002, of 19 July 2002, as amended, to the extent applicable to the relevant Financial Statements. Independent Expert means the expert agreed between the Issuer and the Senior Debtholders in accordance with the terms set out in paragraph 3.3(c) (Challenge and Review) of the description of the Common Terms Agreement. Indexed means, in respect of any reference to an amount, that amount (as previously indexed) as may be adjusted up or down at the beginning of each calendar year by a percentage equal to the amount of percentage increase or, as the case may be, decrease in the Consumer Price Index for such year or as is otherwise specified in the relevant Finance Document, where Consumer Price Index is the Spanish índice de precios de consumo prepared by INE (or any other consumer replacement index nominated by the Issuer). Initial Exploitation Contract means each of: (c) (d) (e) (f) (g) the contract for the exploitation of the two service semi-areas on the Costa del Sol Expressway Estepona-Guadiaro stretch between Cepsa Estaciones de Servicios, S.A. and the Issuer dated 14 February 2002; the contract for the exploitation of three service areas on the Málaga-Estepona stretch between Repsol Comercial de Productos Petrolíferos, S.A. and the Issuer dated 6 November 1998; the framework Contract for making the fibre optic available between France Telecom España, S.A. and the Issuer dated 1 December 2008; the contract for the transfer of the use of the fibre optic network between Vodafone España, S.A. and the Issuer dated 1 February 2006; the contract for the transfer of the use of the fibre optic network between Jazztel Com, S.A.U. and the Issuer executed on November 2014; the contract for the exploitation of a sale point for ferry tickets on the Málaga-Estepona stretch between Ferrys Rápidos del SUR, S.L.U. and the Issuer dated 4 June 2012; and the contract for the exploitation of three sales points for ferry tickets on both stretches of the Project between Balearia Eurolíneas Marítimas S.A. and the Issuer dated 15 June 2004 (as amended on 11 November 2014). 132

139 Initial Security Documents means: (c) (d) the Share Pledge; RPA Pledge; the Insurance Policies Pledge; and the Bank Account Pledge. Initial Shareholders means Cintra and Unicaja. Information Recipients means the Bond Trustee, the Senior Bondholders, the Senior Class A1 Bondholder Representative, the Senior Noteholder Representative, the Junior Agent, the Junior Lenders and the Security Agent. Insolvency means any winding-up, bankruptcy, liquidation, dissolution, administration, receivership, administrative receivership, re-organisation, moratorium or judicial composition of or in respect of a person or any analogous proceedings affecting a person in any jurisdiction. Insolvency Event means, in respect of any entity and in any jurisdiction: (c) (d) (e) (f) (g) the initiation of or consent to Insolvency Proceedings by such company or any other person or the presentation of a petition or application for the making of an administration order; the giving of notice of appointment of an administrator or the making of an administration order or an administrator being appointed in respect of such company save for the purpose of reorganisation on terms approved in writing by the Security Agent; a composition, compromise, assignment or arrangement with creditors of such company (as part of a general composition, compromise, assignment or arrangement affecting such company s creditors generally) other than a composition, compromise, assignment or arrangement with respect to any subordinated Financial Indebtedness, any intragroup loan or guarantee; the passing by such company of an effective resolution or the making of an order by a court of competent jurisdiction for the winding up, liquidation or dissolution of such company; the appointment of an Insolvency Official in relation to such company or in relation to the whole or substantially the whole of the undertaking or assets of such company; the cessation or suspension of payment of its debts generally or a public announcement by such company of an intention to do so; the declaration of a moratorium in respect of all or substantially all of the indebtedness of such company; (h) the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration, reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise), any other insolvency proceeding (in particular, the declaration of insolvency (declaración de concurso) (including the filing of any request for the declaration of voluntary or mandatory insolvency (concurso voluntario o necesario) or the taking or passing of any resolution approving such filing) and/or the filing of an application under Article 5 bis of Spanish Insolvency Law of the Issuer); or (i) in the case of the Issuer, falling into any of the categories set out in article 363 of the Spanish Capital Companies Law which would require it to be dissolved. Insolvency Official means, in connection with any Insolvency Proceedings in relation to a company, a liquidator, provisional liquidator, administrator, administrative receiver, receiver, manager, nominee, supervisor, 133

140 trustee, conservator, guardian or other similar official in respect of such company or in respect of all (or substantially all) of the company s assets or in respect of any arrangement or composition with creditors. Insolvency Proceedings means, in respect of any company, the winding up, liquidation, dissolution or administration of such company, or any equivalent or analogous proceedings under the law of the jurisdiction in which such company is incorporated or of any jurisdiction in which such company carries on business including the seeking of liquidation, winding up, reorganisation, dissolution, administration, arrangement, adjustment, protection or relief of debtors. Insurance means, as the context may require, any contract or policy of insurance taken out by the Issuer from time to time, including in each case any future renewal or replacement of any such insurance whether with the same or different insurers and whether on the same or different terms. Insurance Adviser means Aon Gil y Carvajal, S.A. Correduría de Seguros, Sociedad Unipersonal or any other insurance adviser appointed from time to time in accordance with the Common Documents. Insurance and Disposal Proceeds Account means the account designated as such, opened and maintained by the Issuer in accordance with the Account Bank Agreement. Insurance Proceeds means all proceeds of Insurance received by or on behalf of the Issuer (whether by way of claims, return of premia, ex gratia settlements or otherwise) but excluding any such proceeds paid directly by any insurer to a third party claimant. Insurance Provider means any provider of Insurance which has a rating for its long-term unsecured and noncredit enhanced debt obligations of A- or higher by S&P or Fitch or A3 or higher by Moody s or a comparable rating from an internationally recognised credit rating agency. Insurance Policies Pledge means the Spanish law governed first ranking pledge over credit rights derived from Insurances granted by the Issuer in favour of the Senior Secured Creditors and the second ranking pledge over credit rights from Insurances granted by the Issuer in favour of the Junior Secured Creditors on the Issue Date. Intellectual Property Rights means: any patents, trademarks, service marks, designs, business names, copyrights, database rights, design rights, domain names, moral rights, interventions, confidential information, knowhow and other intellectual property rights and interests (which may now or in the future subsist) whether registered or unregistered; and the benefit of all applications and rights to use such assets of the Issuer (which may now or in the future subsist). Investment Grade Rating means a rating of at least BBB by S&P or Fitch or Baa3 by Moody s (or their respective equivalents at each Rating Agency for the time being). Investor Report means an electronic report in substantially the form set out in Schedule 2 of the Common Terms Agreement. Investor Website means the website which shall be accessible to the Secured Creditors in accordance with clause 3.8 of the Common Terms Agreement. Issue Date means 17 March Joint Venture means any joint venture entity, partnership or similar person, the ownership of or other interest in which does not require the Issuer to consolidate the results of that person with its own as a Subsidiary. Junior Cash Pay Interest means an amount equal to the principal amount of the Junior Loan on the first day of the relevant Interest Period (as defined in the Junior Facility Agreement) multiplied by the relevant Junior Rate of Interest for that period. 134

141 Junior Cash Sweep Amount means, for any Testing Date: if the Global Historical DSCR in respect of the previous Testing Date is below 1.50:1, 100 per cent. of the Excess Cashflow for the six month period ending on the previous Testing Date and 100 per cent. of the Retained Excess Cashflow as at the previous Testing Date; and if the Global Historical DSCR in respect of the previous Testing Date is equal to or above 1.50:1, 50 per cent. of the Excess Cashflow for the six month period ending on the previous Testing Date and 100 per cent. of the Retained Excess Cashflow as at the previous Testing Date. Junior Discharge Date means the date on which all the Junior Finance Document Liabilities have been fully and finally discharged to the satisfaction of the Security Agent whether or not as a result of enforcement and the Junior Secured Creditors are under no further obligation to provide financial accommodation to the Issuer under any of the Finance Documents. Junior Facility means the junior term loan facility made available under the Junior Facility Agreement. Junior Facility Agreement means the agreement dated on the Issue Date between, amongst others, the Issuer as borrower and the Junior Lenders. Junior Facility Final Maturity Date means 17 March 2026, provided that if the Junior Loan has not been repaid in full on or before that date then the Junior Facility Final Maturity Date shall be extended automatically to the next Payment Date until the earlier of: the date the Junior Loan has been repaid in full; or 31 December Junior Finance Documents means: (c) (d) (e) the Common Documents; the Junior Facility Agreement; the Option Agreement; the fee letters entered into in connection with the Junior Facility Agreement or the transactions contemplated in such document; and any other document that has been entered into in connection with Junior Facility Agreement or the transactions contemplated thereby that has been designated as a Junior Finance Document by the Junior Agent, the Issuer and the Security Agent). Junior Finance Document Liabilities means all present and future liabilities and obligations at any time owed to the Junior Secured Creditors under the Junior Finance Documents, both actual and contingent (provided they are materialised) and whether incurred solely or jointly or as principal or surety or in any other capacity together with any of the following matters relating to or arising in respect of those liabilities and obligations: (c) (d) any refinancing, novation, deferral or extension; any claim for breach of representation, warranty or undertaking or on an event of default or under any indemnity given under or in connection with any document or agreement evidencing or constituting any other liability or obligation falling within this definition; any claim for damages or restitution; and any claim as a result of any recovery by any other debtor as a payment on the grounds of preference or otherwise, 135

142 and any amounts which would be included in any of the above but for any discharge, non-provability, unenforceability or non-allowance of those amounts in any insolvency or other proceedings. Junior Interest means, as at a Payment Date, Junior Cash Pay Interest for that Payment Date plus the aggregate amount of PIK Interest previously capitalised and not prepaid in accordance with the Pre-enforcement Priorities of Payment. Junior Lenders means: an Original Junior Lender; or any bank, financial institution, trust, fund or other entity which has become a Party as a Junior Lender in accordance with the terms set out in the Junior Facility Agreement; which, in each case, has not ceased to be a Party in accordance with the terms of the Junior Facility Agreement. Junior Loan means a loan made or to be made under the Junior Facility or the principal amount outstanding for the time being of that loan. A Junior Loan Payment Lock-up occurs with respect to any date if any of the following events has occurred or any of the following circumstances is subsisting on that date: (c) (d) (e) (f) (g) (h) (i) a Default or Event of Default is continuing or would result from making of the proposed payment; the Issuer has failed to deliver a Compliance Certificate in respect of the immediately preceding Testing Date in accordance with the terms of the Common Terms Agreement or, having delivered it, it is not in compliance with the relevant Ratios; either of the Senior Historical DSCR and the Senior Forecasted DSCR is 1.20:1 or less; the Capex Reserve Account is not funded to the Capex Reserve Account Minimum Balance; the Expropriation Reserve Account is not funded to the Expropriation Reserve Account Minimum Balance; the Senior Debt Service Reserve Account is not funded to the Senior Debt Service Reserve Account Minimum Balance; the Reserved Capex Letter of Credit and Reserved Expropriation Letter of Credit is not available to the Issuer to the Required Level; the Issuer is prohibited from making such payment under clause 4.20 (Restricted Payments) of the Common Terms Agreement; or the first scheduled repayment of principal under the Senior Debt has not been made. Junior Make-Whole Premium means the amount in Euro rounded to the nearest Euro cent (half a Euro cent being rounded upwards), as determined by the Company (acting on the advice of a Financial Advisor), equal to the excess (if any) of (A) the sum of the then present values of the sum of the then present values of the anticipated principal and interest payments in respect of the Junior Loan to (but excluding) the anticipated Junior Loan Final Maturity Date (such anticipated payments and dates to be as set out in an Updated Base Case prepared by the Issuer in accordance with clause 3.4 (Updated Base Case) of the Common Terms Agreement for the purposes of calculating the Junior Make-Whole Premium), over (B) the principal amount outstanding of the Junior Loan and, if the Junior Loan is not prepaid in full, the amount of the Junior Make-Whole Premium so determined will be reduced proportionately to the amount of the Junior Loan prepaid, in accordance with the clause 7.2 (Voluntary prepayment) of the Junior Facility Agreement. 136

143 Junior Rate of Interest means the interest payable at a fixed rate from (and including) the Utilisation Date to (but excluding) the date which is the ninth anniversary of the Issue Date and at a fixed rate from and including the date which is the ninth anniversary of the Issue Date until the Junior Facility Final Maturity Date. Junior Ratio Enhancement Account means the account designated as such, opened and maintained by the Issuer, in accordance with the Account Bank Agreement. Junior Secured Creditor Entrenched Rights means the rights of the Junior Secured Creditors listed below: (c) (d) any amendment or waiver which would have the effect of adversely changing any Priorities of Payments (including as a result of any amendment to the definitions referred to therein) or application thereof (including as a result of any change to a requirement set out in a Finance Document that certain payments, applications or distributions should be made in accordance with the Priorities of Payments) in respect of the relevant Junior Secured Creditor or otherwise adversely affect the ranking of the relevant Junior Secured Creditor; any amendment or waiver which would increase the amount of principal, interest, Junior Make-Whole Premium or any other amount payable in respect of the relevant Junior Loan; any material amendment which would have the effect of reducing or delaying the requirements as regards provision of information set out in clause 3 (Information Covenants) of the Common Terms Agreement; or any amendment which would change or would have the effect of changing (i) any matter which is the subject of the relevant Junior Secured Creditor Entrenched Right; (ii) the provisions of this Deed setting out the effect of the relevant Junior Secured Creditor Entrenched Rights; or (iii) how the relevant Junior Secured Creditor casts its votes or exercise its decision-making rights under this Deed. Junior Secured Creditors means the Junior Agent (in its own capacity and on behalf of the Junior Lenders); and the Junior Lenders. Junior Secured Documents means: the Common Documents (other than the Security Documents); and the Junior Facility Agreement. Junior Secured Liabilities means all present and future liabilities and obligations at any time owed to the Junior Secured Creditors under the Junior Secured Documents, both actual and contingent (provided they are materialised) and whether incurred solely or jointly or as principal or surety or in any other capacity together with any of the following matters relating to or arising in respect of those liabilities and obligations: (c) (d) any refinancing, novation, deferral or extension; any claim for breach of representation, warranty or undertaking or on an event of default or under any indemnity given under or in connection with any document or agreement evidencing or constituting any other liability or obligation falling within this definition; any claim for damages or restitution; and any claim as a result of any recovery by any other debtor as a payment on the grounds of preference or otherwise, and any amounts which would be included in any of the above but for any discharge, non-provability, unenforceability or non-allowance of those amounts in any insolvency or other proceedings. 137

144 Liabilities means, as the case may be, Finance Document Liabilities and Shareholder Liabilities. Losses means any loss, damage, cost, charge, claim, demand, expense, judgment, action, proceeding or other liability whatsoever (including, without limitation, in respect of taxes, duties, levies, imposts and other charges) and including any value added tax or similar tax charged or chargeable in respect thereof and legal fees and expenses on a full indemnity basis. Majority Requirement means, with respect to any Extraordinary Resolution or Ordinary Resolution, the majority requirement established in paragraph 6.3 and 5.3 (respectively) of Schedule 2 (STID Decision Making Protocol) of the STID and, with respect to any Enforcement Action, that established in clause 10.2(d) of the STID. Make Whole Premium means either the Junior Make Whole Premium or the Senior Make Whole Premium as applicable. Master Definitions Agreement means the agreement, dated on the Issue Date between, among others the Issuer, the Bond Trustee, the Principal Paying Agent and the Junior Lenders. Material Adverse Effect means a material adverse effect on: (c) (d) the business, assets or financial condition of the Issuer; the ability of the Issuer to meet its payment obligations and other material obligations under the Finance Documents or the Concession Agreements (where such inability to comply would be materially adverse to the material interests of the Senior Debtholders); the validity, legality or enforceability of any Finance Document; or the ranking of any Security Interest established or to be established by any of the Security Documents. Moody s means Moody s Investors Services Limited or any successor to its rating business. A matter is approved on a Negative Approval basis unless, within the relevant period, Qualifying Secured Creditors representing 25 per cent. or more of the Qualifying Secured Debt have notified the Issuer or the Security Agent that they do not approve the particular matter; or if approved pursuant to an Ordinary Resolution of the Qualifying Secured Creditors adopted in accordance with the STID. Net Cashflow means, in relation to any period: Gross Revenues received (in the case of an historic period) or receivable (in the case of a forwardlooking period); minus Project Costs paid (in the case of an historic period) or payable (in the case of a forward-looking period), during that period. For the purpose of this definition: (i). (ii). if the required balance of the Capex Reserve Account or the Expropriation Reserve Account at the beginning of the period is less than the required balance of that Account at the end of that period, the difference shall be deducted from Net Cashflow for the relevant period; if the required balance of the Capex Reserve Account or the Expropriation Reserve Account at the beginning of the period is more than the required balance of that Account at the end of that period, the difference shall be added to Net Cashflow for the relevant period; 138

145 (iii). (iv). (v). Reserved Capex Costs and Reserved Expropriation Costs shall be added back to the extent funded in accordance with clause 4.26 (Capex and Expropriation) of the Common Terms Agreement; Net Cashflow shall be reduced by the aggregate amount of interest paid on the Participative Loan during that period; and where Net Cashflow is used to determine Excess Cashflow, Global Historic DSCR and Global Forecasted DSCR (but for no other purposes): a. if the required balance of the Senior Debt Service Reserve Account at the beginning of the period is less than the required balance of that Account at the end of that period, the difference shall be deducted from Net Cashflow for that period; and b. if the required balance of the Senior Debt Service Reserve Account at the beginning of the period is more than the required balance of that Account at the end of that period, the difference shall be added to Net Cashflow for that period. Officer s Certificate means a certificate signed by an Authorised Officer. Operating Costs means all costs and expenses paid or projected to be paid by the Issuer in the ordinary course of its business, including but not limited to: (c) (d) (e) payments made or scheduled to be made by the Issuer under the Project Contracts; insurance premia in respect of operating Insurances and Insurance excess; endorsement costs and credit card costs; administrative, legal, management, accounting and employee costs other fees and expenses payable to the Senior Secured Creditors not being debt service; and any VAT in respect of any items in this definition, but excluding: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) amounts recovered by Insurance or expected to be recovered by insurance; Capex Costs; Expropriation Costs; Project Taxes (except for VAT); Debt Service; the Sponsor Success Fee; any Restricted Payments; and depreciation, other non-cash charges, reserves, amortisation of intangibles and similar bookkeeping entries. Operational Bonds means any performance or mobilisation bonds required under or in connection with the Concession Agreements to be posted by (or on behalf of) the Issuer in relation to the Project. Option Agreement means the agreement, dated on the Issue Date between, among others, the Issuer and the Junior Lenders. 139

146 Ordinary Resolution means a resolution in respect of an Ordinary Voting Matter in accordance with the Bond Trust Deed or, in respect of a STID Proposal in accordance with Schedule 2 paragraph 5.2 of the STID. Ordinary Voting Matter means a matter which is neither an Extraordinary Voting Matter nor a Security Agent Discretion Matter and which does not relate to an Enforcement Instruction Notice. Original Junior Lender means each of the financial institutions listed in Schedule 1 to the Junior Facility Agreement acting as a lender under the agreement. Participating Member State means any member state of the European Union that has the euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union. Participative Loan means the participative loan for a nominal amount of Euro 99,166, between the Issuer and the Spanish state in respect of AUSOL II dated 28 July Participative Loan Liabilities means all present and future liabilities at any time of the Issuer in respect of the Participative Loan from time to time. Paying Agency Agreement means the agreement dated on the Issue Date between, the Issuer, the Bond Trustee and the Principal Paying Agent. Payment means, in respect of any Liabilities (or any other liabilities or obligations), a payment, prepayment, repayment, redemption, defeasance or discharge of those Liabilities (or other liabilities or obligations). Payment Date means in relation to the Senior Bonds and the Senior Notes, (i) 30 June and 30 December in each year, up to (but excluding) the Senior Debt Final Maturity Date; and (ii) the Senior Debt Maturity Date, with the first such date occurring on 30 June 2016; and in relation to the Junior Loan, (i) 30 June and 30 December in each year to (but excluding) the Junior Facility Final Maturity Date and (ii) the Junior Facility Final Maturity Date, with the first such date occurring on 30 June Permitted Acquisition means: (c) an acquisition of a business or undertaking to provide some or all of the operation of the Project, where such business or undertaking is concerned principally with the operation of the Project and where the consideration for such acquisition (including associated costs and expenses) together with any other assumed Financial Indebtedness or actual or contingent liability remaining in the acquired company or business at the date of acquisition (when aggregated with the consideration for any other acquisition falling under this paragraph since the Issue Date) does not exceed 3,000,000 (Indexed) (or its equivalent); an acquisition of securities which are Cash Equivalent Investments so long as those Cash Equivalent Investments become subject to the Security Documents as soon as is reasonably practicable thereafter; and the acquisition of any Senior Debt pursuant to any permitted buyback subject to the terms of the Finance Documents. Permitted Business means the business of the Issuer, being: the business of being a road network operator comprising operating, maintaining, repairing and upgrading a road network and/or roads and the provision of services and facilities for and connected therewith, in accordance with the Concession Agreements; and any other business ancillary to the activities set out in paragraph above or which is approved by the Security Agent (acting on the instructions of the Senior Debtholders in accordance with the STID), 140

147 provided that the activities set out in paragraph above constitute the principal business carried on by the Issuer. Permitted Disposal means any sale, lease, licence, transfer or other disposal which is on arm s length terms: (c) (d) (e) (f) (g) of trading stock or cash made by the Issuer in the ordinary course of business of the disposing entity; of assets in exchange for other assets comparable or superior as to type, value and quality; of obsolete or redundant vehicles, plant, equipment, parts or similar items for cash; of Cash Equivalent Investments for cash or in exchange for other Cash Equivalent Investments; arising as a result of any Permitted Security; arising from the application or disposal of cash not otherwise prohibited under the Finance Documents; and of assets for cash where the higher of the market value and net consideration receivable (when aggregated with the higher of the market value and net consideration receivable for any other sale, lease, licence, transfer or other disposal not allowed under the preceding paragraphs) does not exceed 4,000,000 (or its equivalent) in total during the term of the Senior Bonds and does not exceed 500,000 (or its equivalent) in any Financial Year. Permitted Financial Indebtedness means any Financial Indebtedness: (c) (d) (e) arising under the Transaction Documents; up to and including the Issue Date, incurred under the Existing Senior Facility Indebtedness; the Participative Loan Liabilities; arising under or in respect of a Permitted Loan or a Permitted Guarantee; in respect of: (i) (ii) a Finance Lease or hire purchase arrangement entered into primarily as a method of raising financing for or financing the acquisition of leased assets; or any deferred purchase arrangement for assets or services acquired in the ordinary course of its business which is on terms that require the indebtedness to be repaid with 90 days of delivery of the goods or performance of the services, as the case may be, provided that the capital value of the goods financed shall not (together with any other Financial Indebtedness permitted under this paragraph exceed 500,000 (Indexed) (or its equivalent) in aggregate at any one time; (f) incurred or to be incurred provided that (I) the incurrence of the proposed Financial Indebtedness takes place on or before the twentieth anniversary of the Issue Date and in all cases would not result in the Leverage Ratio exceeding the level set out in the definitions below as at the date on which such Financial Indebtedness is incurred; and (II) such proposed Financial Indebtedness is either: (i) in the form of Further Senior Bonds or Further Senior Notes and: (A) the Compliance Certificate for the most recent Testing Date has been delivered by the Issuer and approved in accordance with the Common Terms Agreement; and (1) the Senior Historical DSCR is not less than 1.50:1 as at the most recent Testing Date; and 141

148 (2) the Senior Forecasted DSCR is not less than 1.50:1 as at the most recent Testing Date (which for the avoidance of doubt shall take into account any Senior Debt Service payments arising out of the proposed Permitted Financial Indebtedness as if it had been incurred on such Testing Date); (B) the Junior Loan is not then outstanding or, if Junior Loan is then outstanding, the net proceeds of the issue of the proposed Financial Indebtedness is applied in full to prepay all or part of the outstanding Junior Loan (together with accrued interest and any Make-Whole Premium) (up to the principal amount then outstanding of the Junior Loan) and (C) the Issuer has delivered to the Bond Trustee and the Senior Noteholder Representative written confirmation from S&P that the rating of the Senior Bonds and the Senior Notes immediately following the issuance of Further Senior Bonds or the Further Senior Notes is not expected to be less than BBB; or (ii) in the form of Financial Indebtedness which ranks pari passu with the Junior Loan, and (A) (B) the Junior Loan is not then outstanding or, if the Junior Loan is then outstanding, the net proceeds of the issue of the proposed Financial Indebtedness is applied in an amount necessary to repay in full the Junior Loan; and the parties to such Financial Indebtedness have entered into an Intercreditor agreement with, amongst others, the Issuer, the Shareholders, the Bond Trustee, the Senior Noteholder Representative, the Junior Agent and the Security Agent, in each case including non-petition language and on terms approved by the Security Agent (acting in accordance with the STID); or (iii) Financial Indebtedness which is subordinated in all respects to the Senior Debtholders and the Junior Lenders and the parties to such Financial Indebtedness have entered into an intercreditor agreement with, amongst others, the Issuer, the Shareholders, the Bond Trustee, the Senior Noteholder Representative, the Junior Agent and the Security Agent, in each case including non-petition language and on terms approved by the Security Agent (acting on in accordance with the STID), where Leverage Ratio means, as at any particular date set out in the table below, the ratio for that date of Senior Debt outstanding on the most recent Testing Date in respect of which a Compliance Certificate has been delivered in accordance with the Common Terms Agreement (the relevant Testing Date) (assuming for these purposes that the new Financial Indebtedness had been incurred on that relevant Testing Date and that, if the net proceeds thereof are to be applied in redeeming or repaying Senior Debt, the net proceeds had been so applied on that relevant Payment Date) to EBITDA for the Relevant Period ending on that relevant Testing Date. Period Leverage Ratio From and including To but excluding Issue Date 12th anniversary of the Issue Date 10.00:1 12th anniversary of the Issue Date 13th anniversary of the Issue Date 9.00:1 13th anniversary of the Issue Date 14th anniversary of the Issue Date 8.00:1 14th anniversary of the Issue Date 15th anniversary of the Issue Date 7.00:1 15th anniversary of the Issue Date 16th anniversary of the Issue Date 6.00:1 16th anniversary of the Issue Date 17th anniversary of the Issue Date 5.00:1 17th anniversary of the Issue Date 18th anniversary of the Issue Date 4.00:1 142

149 18th anniversary of the Issue Date 19th anniversary of the Issue Date 3.00:1 19th anniversary of the Issue Date 20th anniversary of the Issue Date 3.00:1 Permitted Guarantee means: (c) (d) (e) (f) the endorsement of negotiable instruments in the ordinary course of trade; any performance or similar bond, guarantee or indemnity or undertaking guaranteeing performance by the Issuer under any contract entered into in the ordinary course of trade, including the Operational Bonds; any guarantee permitted as Permitted Financial Indebtedness; any guarantee given in respect of the netting or set-off arrangements permitted pursuant to paragraph of the definition of Permitted Security; any guarantee granted under the Finance Documents; and any other guarantee not otherwise permitted under the preceding paragraphs (i) provided that the aggregate maximum potential liability of the Issuer thereunder does not exceed 3,000,000 or (ii) approved or consented to in writing by the Security Agent (acting in accordance with the STID). Permitted Investment means an investment: which is in freely negotiable and marketable debt instruments denominated in euro; which has, at the time it is acquired by or on behalf of the Issuer, a remaining term to maturity of 365 days or fewer; and (c) which is a Cash Equivalent Investment. Permitted Loan means: (c) any trade credit extended by the Issuer to its customers, tenants or licensees, on normal commercial terms and in the ordinary course of trade; any Permitted Payment made in the form of a loan; and any other loans or grant of credit approved or consented to in writing by the Security Agent (acting in accordance with the STID). Permitted Payment means: (c) (d) (e) a payment in respect of fees, costs and expenses incurred by the Issuer or a Shareholder on behalf of the Issuer or by the Issuer in connection with the issue of the Senior Bonds and the Senior Notes or the entry into the Junior Facility Agreement; a payment by the Issuer under, and in accordance with the terms of, a Project Contract (including, for the avoidance of doubt, Capex Costs, Reserved Capex Costs, Expropriation Costs, Reserved Expropriation Costs, payments made to fund capital expenditures that may come due under future laws, regulations or interpretations and payments under the Participative Loan); the Sponsor Success Fee; a payment under a Project Contract; any payment permitted under the Finance Documents; and 143

150 (f) any repayment of Additional Equity made available to the Issuer under, and in accordance with, the Contingent Equity Agreement to fund Reserved Capex Costs out of funds received by the Issuer as reequilibrium payments from the Grantor in respect of Reserved Capex Costs. Permitted Security means: (c) (d) (e) (f) (g) any Security Interest created pursuant to any Security Document; any lien arising by operation of law and in the ordinary course of the Issuer s trading (as carried on in accordance with the Transaction Documents); any set-off or similar rights accruing under the Finance Documents; any Security Interest arising out of retention of title provisions, hire purchase or conditional sale arrangements having similar effect in each case in a supplier s standard conditions for the supply of goods acquired by the Issuer in the ordinary course of its business; until and including the Issue Date, the Existing Security Interests; any other Security Interest approved or consented to in writing by the Security Agent (acting in accordance with the STID); and any Quasi-Security arising as a result of a disposal which is a Permitted Disposal. Permitted Transaction means: (c) any disposal required, acquisition made, Financial Indebtedness incurred, guarantee, indemnity, Security Interest or Quasi-Security given, or other transaction arising, in each case under the Finance Documents and the Project Contracts (including without limitation any Permitted Payment made in the form of a loan); transactions (other than (i) any sale, lease, license, transfer or other disposal and (ii) the granting or creation of Security or the incurring or permitting to subsist of Financial Indebtedness) conducted in the ordinary course of trading on arm s length terms; and any other transaction approved or consented to by the Security Agent (acting in accordance with the STID). PIK Interest means the amount of interest to be capitalised on any date upon which interest on the Junior Loan is not paid in full. Post-enforcement Priorities of Payment has the meaning given to it in clause 11 of the STID. Potential Event of Default means any event or circumstance specified in clause 6 of the Common Terms Agreement which would, with the expiry of a grace or cure period, with the giving of notice, with the making of any determination under the Finance Documents or any combination of the foregoing, become an Event of Default. Pre-enforcement Priorities of Payment means the order in which amounts may be withdrawn from the General Account in accordance with Clause 4.2 (Withdrawals) of the Account Bank Agreement. Presentation Date has the meaning given in Condition 6.4 (Presentation only on a Presentation Date) of the Conditions. Principal Amount Outstanding means, in relation to a Senior Bond or a Senior Note, the original face value thereof less any repayment or redemption of principal made to the holder(s) thereof in respect of such Senior Bond or Senior Notes (as applicable). 144

151 Principal Payment means each payment of principal under the Senior Bonds and the Senior Notes on a Payment Date. Priorities of Payment means the Pre-enforcement Priorities of Payment and the Post-enforcement Priorities of Payment. Project means the exploitation of the toll expressways/roads (autopistas) which are the subject of the Concession Agreements. Project Account means each of the General Account, the Senior Debt Service Reserve Account, the Junior Ratio Enhancement Account, the Insurance and Disposal Proceeds Account, the Capex Reserve Account and the Expropriation Reserve Account. Project Contract means: (c) (d) each Concession Agreement; the Cintra Service Agreement; any Operational Bonds; and any Exploitation Contract. Project Costs means each of the following amounts: (c) (d) Operating Costs; Capex Costs; Expropriation Costs; and Project Taxes. Project Taxes means all taxes (other than VAT) payable or to be payable by the Issuer. Projected Spot Rate of Exchange means the mid-rate between the forecast spot rate of exchange for the purchase of one currency with another and the forecast spot rate of exchange for the sale of that currency with that other currency, in each case in the London foreign exchange market at or about a.m. on a particular day for delivery two Business Days later. Qualifying Secured Creditors means, on or before the Senior Discharge Date, the Senior Debtholders and thereafter the Junior Lenders. Qualifying Secured Debt means indebtedness owed by the Issuer to the Qualifying Secured Creditors and: on or before the Senior Discharge Date, means: (i) (ii) in relation to a Senior Bondholder, the Principal Amount Outstanding of the relevant Senior Bonds held by it; and in relation to a Senior Noteholder, the Principal Amount Outstanding of the relevant Senior Notes held by it; and after the Senior Discharge Date means, in relation to a Junior Lender, the principal amount owed to the Junior Lender under the Junior Loan. Quasi-Security has the meaning given to it in clause 4.15 of the Common Terms Agreement. 145

152 Quorum Requirement means, with respect to any Extraordinary Resolution or Ordinary Resolution, the quorum requirement established in paragraph 7.2 and 6.2 (respectively) of Schedule 2 (STID Decision Making Protocol) of the STID and, with respect to any Enforcement Action, that established in clause 10.2 (c) of the STID. Rate of Interest means, in respect of the Senior Bonds and the Senior Note, the Senior Rate of Interest and, in respect of the Junior Loan, the Junior Rate of Interest. Rating Agency means any one of S&P, Moody s or Fitch or any other internationally recognised rating agency. Ratios means the Global Historical DSCR, the Global Forecasted DSCR, the Senior Historical DSCR and the Senior Forecasted DSCR. Receiver means a receiver or receiver and manager or administrative receiver of the whole or any part of the Secured Assets. Redemption Date means each date established for mandatory or voluntary redemption of the Senior Bonds, (in accordance with the Conditions) and/or the Senior Notes, (in accordance with the Note Purchase Agreement) Relevant Jurisdiction means, in relation to the Issuer and any other entity: (c) (d) its jurisdiction of incorporation; any jurisdiction where any asset subject to or intended to be subject to the Security to be created is situated; any jurisdiction where it conducts its business; and the jurisdiction whose laws govern the perfection of any of the Security Documents entered into by it. Relevant Period means on any Testing Date: (e) (f) for the purpose of calculating the Global Historical DSCR or the Senior Historical DSCR in respect of any Testing Date, the period of 12 months ending on (and including) the relevant Testing Date; and for the purpose of calculating the Global Forecasted DSCR or the Senior Forecasted DSCR in respect of any Testing Date the period of 12 months commencing on (but excluding) the relevant Testing Date. Required Level means, as the case may be: in respect of the obligations of the Shareholders is to fund the Reserved Capex Costs under the Contingent Equity Agreement and the Reserved Capex Letters of Credit, an aggregate of 17,095,260.00, being the estimated Reserved Capex Costs as set out in the Base Case, less the amounts paid with respect thereto by the Issuer in accordance with the Common Documents; and in respect of the obligations of the Shareholders is to fund the Reserved Expropriation Costs under the Contingent Equity Agreement and the Reserved Expropriation Letters of Credit, an aggregate of 25,597,811.69, being the estimated Reserved Expropriation Costs as set out in the Base Case and in the report of the Expropriation Adviser, less the amounts paid by the Issuer with respect thereto in accordance with the Common Documents, subject, in each case to reduction in accordance with clause 4.26 of the Common Terms Agreement. Requisite Rating means, in respect of the Account Bank, a rating for its long-term unsecured and non-credit enhanced debt obligations of: BBB or higher by S&P provided that the Kingdom of Spain s sovereign rating is below A+ by S&P; or A- or higher by S&P provided that the Kingdom of Spain s sovereign rating is A+ or higher by S&P. 146

153 Reserved Capex Costs means the amount approved by the Technical Adviser as being the aggregate future liability of the Issuer at any time in respect of the additional capital expenditure requirements imposed on the Issuer in respect of maintenance of tunnels under European Directive 2004/54/CE expected to be incurred in Reserved Capex Letter of Credit means each letter of credit (if any) which is: (c) (d) issued by an Acceptable Bank in favour of the Issuer as beneficiary; granted on terms whereby the Issuer has no obligation directly or indirectly to counter-indemnify the provider in respect of any payments made by the provider of the letter of credit; available to the Issuer to cover (and only to cover) payments it makes in relation to Reserved Capex Costs; and granted on terms whereby the Issuer and/or the Security Agent may make a call thereunder. Reserved Expropriation Costs means 25,597,812, or such other amount approved by the Expropriation Adviser as being the aggregate future liability of the Issuer at any time in respect of pending expropriation cases identified in the report prepared by the Expropriations Adviser (as supplemented) with codes MI-011 RET and ES-A-003. Reserved Expropriation Letter of Credit means each letter of credit (if any) which is: (c) (d) issued by an Acceptable Bank in favour of the Issuer as beneficiary; granted on terms whereby the Issuer has no obligation directly or indirectly to counter-indemnify the provider in respect of any payments made by the provider of the letter of credit; available to the Issuer to cover (and only to cover) payments it makes in relation to Reserved Expropriation Costs; and granted on terms whereby the Issuer and/or the Security Agent may make a call thereunder. Restated Compliance Certificate has the meaning given to it in paragraph 3.3 (Challenge and Review) of the description of the Common Terms Agreement. Restricted Payment means: (c) any dividend, charge, remuneration, fee (including, without limitation, payment of fees to a Shareholder or an Affiliate of a Shareholder other than as expressly permitted under the Transaction Documents) or other distribution (in cash or in kind) (including, for the avoidance of doubt, through loans made by the Issuer to a Shareholder or an Affiliate of a Shareholder, which are expressly permitted); repayment of share premium reserve, or any other payment by way of a return of capital of, or other investment in, the Issuer or participation in the income or profits of the Issuer; repayment, redemption, repurchase or return of the capital (of any tier) of the Issuer or any other such investment or any other such payment in respect of any debt (in cash or in kind) including payments or repayments in respect of any Shareholder Liabilities. Restricted Payment Condition means: no Default is continuing or would result from making any proposed Restricted Payment; the Issuer has delivered a Compliance Certificate in respect of the immediately preceding Testing Date which demonstrates compliance with the relevant Ratios; 147

154 (c) each of the Senior Historical DSCR and the Senior Forecasted DSCR is above 1:1.30; (d) (e) (f) (g) (h) (i) (j) (k) (l) the Capex Reserve Account is funded to the Capex Reserve Account Minimum Balance; the Expropriation Reserve Account is funded to the Expropriation Reserve Account Minimum Balance; the Senior Debt Service Reserve Account is funded to the Senior Debt Service Reserve Account Minimum Balance; the Reserved Capex Letter of Credit and Reserved Expropriation Letter of Credit is available to the Issuer to the Required Level; either (i) the Junior Loan has been unconditionally repaid in full and is no longer subject to clawback and declaration of ineffectiveness pursuant to applicable Insolvency Proceedings; or (ii) if not, (A) each of the Global Historical DSCR and the Global Forecasted DSCR is above 1.50:1 and (B) there is no interest (whether capitalised or accrued) outstanding on the Junior Loan; the first scheduled repayment of principal under each class of the Senior Bonds and the Senior Note has been made; the Issuer is not prohibited from making such Restricted Payment under clause 5.3 (Challenge and Review) of the Common Terms Agreement; there being no Junior Loan Payment Lock-up; and the amount of the Restricted Payment does not exceed the lower of (i) 50 per cent. of the Excess Cashflow for the most recently determined Relevant Period while any Junior Loan remain outstanding; or (ii) the Distributable Amount. Retained Excess Cashflow means, as at any Payment Date, the aggregate amount of Junior Cash Sweep Amounts which were required to have been applied in prepayment of the Junior Loan but were not so applied as a result of there being a Junior Loan Payment Lock-up as at each relevant Payment Date. RPA Pledge means the Spanish law governed first ranking pledge over the credit rights derived from the Concession Agreements against the Grantor (including, but not limited to any credit rights arising in connection with the RPA Termination Payment or any other compensation and/or indemnity resulting from the early termination and extinction of the Concession Agreements) granted by the Issuer in favour of the Senior Secured Creditors and the second ranking pledge over the credit rights derived from the Concession Agreements against the Grantor (including, but not limited to any credit rights arising in connection with the RPA Termination Payment or any other compensation and/or indemnity resulting from the early termination and extinction of the Concession Agreements) granted by the Issuer in favour of the Junior Secured Creditors on the Issue Date. RPA Termination Payment means the Responsibilidad Patrimonial de la Administración payment to be made to the Issuer by the Grantor under the applicable legislation upon the early termination or extinction of a Concession Agreement. S&P means Standard & Poor s Rating Services, a division of The McGraw Hill Companies, Inc. or any successor to its rating business. Secured Assets means all of the assets which from time to time are, or are expressed to be, the subject of the Security Documents. Secured Creditor Representative means each Senior Secured Creditor Representative and the Junior Agent. Secured Creditors means the Senior Secured Creditors and the Junior Secured Creditors. Secured Documents means the Junior Secured Documents and the Senior Secured Documents. Secured Liabilities means the Senior Secured Liabilities and the Junior Secured Liabilities. 148

155 Security means the Security Interests expressed to be created in favour of the Security Agent or the Secured Creditors pursuant to the Security Documents, including any enforcement enhancing instrument, guarantee or obligation to provide cash collateral or further assistance thereunder. Security Agent Discretion Matter means a modification to a Finance Document to which the Security Agent is a party or over which it has the benefit of the Security if: in the opinion of the Security Agent such modification is of a formal, minor or technical nature or is to correct a manifest error which is proven; or in the opinion of the Security Agent, such modification is not materially prejudicial to the interests of any Secured Creditor (where materially prejudicial means that such modification, consent or waiver would have or would be reasonably likely to have a material adverse effect on the ability of the Issuer to perform its payment obligations to the Secured Creditors under the Finance Documents), as determined by the Security Agent. Security Document means: each Initial Security Document; and any other document under which an additional Security Interest has been granted to secure the Secured Liabilities designated as a Security Document by the Issuer and the Security Agent. Security Interest means a mortgage, charge, pledge, lien or other security interest securing any obligation of any person or any other agreement or arrangement having a similar effect. Security Trust and Intercreditor Deed or STID means the security trust and intercreditor deed dated on the Issue Date between among others the Issuer, the Bond Trustee and the Security Agent. Semi-Annual Financial Statements has the meaning given to that term in clause 3.1 (Financial Statements) of the Common Terms Agreement. Senior Bond Payment Schedule means the table setting out the aggregate Principal Amount Outstanding, Senior Interest Payment and Principal Payment on each Payment Date. Senior Bonds means the Senior Class A1 Bonds and the Senior Class A2 Bonds. Senior Bonds Final Maturity Date means the Senior Debt Final Maturity Date. Senior Bond Documents means (c) (d) (e) the Common Documents; the Bond Trust Deed; the Senior Bonds (including the Conditions); the Paying Agency Agreement; and any other document that has been entered into in connection with Bond Trust Deed or the transactions contemplated thereby that has been designated as a Senior Bond Document by the Bond Trustee, the the Issuer and the Security Agent). Senior Bond Secured Documents means: the Common Documents (other than the Security Documents); the Senior Bonds; and 149

156 (c) the Bond Trust Deed (including the Conditions). Senior Bondholder means the holder of each class of Senior Bonds. Senior Class A1 Bondholder Representative means Allianz Global Investors GmbH or such other representative of the Senior Class A1 Bondholders as may be appointed by the Senior Class A1 Bondholders from time to time. Senior Class A1 Bonds means the 320,000, per cent. Secured Senior Class A1 Bonds due 30 December 2045, including any Further Senior Bonds of the same class issued pursuant to the Bond Trust Deed. Senior Class A2 Bonds means the 147,000, per cent. Secured Senior Class A2 Bonds due 30 December 2045, including any Further Senior Bonds of the same class issued pursuant to the Bond Trust Deed. Senior Debt means the Senior Bonds and the Senior Notes. Senior Debtholder means the Senior Bondholders and Senior Noteholders. Senior Debt Final Maturity Date means 30 December Senior Debt Service Reserve Account means the account designated as such, opened and maintained by the Issuer, in each case, in accordance with the Account Bank Agreement. Senior Debt Service Reserve Account Minimum Balance means, as at any Payment Date, the aggregate scheduled interest and principal payments payable by the Issuer in respect of the Senior Debt in the 12-month period from (but excluding) the corresponding Testing Date to (and including) the Testing Date 12 months later. Senior Debt Service means, in relation to any period, an amount equal to the aggregate of: amounts accruing and payable in relation to interest on the outstanding Senior Debt in accordance with the terms of the Bond Trust Deed and the Senior Note Purchase Agreement in that period; and scheduled principal amounts payable on the Senior Debt in that period. Senior Discharge Date means the date upon which all the Senior Secured Liabilities owed to the Senior Bondholders, the Senior Noteholders and the Bond Trustee have been fully and finally discharged to the satisfaction of the Security Agent, whether or not as a result of enforcement and none of the Senior Bondholders, Senior Noteholders or the Bond Trustee are under no further obligation to provide financial accommodation to the Issuer under any of the Finance Documents. Senior Finance Documents means: (c) the Senior Bond Documents; the Senior Note Documents; and any other document that has been entered into in connection with the Senior Bond Documents or the Senior Note Documents or the transactions contemplated thereby that has been designated as a Senior Finance Document by the Issuer, any of the Bond Trustee or the Senior Noteholder Representative and the Security Agent). Senior Finance Document Liabilities means all present and future liabilities and obligations at any time owed to the Senior Secured Creditors under the Senior Finance Documents, both actual and contingent (provided they are materialised) and whether incurred solely or jointly or as principal or surety or in any other capacity together with any of the following matters relating to or arising in respect of those liabilities and obligations: any refinancing, novation, deferral or extension; 150

157 (c) (d) any claim for breach of representation, warranty or undertaking or on an event of default or under any indemnity given under or in connection with any document or agreement evidencing or constituting any other liability or obligation falling within this definition; any claim for damages or restitution; and any claim as a result of any recovery by any other debtor as a payment on the grounds of preference or otherwise, and any amounts which would be included in any of the above but for any discharge, non-provability, unenforceability or non-allowance of those amounts in any insolvency or other proceedings. Senior Forecasted Debt Service Coverage Ratio or Senior Forecasted DSCR means on each Testing Date in respect of the Relevant Period, the ratio of: forecast Net Cashflow; to forecast Senior Debt Service, in each case during such Relevant Period. Senior Historical Debt Service Coverage Ratio or Senior Historical DSCR means, on each Testing Date in respect of the Relevant Period, the ratio of: the actual Net Cashflow; to the actual Senior Debt Service, in each case during such Relevant Period. Senior Interest Payment means the aggregate amount of interest payable in respect of the Senior Bonds and the Senior Note on a Payment Date. Senior Make-Whole Premium has the meaning given to it in, in relation to the Senior Bonds, the Conditions, and, in relation to the Senior Note, the Senior Note Purchase Agreement. Senior Note means the Senior Notes as defined under the Senior Note Purchase Agreement and any Further Senior Notes. Senior Note Documents means: (c) (d) the Common Documents; the Senior Note Purchase Agreement; the Senior Note; and any other document that has been entered into in connection with Senior Note Purchase Agreement or the transactions contemplated thereby that has been designated as a Senior Notes Finance Document by the Senior Noteholder Representative, the Issuer and the Security Agent). Senior Note Final Maturity Date means the Senior Debt Final Maturity Date. Senior Note Purchase Agreement is the note purchase agreement dated 9 March 2016 between, amongst others, the Issuer and the Senior Note Purchasers, as supplemented. Senior Note Purchaser means the Purchasers as defined under the Senior Note Purchase Agreement. 151

158 Senior Noteholder means, at any time, the current holders of the Senior Notes issued by the Issuer under the Senior Note Purchase Agreements. Senior Noteholder Representative means any person notified in writing to the Security Agent as having been appointed to the role of Senior Noteholder Representative under the Senior Note Purchase Agreement provided that, if no such person is appointed, then the Senior Noteholders will be deemed to be the Senior Noteholder Representative for all purposes other than for the purposes of the Priorities of Payment. Senior Notes Secured Documents means: (c) the Common Documents (other than the Security Documents); the Senior Note; and the Senior Note Purchase Agreement. Senior Rate of Interest has the meaning given to it in, in relation to the Senior Bonds, the Conditions and, in relation to the Senior Note, the Senior Note Purchase Agreement. Senior Secured Creditor Entrenched Rights means the following rights of a Senior Secured Creditor: in respect of a Senior Secured Creditor other than the Senior Debtholders, any amendment or waiver which would (i) have the effect of imposing more onerous obligations on that Senior Secured Creditor; (ii) have the effect of adversely changing any Priorities of Payments (including as a result of any amendment to the definitions referred to therein) or application thereof (including as a result of any change to a requirement set out in a Finance Document that certain payments, applications or distributions should be made in accordance with the Priorities of Payments) in respect of the relevant Senior Secured Creditor ; or (iii) otherwise adversely affect the ranking of the relevant Senior Secured Creditor; and in respect of the Senior Debtholders: (i) (ii) (iii) (iv) (v) (vi) any amendment or waiver which would have the effect of adversely changing any Priorities of Payments (including as a result of any amendment to the definitions referred to therein) or application thereof (including as a result of any change to a requirement set out in a Finance Document that certain payments, applications or distributions should be made in accordance with the Priorities of Payments) in respect of the relevant Senior Debtholder or otherwise adversely affect the ranking of the relevant Senior Debtholder; any amendment or waiver which would delay the date fixed for payment of principal, interest, Make-Whole Premium or any other amount in respect of the relevant Senior Debtholder s debt or would reduce the amount of principal, the rate of interest, Make-Whole Premium or any other amount payable in respect of such debt; any amendment or waiver which would bring forward the date fixed for payment of principal or interest in respect of the relevant Senior Secured Creditor s debt or would increase the amount of principal, the rate of interest payable, Make-Whole Premium or any other amount on any date in respect of the relevant Senior Secured Creditor s debt; any amendment or waiver which would alter the amount of principal, interest, Make-Whole Premium or any other amount payable in respect of the relevant Senior Debtholder s debt; any amendment or waiver which would result in the exchange of the relevant Senior Debtholder s debt for, or the conversion of such debt into, shares, notes or other obligations of any other person; any amendment or waiver which would change or would relate to the currency of payment due under the relevant Senior Debtholder s debt; 152

159 (vii) (viii) (ix) (x) (xi) any amendment or waiver which would have the effect of changing or would relate to the rights of the relevant Senior Debtholder to receive any sums owing to it for its own account in respect of fees, costs, charges, Losses, taxes, damages, proceedings, claims and demands in relation to any Finance Document to which it is a party; any amendment or waiver which would change or would relate to any existing obligation of the Issuer to gross up any payment in respect of the relevant Senior Debtholder s debt in the event of the imposition of withholding taxes; any amendment or waiver which would result in an increase in the relevant Senior Debtholder s obligations or Liabilities, or would adversely modify the relevant Senior Debtholder s rights, under or in connection with this Deed and/or any other Finance Document; any amendment which would have the effect of materially changing the nature or the scope of, or would release any Security, unless equivalent replacement security is taken at the same time; or any amendment which would change or would have the effect of changing (i) any matter which is the subject of the relevant Senior Secured Creditor Entrenched Right; (ii) the provisions of this Deed setting out the effect of the relevant Senior Secured Creditor Entrenched Rights; or (iii) how the relevant Senior Secured Creditor casts its votes or exercises its decision-making rights under this Deed. Senior Secured Creditor Representative means: the Bond Trustee (in respect of the Senior Bonds); and the Senior Noteholder Representative (in respect of the Senior Notes). Senior Secured Creditors means: (c) (d) (e) (f) (g) the Security Agent (in its own capacity and on behalf of the other Senior Secured Creditors); the Senior Bondholders; the Senior Noteholders; the Bond Trustee (in its own capacity and on behalf of the Senior Bondholders); the Account Bank; the Principal Paying Agent; and the Junior Agent (in its own capacity only). Senior Secured Documents means the Senior Bond Secured Documents and the Senior Note Secured Documents. Senior Secured Liabilities means all present and future liabilities and obligations at any time owed to the Senior Secured Creditors under the Senior Secured Documents, both actual and contingent (provided they are materialised) and whether incurred solely or jointly or as principal or surety or in any other capacity together with any of the following matters relating to or arising in respect of those liabilities and obligations: any refinancing, novation, deferral or extension; any claim for breach of representation, warranty or undertaking or on an event of default or under any indemnity given under or in connection with any document or agreement evidencing or constituting any other liability or obligation falling within this definition; 153

160 (c) (d) any claim for damages or restitution; and any claim as a result of any recovery by any other debtor as a payment on the grounds of preference or otherwise, and any amounts which would be included in any of the above but for any discharge, non-provability, unenforceability or non-allowance of those amounts in any insolvency or other proceedings. Shareholder Liabilities means all present and future liabilities at any time of the Issuer to any of the Shareholders in respect of any Financial Indebtedness from time to time. Shareholder Liabilities Instrument means any agreement (whether or not in writing), contract, document or account record setting out or evidencing the terms of any Shareholder Liabilities. Shareholders means the Initial Shareholders, or such other holders of the shares of the Issuer as permitted in accordance with the terms of the Transaction Documents. Share Pledge means the Spanish law governed first ranking pledge over the shares in the Issuer granted by the Initial Shareholders in favour of the Senior Secured Creditors and the second ranking pledge over the shares in the Issuer granted by the Initial Shareholders in favour of the Junior Secured Creditors on the Issue Date. Spanish Commercial Code means the Spanish Código de Comercio. Sponsor Success Fee means a fee payable by the Issuer to the Shareholders (or any of their Affiliates) on or about the Issue Date. STID Decision Making Protocol means the Schedule 2 to the STID. STID Proposal means a request by the Issuer for any amendment, waiver or consent, determination or exercise of right or discretion under a Finance Document. Subsidiary means a subsidiary within the meaning of article 42 of the Spanish Commercial Code. Talon has the meaning given to it in the Conditions. TARGET2 Day means any day in which the TARGET2 System is open for the settlement of payment in euro. TARGET2 System means the Trans-European Automated Real Time Gross Settlement Express Transfer (TARGET) System launched on 19 November Tax means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any related penalty or interest) and Taxes, taxation, taxable and comparable expressions will be construed accordingly. Technical Adviser means Ove Arup & Partners Limited or any other technical adviser appointed from time to time in accordance with the Common Documents. Technical Assumptions means the assumptions in relation to technical matters used for the purpose of preparing the Base Case (as the same may be updated by the Issuer from time to time). Testing Date means 30 June and 31 December in each year. Traffic Adviser means Steer Davies Gleave or any other traffic adviser appointed from time to time in accordance with the Common Documents. Traffic Assumptions means the assumptions in relation to traffic data used for the purposes of preparing the Base Case (as the same may be updated by the Issuer from time to time). Traffic Report means the report dated 7 February 2016 and prepared by Steer Davies Gleave included in Annex B to this Prospectus. 154

161 Transaction Documents means the Finance Documents, the Project Contracts and the Equity Documents. Treasury Transaction means any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price. Trust Corporation means a corporation entitled by rules made under the Public Senior Bond Trustee Act 1906 or entitled pursuant to any other comparable legislation applicable to a trustee in any other jurisdiction to carry out the functions of a custodian trustee. Unicaja means Unicaja Banco, S.A., a sociedad anónima incorporated under the laws of Spain, having its registered office at Málaga, Avenida de Andalucía, números 10 y 12 with tax identification number A Updated Base Case has the meaning given to it in paragraph 1.4 (Updated Base Case) of the description of the Common Terms Agreement. VAT means the Spanish value added tax imposed pursuant to the Spanish Law 37/1992, of 28 December, as amended or substituted from time to time. 155

162 ANNEX A FINANCIAL MODEL 1. Financial Model Overview 1.1. Description and basis for preparation The Financial Model comprises semiannual hypothetical results for AUSOL I and AUSOL II derived from specified operational, macroeconomic and financial assumptions for the entire Concession period (i.e. until 2046 for AUSOL I and until 2054 for AUSOL II). See Forward-Looking Information and Financial Model Revenues results are built in the Financial Model combining the traffic and the tariff scenario included in the Traffic Advisor Report in accordance with the indexation terms contained in the relevant Concession Agreement. The Financial Model includes cost results (i.e. opex and lifecycle capex) based on the data provided in the Technical Advisor Report. In addition to the operating assumptions mentioned in the paragraph above, the Financial Model considers certain financial assumptions in order to present pro-forma financial statements, including P&L, Balance Sheets and Cash Flow statements Key assumptions of the Financial Model Operating Assumptions: Operating assumptions: Forecasted traffic: as per Base Case under Steer Davies Gleave Report dated February Forecasted tariffs: review in accordance with the relevant Concession Agreement mechanism. Forecasted opex and lifecycle maintenance: as per Base Case under Arup Report dated 25 February Forecasted expropriation costs: as per estimations under Getinsa Report dated 23 September 2015 and complemented by a supplementary note dated 8 February Macroeconomic assumptions: Consumer Price Index (CPI) (Índice de Precios de Consumo): 2016 (1.00%); 2017 (1.50%); (2.00%). Corporate Income Tax rate (Impuesto de Sociedades): 2015 (28.00%); (25.00%). (c) Financing assumptions: Issue Date: 17 March 2016 Upfront fee on the Senior Bonds: 0.50%. Rate of Interest for Senior Bonds: Mid-swap (1.00%) + spread (2.75%) Upfront fee on the Junior Loan: (3.75)%. Applicable interest rate on the Junior Loan: (7.00%); (10.00%) Step-up on PIK interest on Junior Debt: 2.00% Other refinancing costs: 3,125,945. A-1

163 Breakage cost of the current IRS applying on the Project: 59,217,039. Senior Bonds rating annual fee: 72,500 (indexed at CPI). Bond Trustee / Security Agent / Account Bank: 55,000 (indexed at CPI) 1.3. Key outputs of the Financial Model Sources and Uses as of March 2016 Summary of Sources and Uses EOAF March 2016 Uses Sources Outstanding Debt mar ,59 Drawdown Bond 507,00 Prefunding DSRA Bonds -21,95 Drawdawn Junior 50,80 Prefunding DSRA Junior Debt 0,00 Enhancement Ratio -1,30 Financial Fees and other Expenses -4,97 Total Uses -557,80 Total Sources 557,80 Senior Bonds and Senior Notes profile and relevant ratios Evolution of Senior Bonds and Senior Notes balance and Senior Debt Service Coverage Ratio 600 Senior Debt 4,50x 500 4,00x 3,50x 400 3,00x 300 2,50x 2,00x 200 1,50x 100 1,00x 0,50x 0 0,00x Outstanding Debt DSCR A-2

164 Outstanding Debt , , , , , , , , , , , , , , , , , , , , , , , , , , , , , A-3

165 Evolution of Senior Debt Service (coupon + principal) and Senior Debt Service Coverage Ratio 40 Senior Debt 6,00x ,00x 4,00x 20 3,00x ,00x 1,00x 0 0,00x Interest Expenses Principal Debt Repayment DSCR Junior Loan profile and relevant ratios Evolution of Junior Loan balance and Global Debt Service Coverage Ratio Junior Debt 6,00x 5,00x 4,00x 3,00x 2,00x 1,00x 0,00x Interest Expenses Principal Debt Repayment RCSD Global Enhancement A-4

166 Outstanding Debt , , , , , Evolution of Junior Debt Service (coupon + principal) and Global Debt Service Coverage Ratio 18 Junior Debt 6,00x ,00x 12 4,00x ,00x 6 2,00x 4 2 1,00x 0 0,00x Interest Expenses Principal Debt Repayment RCSD Global Enhancement A-5

167 ANNEX B TRAFFIC REPORT B-1

168 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders AUTOPISTA DEL SOL (AUSOL) Final Report February 2016 Our ref: Client ref:

169

170 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders AUTOPISTA DEL SOL (AUSOL) Final Report February 2016 Our ref: Client ref: Prepared by: Prepared for: Steer Davies Gleave Upper Ground London SE1 9PD AUTOPISTA DEL SOL (AUSOL) Pza. Manuel Gómez Moreno, 2 Edificio Alfredo Mahou, Madrid (Spain) Steer Davies Gleave has prepared this material for AUTOPISTA DEL SOL (AUSOL). This material may only be used within the context and scope for which Steer Davies Gleave has prepared it and may not be relied upon in part or whole by any third party or be used for any other purpose. Any person choosing to use any part of this material without the express and written permission of Steer Davies Gleave shall be deemed to confirm their agreement to indemnify Steer Davies Gleave for all loss or damage resulting therefrom. Steer Davies Gleave has prepared this material using professional practices and procedures using information available to it at the time and as such any new information could alter the validity of the results and conclusions made.

171 Contents DISCLAIMER NOTICE Introduction... 2 The Project and Our Assignment... 2 Contents of this Report Autopistas del Sol Concessions... 4 Characteristics... 4 Tolling System... 6 Travel Times Benefits Current and Historic Traffic Introduction Base Year traffic (2015) Traffic Pattern Historic Traffic The Socioeconomic Context The Study Area and Purpose of the Road Corridor Population Economy Tourism Traffic Growth Introduction Background Growth Traffic Capture Traffic and Revenue Forecasts Introduction Key Assumptions Bank Case Forecasts Sensitivity Analysis Results February 2016

172 Figures Figure 2.1: Location of AUSOL I and AUSOL II Concessions... 5 Figure 2.2: AUSOL I San Pedro toll plaza... 5 Figure 2.3: AUSOL I and II Toll Plazas... 6 Figure 2.4: Toll Tariff Increase Index 2002 = Figure 2.5: Payment Method Proportions Figure 2.6: Malagá and Estepona Figure 2.7: Observed AM Peak Period Travel Speeds Figure 3.1: Average Daily Traffic Transactions by Location Figure 3.2: Hourly Traffic Profile AUSOL I (Both Directions) Figure 3.3: Hourly traffic profile AUSOL II (Both Directions) Figure 3.4: Weekly traffic profile AUSOL I Figure 3.5: Weekly traffic profile AUSOL II Figure 3.6: Monthly traffic profile AUSOL I Figure 3.7: Traffic Growth where is this chart to update? Figure 3.8: Monthly profile AUSOL I ( ) Figure 3.9: Monthly profile AUSOL II ( ) Figure 4.1: Municipalities in and around the concession in the Province of Malaga Figure 4.2: % of Domestic and Foreigners Trips on AUSOL Corridor Figure 4.3: Distribution by Trip Purpose Figure 4.4: Andalucia GDP per capita Figure 4.5: Historic GDP growth in Spain and Andalucia Figure 4.6: % annual change in GDP and Household Consumption of Spain Figure 4.7: % annual change in GDP and Industrial Production of Spain Figure 4.8: Unemployment Rate in Spain and Andalucia Figure 4.9: Concentration of hotels and resort on AUSOL corridor Figure 4.10: Concentration of Shopping Centres on AUSOL corridor Figure 4.11: Malaga Airport Passengers Figure 5.1: Evolution Corridor AUSOL I Lights with respect to explanatory variables Figure 5.2: Evolution AUSOL II Lights with respect to explanatory variables Figure 5.3: AUSOL I Heavies with respect to explanatory variables February 2016

173 Figure 5.4: Heavies AUSOL II with respect to explanatory variables Figure 5.5: Heavy Vehicles-km Traffic across all Spanish Road Network Figure 5.6: Example Logit Curve Figure 5.7: BRP Curves Figure 6.1: Observed and forecast traffic Figure 6.2: AUSOL I traffic forecasts Figure 6.3: AUSOL II traffic forecasts Figure 7.1: Change in traffic for sensitivity scenarios (2020) Figure 7.2: Change in traffic for sensitivity scenarios (2040) Figure 7.3: Location of New Roundabouts on the N340/A Figure 7.4: Sensitivity test results AUSOL I Figure 7.5: Sensitivity test results AUSOL II Tables Table 2.1: AUSOL I Tolls Low and High Season Tariff by Section and Toll Plaza ( 2015)... 7 Table 2.2: AUSOL II Tolls Low and High Season per Section and Toll Plaza (Euros 2015)... 7 Table 2.3: Discounts Available to Frequent Users of AUSOL I and II... 7 Table 2.4: Toll Tariff Escalation Factors... 9 Table 2.5: Concession benefit time (min) and tolls ( 2015) Table 3.1: Base Year (2015) traffic and revenues AUSOL I (total transactions by period) Table 3.2: Base Year (2015) traffic and revenues AUSOL II (total transactions by period) Table 3.3: Estimate of Alternative Traffic in 2015 (Annual Transactions) Table 3.4: 2015 Daily Traffic AUSOL I and AUSOL II Table 3.5: Long distance traffic on the alternative (Section 1) Table 3.6: AADT Historic Data Table 4.1: Population in 2015 and Growth in 1996 to 2014 and 2015 to Table 4.2: Number of Andalucia Visitors Table 5.1: GDP, Industrial Production and Tourism Projections Table 5.2: BRP curve parameters Table 5.3: VoT - /hr (2015 prices) Table 6.1: Base Case assumptions Table 6.2: AUSOL I Traffic Growth February 2016

174 Table 6.3: AUSOL II Traffic Growth Table 6.4: Capture rates AUSOL I Table 6.5: Capture rates AUSOL II Table 6.6: Times (min) Table 6.7: AUSOL I traffic forecast (AADT) Table 6.8: AUSOL II traffic forecast (AADT) Appendices A B Traffic Forecasts by Toll plaza Levels of Service February 2016

175 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report DISCLAIMER NOTICE The projections of traffic and revenue contained within this document represent Steer Davies Gleave s current estimates. While they are not precise forecasts, they do represent, in our view, a reasonable expectation for the future, based on the most credible information available as of the date of this report. The estimates contained within this document rely on numerous assumptions and judgments and are influenced by external circumstances that can change quickly and can affect estimated revenues. In addition, it has been necessary to base much of this analysis on data collected by third parties. This has been independently checked whenever possible. However, Steer Davies Gleave does not guarantee the accuracy of this third party data. Finally, it should be remembered that the traffic forecasts presented represent long term growth profiles. There will, in reality, be a degree of year on year oscillation of actual traffic levels around these growth rates that match macro-economic cycles of recession and boom. We do not believe it is feasible to include such oscillations within our concession life forecast, and would recommend such uncertainties are, especially in the short term, addressed through stress tests within the financial model. February

176 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report 1 Introduction The Project and Our Assignment 1.1 The concessions AUSOL I and II are operated by Autopista del Sol, Concesionaria Española S.A. (the Concessionaire) which was created with the purpose of constructing, maintaining and managing the Toll Motorway between Málaga and Estepona, which began operations on June In 2001 the Ministry of Public Works (Ministerio de Fomento) awarded Autopista del Sol concession for the construction, maintenance and management of the toll motorway extension from Estepona to Rio Guadiaro. This motorway has been operating since August Steer Davies Gleave has been commissioned by Autopista de SOL S.A. (AUSOL) to act as Independent Traffic Advisor on behalf of the lenders, for the refinancing of AUSOL I and AUSOL II toll road concessions. 1.4 In support of this, the lenders require an independent traffic study to understand the traffic and revenue position of the concession. Steer Davies Gleave has produced updated traffic and revenue forecasts for both concessions, which are presented in this report. Our Approach 1.5 The approach employed in the preparation of the traffic and revenue forecasts was developed to take advantage of the existing knowledge of the AUSOL concessions and of the available data. It follows normal practices well established in addressing the issue of forecasting ongoing traffic growth on a brownfield project. 1.6 The analysis focused on two sets of issues: understanding, as clearly as possible, the traffic which is at present using AUSOL I and II; and identifying how and why that traffic will change in the future. 1.7 In turn, future change is driven by two factors: Growth of 'background' traffic: this depends to a certain extent on the on-going socioeconomic and demographic development of the area served by the AUSOL concessions; Change in the competitive position of the concessions: this reflects changes in highway capacity of competing roads and the relative changes in service levels (time, congestion, price, etc.) for AUSOL and competitors. 1.8 The work carried out by Steer Davies Gleave to produce the forecasts include: February

177 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Analysis of existing and historical traffic and revenues for all toll plazas, using traffic data provided by the concessionaire. Analysis of additional traffic counts for other locations based on traffic counts data provided by the concessionaire and data collected by Ministerio de Fomento. Analysis of seasonality considering traffic variations in high and low season and the current toll rates in low and high season. Review of historic and current traffic on the concessions and in the whole corridor. Analysis of the highway traffic during the economic crisis and the current recovering period. Analysis of the corridor and the area of influence in terms of traffic and competence. Identification and analysis of drivers of traffic growth on the corridor and AUSOL (employment, tourism, population, GDP, congestion on the alternatives, etc.). Identification of forecasts of economic development and population in the future, to prepare estimates of traffic growth. Development of estimates of background traffic growth and future capture. Identification and analysis of other elements that can affect the concession in future. Development of traffic and revenue forecast estimates central estimates with discussion of potential upsides. Sources of Information 1.9 Steer Davies Gleave s work is based in its entirety on an analysis of publicly available information and data provided by CINTRA and the Concessionaire. This information includes details of historic traffic flows by toll plaza, traffic counts on the alternative route and traffic statistics for other toll roads Spain, from Ministerio de Fomento It was not within the scope of this study to audit these data sources. Although, as far as possible, the data has been reviewed for completeness and reliability, Steer Davies Gleave cannot guarantee the accuracy of this third-party data. However, it is worth mentioning that the traffic and revenue data provided by Cintra is audited by the company auditors every year, so we believe that the information is accurate and complete The study team has visited the concessions and areas surrounding AUSOL I and II to become familiar with the schemes and the study area and have a better understanding of the traffic on the AUSOL concessions and competing roads. Contents of this Report 1.12 The report has been divided into 7 chapters: Chapter 2 describes the concession. Chapter 3 sets forth traffic and revenue figures of the toll roads in 2015, base year of the study. It further identifies the traffic volumes and revenue for each toll plaza. Chapter 4 discusses the context of the study area (AUSOL I, II and the competing route) and covers the socio-economic situation in the corridor. Chapter 5 covers the development of the growth model (AUSOL and traffic growth on other roads in the study area), and its relation with socioeconomic indicators and predicted elasticities. Chapter 6 presents traffic and revenue projections and any assumptions upon which the forecasts are based. Chapter 7 includes the main results of sensitivity tests undertaken. February

178 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report 2 Autopistas del Sol Concessions Characteristics 2.1 The AUSOL Concessions form the A7 motorway which runs between Malaga and Guadiaro along the southern coast of Spain. There are two concessions included in the package: AUSOL I: This is the first concession that started operation in June 1999 and runs for 84km between Malaga and Estepona. The concession has two tolled sections with the following toll plazas: Calahonda San Pedro AUSOL II: The second concessions started operation three years later, in August 2002, and runs for 21km between Estepona and Guadiaro. The concession has one toll plaza: Manilva 2.2 The complete motorway (Ausol I and II) is made up of three tolled sections separated by free sections at Benalmádena, Marbella and Estepona. The sections of Benalmádena and Marbella have three lanes in each direction, while the rest of the motorway has two. The speed limit on the concession is 120 kph with sections near the toll plazas and tunnels having lower speed limits. 2.3 The concession runs parallel to the N340/A7, a free alternative dual carriageway with two lanes per direction and grade or signalised intersections at some points along the road. 2.4 The map below shows the the study area and the location of the concessions, alternative road and toll plazas. Figure 2.2 presents a typical section of the toll road near the toll plaza of San Pedro. February

179 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Figure 2.1: Location of AUSOL I and AUSOL II Concessions Source: Steer Davies Gleave Figure 2.2: AUSOL I San Pedro toll plaza Source: Steer Davies Gelave February

180 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Tolling System 2.5 The toll collection system for the concessions is an open system within each of the three tolled sections. Tolls are paid at the mainline toll plazas (troncal) or at the ramp toll plazas (lateral). The following figure shows the detail of the location of the toll plazas. Figure 2.3: AUSOL I and II Toll Plazas Source: Steer Davies Gleave Toll Tariffs 2.6 Toll rates vary by vehicle type and according to the time of year, with high season being during the summer months and at Easter. The high season extends from June to September (inclusive) and Easter Week (for the 17 days prior to and including Easter Sunday) 2.7 The tolls for lights and heavies are presented in the tables overleaf, where: Light vehicles include: cars, motorcycles, small vans and minibuses with or without trailers with single wheels. Heavy vehicles I include trucks with 2 or 3 axles, vans and minibuses with trailers with twin wheels; and Heavy Vehicles II are trucks with 4 or more axles and coaches with 2 and more axles. February

181 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Table 2.1: AUSOL I Tolls Low and High Season Tariff by Section and Toll Plaza ( 2015) Section (Toll Plaza) Light Vehicles Heavy Vehicles I Heavy Vehicles II Low/ High Marbella Málaga (Calahonda Troncal) Málaga Calahonda, Calahonda Marbella (Calahonda Lateral) Marbella Estepona (San Pedro Troncal) Marbella San Pedro, San Pedro Estepona (San Pedro Lateral) Low High Low High Low High Source: CINTRA Table 2.2: AUSOL II Tolls Low and High Season per Section and Toll Plaza (Euros 2015) Section (Toll Plaza) Light Vehicles Heavy Vehicle I Heavy Vehicle II Low/High Estepona - Guadiaro (Manilva Troncal) Estepona Manilva, Manilva Guadiaro (Manilva Lateral) Low High Low High Low High Source: Discounts are applied through the year based on number of trips made by month. In addition to the discounts according to trips made, frequent users pay the normal fare throughout the year. Discounts can be up to 50% as shown in the table below. Table 2.3: Discounts Available to Frequent Users of AUSOL I and II Number of Trips per Month Discount 1 st to 10 th trips - 11 th to 15 th trip 5% 16 th to 20 th trip 10% 21 st to 25 th trip 20% 26 th to 30 th trip 30% 31 st to 35 th trip 40% From 36th onwards 50% Source: For a user to qualify for these discounts, the driver must always use the same payment method, either a credit card (always the same card) or tag (or OBE). February

182 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Toll Tariff Increase 2.10 The toll tariffs are increased annually in accordance with the annual average variation of the Consumer Price Index and with the usage for each concession for the previous year versus the bid offer traffic forecast The tariff increase is calculated applying the following formula: Where: Tariff Increase = 1 + CPI increase X X = [ADT r ADT b ]/ADT b with 0 X 1 ADT r = Observed real daily total traffic ADT Est_b = Traffic forecasted in the Bid 2.12 The factor X is only applied when the outturn traffic is higher than the traffic forecasted in the bid offer. The value of X historically has been very small, so in practise tariffs have increased more or less on line with inflation. The following figure showing illustrates how the tariffs of AUSOL I and II have changed over time since 2002 (100 = 2002). Figure 2.4: Toll Tariff Increase Index 2002 = 100 Source: CINTRA and INE data 2.13 It can be seen that AUSOL II tariffs have increased less than AUSOL I, as a consequence of the application of the adjustment factor X which has been different on each concession. This is because traffic outturn in AUSOL II has been higher than the bid forecasts since the opening until year February

183 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report 2.14 On the contrary, AUSOL I traffic has been either been very similar or below the bid offer forecasts. Consequently, tariffs on AUSOL I have increased more than those of AUSOL II In year 2012 tariffs increased well above inflation. This is explained by two things: In June 2012, the government derogated a decree (Decree 6/99) by which the Government stopped paying a subsidy to the concession companies to guarantee a rate of return of 7%. Tariffs across of tolled roads that were in operation before year 2000, increased by 7.53%. AUSOL I started operating in In September 2012, the Government changed the VAT from 18% to 21% The table below provides details of past adjustments to the tariffs of each concession. Table 2.4: Toll Tariff Escalation Factors CPI and other AUSOL I Factor X Tariff increase % % CPI and other AUSOL II Factor X % % % % % % % % % % % % % % % % % % % % (jan-jul) 3.21% % (ago-dec) 7.53% % % % % % % % Source: CINTRA Tariff increase 2.17 In the future, tariffs of both concession are expected to grow on line with inflation for the rest of the concession period, because the forecasted traffic presented at the end of this report are well below the bid values. Payment Methods 2.18 Tolls are paid using one of the following three payment methods: Cash: Paying the toll to a cashier or through an automatic machine (ATM) in a booth at the toll plaza Credit Card: Payment using card via an automatic machine or to a cashier Electronic: payment of the toll using a tag/transponder attached to the vehicle. The electronic system, or OBE, is interoperable on any OBE via T in Spain. February

184 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report 2.19 Figure 2.5 shows the proportion of the total transactions each of the payment method contributes for a particular year (2014). The payment methods are considered for each of the toll plazas along AUSOL I and II for lights and heavy vehicles. Figure 2.5: Payment Method Proportions Source: Steer Davies Gleave 2.20 Cash and Cards are the most popular methods of payment, accounting for approximately 47% and 32% of all transactions, respectively. The payment method seems to vary slightly by concession, with more users using cash on AUSOL II. Around 20% of all transactions use electronic toll payments As one could expect, electronic toll payment is more widely used among the heavy vehicles. Overall, 72% of the heavy vehicle transactions used OBE. Normally in the case of trucks, when the vehicle belongs to a company instead of the driver, the company prefers to pay the tolls directly. Alternative Route 2.22 The A7/N-340 runs along the coast and provides direct competition for the travel market in the corridor In its route it passes through densely urbanised areas and the main touristic and commercial developments on the coast, which will make almost imposible to widen the road to increase capacity The road has a double function; it connects the main cities and towns along the coast and at the same time, it provides access to the properties and commercial areas located along the route. It serves a mixture of short and long distance traffic The N-340 used to be the national road that was then widened and converted to a dual carriage way road. Because of the fact that the A7 was not originally conceived as a motorway, it has many junctions along the route and the layout of the junctions are quite poor, February

185 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report characterised for having short ramps to egress and access the road and short lanes for merging and exiting the road. Accidents are very common on this road, which has been catalogued as one of the worst in Spain Total travel costs (journey times and tolls) via the two routes are fundamental to determine the capture rate of the concession in the future The maximum speeds allowed on the alternative route between Malagá and Estepona is 80 kph and they are controlled by radar. However, according to travel times and speed measurements provided by CINTRA at certain times of the day some people drive faster at around 90kph to 100 kph The alternative route from Estepona to Guadiaro is also the N-340. The N-340 is dual carriageway with at grade interchanges (roundabouts). Speeds on this road are in the range of 60 to 80 kph The following figure shows a typical profile of the alternative road between Malagá and Estepona. Figure 2.6: Malagá and Estepona Source: Steer Davies Gleave 2.30 It is worth noting that the A7/N-340 is the only alternative route. Given its location it would be impossible to widen it in the future There are no plans in the future to build a road or railway line that could compete with AUSOL. Travel Times 2.32 Based on the travel time information collected by Steer Davies Gleave and real time traffic information from the Google website, we analysed the travel times in the study area. Figure 2.7 shows the AM and PM peak average speeds for the concession and alternative. February

186 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Figure 2.7: Observed AM Peak Period Travel Speeds Source: Steer Davies Gleave 2.33 It can be seen that in all time periods the vehicles on the concession road travel at or near the speed limit (120 kph). Vehicles travelling on the alternative road show lower speeds as a result of the lower speed limits, number of intersections along the road and, depending on the time of the day and the direction, delays due to congestion. While speeds on the alternative road competing with AUSOL I seem more variable throughout the day, the speeds on the parallel road to AUSOL II are more uniform. Benefits 2.34 Additionally, to understand the benefits of the concession, we estimated the time and toll costs for a typical car trip through the concession and through the alternative road. This was done for each section and for the total length of the concession. Table 2.5 shows these costs for AM peak (summer) in the westbound direction The concession offers journey time benefits of around 25% and in the first section between Malaga and Marbella of nearly 40% (10 min). While the trade-off between time saving and toll February

187 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report rates suggests high values of time (more than 40 /hr), drivers probably also consider additional benefits from reliable journey times offered by the toll facilities. Table 2.5: Concession benefit time (min) and tolls ( 2015) Section AUSOL Alternative Benefits Time Toll Time Toll Time Toll 1: Fuengirola-Marbella N/A : Marbella-Estepona N/A : Estepona-Guadiaro N/A Total: Malaga Guadiaro (incl free sections) Source: Steer Davies Gleave N/A February

188 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report 3 Current and Historic Traffic Introduction 3.1 In this chapter the traffic and revenue levels for the base year are set out and then an analysis of the historic usage of the concessions is presented. 3.2 For this assignment, the concessionaire has provided Steer Davies Gleave with extensive traffic data for AUSOL, collected on an on-going basis as part of the tolling and charging process. This data shows traffic by vehicle type for each toll plaza, for the period between the openings of the concessions until June Base Year traffic (2015) Transactions 3.3 Cintra provided monthly transaction and revenue data for all the toll plazas for 2015, as well as historical seasonality profiles from We have decided to define 2015 as the base year. 3.4 The total number of transactions for 2015 was 14.9 million. This can be compared with 13.3 million in 2014 a year-on-year increase of around 12%. This is a high increase but in line with the observed traffic growth for the first six months of the year and with an expected high growth in GDP of 2.9% in Spain. 3.5 A summary of the estimated 2015 base traffic and revenue data is given in the tables below for each concession. We have included transactions divided into summer and rest of the year, with the summer transactions including the Easter period (this is because the increased toll rates are applied in this period). Note that the revenue shown in the tables below include tax, but does not account for discounts. Based on the 2014 revenue data provided by Cintra, we estimate discounts to result in a 2% reduction of the total revenue. Table 3.1: Base Year (2015) traffic and revenues AUSOL I (total transactions by period) Section Vehicle Type Transactions Summer (million) Transactions Non- Summer (million) Transactions Total (million) Revenues ( million) With VAT Excl. VAT Calahonda Troncal Car Medium Truck Heavy Truck Total February

189 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Section Vehicle Type Transactions Summer (million) Transactions Non- Summer (million) Transactions Total (million) Revenues ( million) With VAT Excl. VAT Calahonda Lateral Car Medium Truck Heavy Truck Total San Pedro Troncal Car Medium Truck Heavy Truck Total San Pedro Lateral Car Medium Truck Heavy Truck Total Total Car Medium Truck Heavy Truck Total Source: Prepared by Steer Davies Gleave based on data provided by Concessionaire Totals may not sum due to rounding Table 3.2: Base Year (2015) traffic and revenues AUSOL II (total transactions by period) Section Vehicle Type Transactions Summer (million) Transactions Non- Summer (million) Transactions Total (million) Revenues ( ) With VAT Excl. VAT Manilva Troncal Car Medium Truck Heavy Truck Total Manilva Lateral Car Medium Truck Heavy Truck Total Total Car Medium Truck Heavy Truck Total Source: Prepared by Steer Davies Gleave based on data provided by Concessionaire Totals may not sum due to rounding February

190 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report 3.6 The transactions on AUSOL I represent 63% of the total transactions and the summer period accounts for nearly half the annual transactions, although only 38% of the yearly days. This demonstrates the seasonal peak of the toll road in the summer due to leisure users travelling in the area. 3.7 Along the full stretch of the toll road, the volume of trucks is just under 8%. The proportion is higher in AUSOL II, around 11%, in part due to the presence of a quarry and because of the nature of the road which is more inter-urban and with less commuter traffic. Alternative road In order to have the total in-scope demand for the project, we estimated the 2015 traffic for each section of the alternative. The following table summarise these estimates: Table 3.3: Estimate of Alternative Traffic in 2015 (Annual Transactions) Section Veh Type Vehicles 2015 Artola N-340 Pirata N-340 Sufridor N-340 Car Medium Truck Heavy Truck Total Car Medium Truck Heavy Truck Total Car Medium Truck Heavy Truck Total Source: Prepared by Steer Davies Gleave based on traffic count data from Ministerio de Fomento 3.8 The following figure presents the average daily transactions by location and their corresponding share of trucks. For each toll plaza of the concession we present the total of mainline and ramp transactions. February

191 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Figure 3.1: Average Daily Traffic Transactions by Location Source: Steer Davies Gleave AADT 3.9 Based on the traffic data presented above, annual average daily traffic (AADT) was calculated taking into account the length of each tolled section using the following formulation: AADT AUSOL I = (50.15 (Cal Troncal Cal Lateral ) (SP Troncal SP Lateral ) ) ( ) Where AADT AUSOL II = Man Troncal Man Lateral Cal: Toll plaza at Calahonda SP: Toll plaza at San Pedro Man: Toll plaza at Manilva 3.10 The following table shows the resulting AADT of AUSOL I and II in year Table 3.4: 2015 Daily Traffic AUSOL I and AUSOL II Vehicle type AUSOL I AUSOL II Car 11,803 12,610 Medium Truck Heavy Truck Total 1212,559 14,161 Source: Steer Davies Gleave February

192 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Hourly traffic profiles 3.11 In order to understand the daily peaking of the concessions, we analysed the total traffic in one hour intervals. For each concession, we identified the summer average one hour traffic level and used that as the base. We then identified the index relative to the base of each one hour period. Figure 3.2 and Figure 3.3 present the index values for each concession for Monday to Thursday, Friday, Saturday and Sunday, respectively It can be initially noticed that both sections of the concession show bi-daily peaks at approximately 11am and 6pm, the magnitude of these peaks varies between the two sections of road. The timing of these peaks and how they vary by weekday and weekend, demonstrates that the demand on the toll road stretches beyond that of regular commuter demand For both AUSOL I and II, the weekday Monday to Friday distribution is skewed to the left in comparison with Friday and weekends showing the concession does serve business or work travellers in the week. The distributions of trips on the weekend show peaks later in the morning compared with weekday traffic consistent with a high level of tourist and leisure trips along the concession. It can be seen that on Saturdays the peak transactions is in the late morning, whilst the Sunday peak is in the late afternoon. It can be noticed that there is also a peak on Friday evenings. This further reinforces the use of the road to access leisure destinations. Figure 3.2: Hourly Traffic Profile AUSOL I (Both Directions) Source: Steer Davies Gleave February

193 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Figure 3.3: Hourly traffic profile AUSOL II (Both Directions) Source: Steer Davies Gleave Weekly traffic profile 3.14 We analysed traffic data on both concessions to identify the day of week traffic pattern, considering summer and non-summer periods separately AUSOL I and AUSOL II show similar characteristics in terms of the weekly profiles. Throughout the weekdays the level of transactions remains fairly constant but with a small increase in trips as week progresses. There is then a significant peak on a Friday which it could be assumed are people travelling to the coast for the weekend In terms of differences in weekly distribution by summer and non-summer it can be observed that AUSOL I has a slightly less significant Friday peak in the non-summer compared to the summer. AUSOL II shows a similar profile in both summer and non-summer weeks. February

194 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Figure 3.4: Weekly traffic profile AUSOL I Source: Steer Davies Gleave Figure 3.5: Weekly traffic profile AUSOL II Source: Steer Davies Gleave Monthly traffic profiles 3.17 To understand the variability of traffic over the course of the year, we analysed the historical traffic for each month. Similar to the previous analysis, for each concession, we identified the average monthly value and calculated the index of each month against the average. These index values are presented in Figure 3.6. February

195 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report 3.18 Supporting the information in Table 3.1 and Table 3.2, these figures show a sharp peak in demand in August and generally across the summer months (June September) with 43% of the annual demand in this time for AUSOL I and 40% for AUSOL II. The figures show a gradual increase in demand in the earlier months of the year beginning around Easter and continuing through to the summer peak. By September the demand declines significantly returning to similar levels as before the summer period. AUSOL II has a slightly lower peak than AUSOL I. Figure 3.6: Monthly traffic profile AUSOL I Source: Steer Davies Gleave Traffic Pattern 3.19 To gain a full understanding of the potential market of the concession we analysed Automatic Number Plate Recognition information captured from vehicles passing a series of video cameras located on the alternative road. Data was collected at the beginning and end of the first sector (between Fuengirola and Marbella) and continuously through the first five months of 2013 (January to March) 3.20 This information helps to establish trip length distribution but more important for this project it gives the proportion of long distance vehicles travelling on the alternative road that could travel on the concession The results of the analysis, which are shown in Table 3.5, suggest that about 20% of traffic on the first section of the alternative road are long distance and therefore potential users of the concession, with a slight lower percentage during the winter months. We think this percentage is also probably right for the second section that also seems very urban and where there are many restaurants and commerce along the route. For the third section (AUSOL II) we think that 25% is more reasonable to use as it appears to be less urbanised. Table 3.5: Long distance traffic on the alternative (Section 1) Month Long distance traffic on the alternative January 17.9% February

196 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Month Long distance traffic on the alternative February 19.9% March 20.0% April 18.9% March 19.1% Source: Steer Davies Gleave with information from Cintra 3.22 It is worth mentioning that the cameras registered less vehicles than the automatic traffic counters installed at the same locations, as the camera is not always able to detect all the plates (poor vision, vehicles too close, angle view, etc.). Therefore, it is likely that more than 20% of the vehicle passed through the two locations. Also we believe that in any case, the number of potential users is likely to be more than 20% over the summer months. Therefore, 20% in the case of AUSOL I and 25% on AUSOL II as in-scope traffic for the motorway now using the alternative are conservative assumptions. Historic Traffic Table 3.6 lists the AADT history on AUSOL I and AUSOL II with its corresponding percentage growth and Source: Steer Davies Gleave with information from Cintra 3.23 Figure 3.7 shows the AADT history for both concessions. Full annual data for AUSOL II is shown from 2003, first year when full annual data is available Total traffic grew rapidly in the first three years of AUSOL I, from 9,300 vehicles per day in 1999 to 14,600 vehicles per day in That reflects a compound annual growth rate (CAGR) of 16% which is high probably due to some ramp-up effect. A similar situation was observed in the first three years of AUSOL II with a CAGR of 13% In 2007 both concessions reached the peak with almost 20,000 vehicles per day. After this year and following the economic recession, traffic declined for almost six consecutive years to reach levels of 10,000 and 12,000 vehicles per days in AUSOL I and AUSOL II respectively. After this low point in 2013, the total number of vehicles started growing again at 3% and 2% p.a. in In the first eight months of 2015, traffic has seen a significant increase of almost 10% compared with the same period in We believe this high growth is explained in part by the recovery of the economy in the region but also by the economic and political situation of other popular destination holiday destinations in the Mediterranean area. This is likely to continue helping to extend the growth in traffic this year. Table 3.6: AADT Historic Data Year AUSOL I AUSOL II AADT % AADT % ,309 N/A , % N/A , % N/A , % 11, , % 13, % February

197 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Year AUSOL I AUSOL II AADT % AADT % , % 14, % , % 16, % , % 17, % , % 19, % , % 17, % , % 16, % , % 15, % , % 14, % , % 13, % , % 12, % , % 12, % , % 14, % Source: Steer Davies Gleave with information from Cintra Figure 3.7: Traffic Growth Source: Steer Davies Gleave with information from Cintra 3.27 Additionally, and to understand how the recovery is developing across the year we analysed the monthly change in total transactions for each concession from 2010 to The results of this analysis are shown in Figure 3.8 and Figure 3.9. February

198 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Figure 3.8: Monthly profile AUSOL I ( ) Source: Steer Davies Gleave Figure 3.9: Monthly profile AUSOL II ( ) Source: Steer Davies Gleave 3.28 As discussed before, following the decline in toll road demand as a result of the economic recession, 2014 transactions show that demand is beginning to build up again. This is particularly apparent in August 2014 on AUSOL I which shows total transactions increase beyond those observed in Similar increases in demand can be seen in April also, on line with when Easter fell in These combined suggest that leisure travel is increasing again along the concession and in general the corridor is beginning to recover from the recession. February

199 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report 4 The Socioeconomic Context The Study Area and Purpose of the Road 4.1 AUSOL I and II toll roads and N-340 carriageways lie within the region of Andalucía. The current population of Andalucía is in excess of 8 million people and has been growing steadily over many decades reflecting large growth in residential properties. The region is subdivided into a number of provinces and the study area falls within Malaga and Cadiz. The provinces are further subdivided into municipalities which form the main towns in the province. 4.2 The AUSOL I and II concessions that form the AP7 toll motorway run between Malaga and Guadiaro along the southern coast of Spain. It starts at the outskirts of Malaga and passes across the municipalities of Torremolinos, Benalmadena, Fuengirola, Mijas and Marbella in case of AUSOL I; and the municipalities of Estepona, Casares, Manilva and San Roque in Cadiz province in the concession AUSOL II. Figure 4.1: Municipalities in and around the concession in the Province of Malaga 4.3 The municipalities of the Malaga province belong to the Comarca de Costa del Sol Occidental, part of the Andalusian Sea Shore, the most dynamic area in terms of demographic growth of the whole of Andalucia. February

200 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report 4.4 Traffic volumes in of AUSOL and the N-340 are related to the distribution and growth of the population and economic activities located along the corridor. The mobility patterns show a combination of trips purposes served by the road with commuting trips during the week reflected in daily peaks and off peaks and leisure/tourism trips during the weekend and summer months. 4.5 According to Stated Preference surveys to car users undertaken by Cintra at toll plazas and fuel stations on the N-340 in June-July 2010 on a typical summer month around 36% of trips in the corridor are made by foreigners, some are on holiday and some might actually live in the area. However, it is worth noting that there is also an important proportion of work related trips, as it can be seen in Figure 4.3. Figure 4.2: % of Domestic and Foreigners Trips on AUSOL Corridor Source: Steer Davies Gleave based on survey results provided by Cintra Figure 4.3: Distribution by Trip Purpose Source: Steer Davies Gleave based on survey results provided by Cintra February

201 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report 4.6 Taking into account the type of users that travel along the corridor, in the following sections we examine the key factors influencing traffic growth on the corridor: Population; VAB Provincial and National GDP; Employment and Tourism Corridor Population 4.7 The population in the corridor conformed by AUSOL I and AUSOL II is analysed separately for the two concessions. The following table shows the current population figures in the municipalities the concessions go through (except Casares) and the population growth experienced in the period Table 4.1: Population in 2015 and Growth in 1996 to 2014 and 2015 to 2035 Corridor Municipality Population 2015 Annual Growth 14/96 Estimated Annual Growth 35/15 (*) Torremolinos 67,673 3,6% 0,4% Benalmádena 66,395 5,1% 0,5% AUSOL I Fuengirola 75,141 3,4% 0,1% Mijas 80,691 4,4% 1,3% Marbella 138,762 1,9% 0,3% Corridor AUSOL I 428,661 2,9% 0,4% Estepona 65,606 3,2% 0,3% AUSOL II Manilva 14,163 5,9% 0,9% Corridor AUSOL San Roque 30,661 1,6% 0,2% II 110,431 3,0% 0,4% (* ) Población proyectada en municipios mayores de diez mil habitantes según sexo, Andalucía, Instituto de Estadistica y Cartografia de Andalucia (2015) 4.8 Similarly, in the last column we present the growth projections for the next two decades according to forecasts of the Instituto de Estadística y Cartografía de Andalucia. 4.9 In the previous two decades the corridor s population grew more in AUSOL II section than in AUSOL I. This growth was particularly driven by higher population increase in Estepona (average of 3.2% per year) and Manilva (5.9% per year) Growth on AUSOL I was slightly lower. In this corridor Mijas and Benalmadena are the municipalities that experienced more growth, due to their proximity to Fuengirola and Marbella, receiving the sprawl that Fuengirola or Marbella. In the future, Mijas is projected as the city that will have higher population growth in the whole corridor in the next 20 years The municipality of Manilva located on the AUSOL II corridor is also expected to grow faster than the other two. February

202 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report 4.12 INE predicts that population in both corridors will grow more or less at the same rate, even though in the past the municipalites of AUSOL II grew slightly faster We believe that this trend will continue in the future, taking into account that there is a greater opportunity for development and population growth in the corridor of AUSOL II Also, given the high concentration of built up areas in the corridor Malaga-Torremolinos Fuengirola we believe it is more reasonable to expect a gradual reduction in rates in the following years in AUSOL I corridor. Economy Gross Domestic Product 4.15 Andalucia is the most populous region in Spain with over 8 million inhabitants, representing 18% of the population in the country. In 2014 the GDP figure was 141,704 million euros, being Andalucia one of the most important regions in terms of GDP, on the 3rd place in the ranking compared with other autonomous communities. However, the region lags behind the Spanish currently standing at 76% of the Spanish average GDP per capita The GDP per capita of Andalucia in 2014 was 16,884, 218 higher than 2013 which was 16,666. To see the evolution of GDP per capita is interesting to look a few years back and compare this value with that of 2007 when per capita GDP was 18,400 in Andalucia. Figure 4.4: Andalucia GDP per capita Source: The figure below compares the national and Andalucia s GDP. Both National and Provincial GDP are shown to have been growing rapidly over the last decade (prior to the recession) averaging at 3% to 4%. However growth since 2008 declined with negative growth occurring until However, in 2014 the GDP of Spain grew 1.4% and 1.3% in Andalucia. February

203 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Figure 4.5: Historic GDP growth in Spain and Andalucia Source: Institute of National Statistics and This has been the highest growth after six consecutive years of low or negative growth, indicating that better economic conditions might be returning Institutions like IMF, OCDE and Consensus have increased their growth projections for Spain in recent months. Robust growth is projected over the next two years, driven by very supportive financial conditions, the depreciation of the euro, lower oil prices and strengthening trading partner growth According to the Consensus Forecasts publication from August 2015, GDP in Spain is expected to rise 3.0% in 2015 and 2.6% in This is lower than projections from Banco de España of June 2015 that predicts 3.3% growth in 2015 and 3.0% in The economy of Andalucia is also expected to grow in the next two years. FUNCAS (Spanish Savings Banks Foundation a private non-profit organisation particularly active in the promotion and publication of research and studies on economic and social issues) published a report in June 2015 about growth on the different autonomous communities. According to this publication the economy of Andalucia can grow 2.8% and 2.7%, in 2015 and 2016 respectively A report from Banco de España suggests that economic growth in the next two years would be driven by: Growth in domestic demand: Current projections envisage household consumption to grow 3.4% in 2015, mainly driven by the significant improvement in labour market conditions and more temporarily, due to the positive effect on the growth of disposable income of the reduction in oil prices and the reduction of direct taxation. Continuation of job creation: The increase in employment will involve further reductions in the unemployment rate, which, however, will be tempered by the modest projected increase in the labour force. Robust growth in tourism Recovery of industrial production that fell more than GDP during the recession. February

204 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Figure 4.6: % annual change in GDP and Household Consumption of Spain Source: INE and Consensus Forecasts - Apr 2015 Figure 4.7: % annual change in GDP and Industrial Production of Spain Source: INE and Consensus Forecasts Apr 2015 Employment 4.23 The economic and financial crisis affected Andalucia employment harder than most of other Spanish regions. Local economists point out that this was due to its economic structure that was over-dependent on construction and tourism. In 2007 the industrial sector accounted for only 9% of the total GDP. The tertiary (service) sector grew greatly in the past and came to February

205 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report constitute the majority of the regional economy, representing around 70% of the total VAB of Andalucia in The construction sector in year 2007 represented 14.7% of the total VAB. The participation of the sector grew steadily from 7.6% in 1997, helping to drive production and employment during the boom years. But during the recession the construction sector declined considerably In year 2009 the regional GDP contracted by 4.0% and the unemployment rate reached 26.3%. The negative development has continued so that in 2013 the unemployment rate reached 36%, ten percentage points above the national average. Figure 4.8: Unemployment Rate in Spain and Andalucia Source: Instituto Nacional de Estadística INE 4.26 There are signs that unemployment is going down in Spain and the region. According to a report of BBVA research on Andalucia, employment grew in Andalucia in 2014 by 2.4%, doubling National growth (Spain: + 1.2%). In 2014 the increase in employment rate together with a lower increase in the number of active population (0.2% vs. -1.0% in Spain) led to a reduction of the unemployment rate to 34.2%. While this momentum is still not enough to increase the pace of job creation desired, they show that during the first quarter of 2015 the labour market continued to improve This trend is expected to continue. Employment in Spain is forecast to grow 2.8% in 2015 and 2.5% in The annual average unemployment will be reduced by 2.2 percentage points in 2015 and 2 points in 2016, up 22.2% and 20.2% active population, respectively. In Andalucia unemployment rate is also expected to go down slowly from 34% in 2014 to 32% BBVA Research, Situación Andalucia, Segundo Semestre FUNCAS Previsiones económicas para las Comunidades Autónomas , June February

206 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report 4.28 From this we can conclude that unemployment rates are slowly going down in Andalucia. Still they appear high in the short to medium term, around ten percent higher than the rest of Spain. This will have an important influence on the levels of commuter traffic. Tourism 4.29 The region has been subject to considerable development over recent decades, which is related particularly to the tourism industry and has affected the coastal strip both east and west of Malaga the Costa del Sol. The level of development links directly to the rise in population along the Costa del Sol, such as Marbella and Torremolinos. This level of development was also related to the increase in tourism and the rise in the building of property, hotels, and shopping centres during the years before the economic recession The highway constitutes the main link along Costa del Sol. It provides the main access to local attractions, beaches and many large resorts and hotels along the route. Figure 4.9: Concentration of hotels and resort on AUSOL corridor Source: Google Maps 4.31 Retail is another important sector of the economy and AUSOL provides access to a large number of shopping centres located along the route. February

207 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Figure 4.10: Concentration of Shopping Centres on AUSOL corridor Source: Google Maps 4.32 Among the autonomous communities of Spain, Andalucia is second only to Catalonia in tourism, with around 8 million foreign visitors every year and 20 million including domestic tourists. The principal tourist destination in Andalucia is the Costa del Sol In the figure below it can be seen that the number of tourists went down significantly from 25.8 million in 2007 to 21.9 million in 2009 (-15%). Between 2009 and 2012 tourist figures were more or less stable. Since 2013 the data shows an important increase in the number of tourists, of both domestic and foreigners. Table 4.2: Number of Andalucia Visitors Source: IECA. Encuesta de Coyuntura Turística de Andalucía February

208 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report 4.34 The Andalusian tourism sector shows an increase in 2014 of 6.8%. As happened in 2013, both domestic and foreign visitors contributed to this growth. The increase in the number of national tourists is supported in part by the recovery of the Spanish economy Data from the first quarter of 2015 suggests continuity in the growth rate of the tourist arrivals in the region (+ 1.5%) The Statistics of Air Passengers of Malaga also show a strong increase in passenger numbers in the last two years. In 2013 the passenger numbers increased 3% and in 2014 by 6.4%. Figure 4.11: Malaga Airport Passengers Source: AENA Statistics 4.37 A third of the passengers are from/to the UK, 16% Spanish and 10% German, with the rest mostly from other parts of Europe This recent boom in tourism is driven by several factors among those: the depreciation of the euro against major currencies (mainly the dollar and pound) which has helped attract more visitors from the United States and the UK. the political situation in other parts of the Mediterranean, such as Tunisia, might explain this greater influx of domestic visitors to the region. The instability caused by Greece s debt crisis and migrant influx into Italy have also added to many tourists choosing Spain as a safe sunny alternative. an increase in household spending can explain the increase in the number of domestic visitors. Household disposable income was favoured by job creation and the reform of persona0l income tax. BBVA research indicates that private consumption was also been boosted by an improvement in household perceptions of the economic situation and an increase in new lending operations, now on cheaper terms too. the completion of the expansion and renovation of Malaga Airport that started before year 2010 and were completed in year 2013 might be another factor. The third terminal adjacent to the previous two opened on 15 March 2010, and flight operations started on 16 March A second runway opened at the airport in June Also in year 2014 a new navigation system and new road access were put into service. The expansion has made it possible to increase the number of flight connections and scheduled flights to different cities of the UK and Germany. February

209 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Now there are also flights to Russia, Poland, Canada, Hungary, Bulgaria and Slovakia are among the countries that have joined the offer from Malaga airport in recent years. In fact, extending the flights with Russia is one of the main objectives for the coming years and the government have long been looking to strengthen the air routes with Moscow and open a new one with St. Petersburg. According to the local news, building on an agreement with Turkish Airlines that has established a stable and highly profitable route between Malaga and Istanbul, it will be possible offer new connections to Middle East and Asia, to where Turkish Airlines has a significant presence This important increase in demand on the corridor and patronage for the toll road seen in 2014 and first half of 2015 can in part be attributed to the increase in the number of visitors. 4 February

210 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report 5 Traffic Growth Introduction 5.1 In this chapter we describe our approach to estimate the future likely growth in travel in the concessions. 5.2 For this we have developed a spreadsheet model with two components: Background growth: We expect the in-scope demand (concession and alternative) to grow in line with the economy. To understand this we have analysed the relationship between traffic and socio-economic independent variables based on historical information. Capture model: We also expect the capture rate of the concession to increase as the congestion on the alternative increases. To understand this we have developed a capture model based on how the costs changes in the future. 5.3 We explain each model component below. Background Growth 5.4 In order to get some understanding of how/why traffic has grown and fallen - on the concession and alternative route, we examined a number of the prevailing background economic indicators. We anticipate from previous work for different toll road concessions in Europe, that these should include measures of growth in personal and national wealth in the case of light vehicles. We also considered tourism, as in the case of the corridor under study our analysis suggests that tourism is an important driver of traffic growth. 5.5 In the case of heavy vehicles traffic, we have looked at those prevailing background economic indicators, which we believe have impacted traffic levels. In this case the most appropriate measures have been found to be GDP and Industrial Production. 5.6 We developed regressions models considering the following variables: Spanish Gross Domestic Product: analysed in constant figures. Household Consumption (formerly private consumption): Index that measures expenditure on goods and services, including durable products (such as cars, washing machines, home computers, rent), purchased by households. Industrial Production Index: this index measures the evolution of the productive activity of the industrial sector, including extractive, manufacturing, production and distribution activities of electrical energy, water and gas, etc. Tourism in Andalusia: measured in total tourist movements, including foreign and domestic visitors (Andalucia and rest of Spain). 5.7 The analysis was carried out per vehicle type for each concession. February

211 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Light Vehicles 5.8 During the long period of economic growth ( ), traffic on AUSOL I was growing faster than the GDP and household consumption. GDP and household consumption were growing at similar rates. Total corridor traffic was growing more or less on line with GDP although slightly above. Light traffic growth also more or less follows the growth in tourism. Light vehicle traffic appears to be correlated to these economic drivers. Figure 5.1: Evolution Corridor AUSOL I Lights with respect to explanatory variables Source: Steer Davies Gleave 5.9 From 2007, GDP went into recession in 2009, and continued falling slightly since then. Between 2010 and 2013 it can be seen that household consumption fell more than the GDP. Tourism also had a great fall in 2009 and kept falling until 2013 when it started growing again. AUSOL I continued falling sharply after the recession but corridor traffic followed more closely the GDP and household consumption The corridor of AUSOL II follows similar pattern. But traffic on the motorway was growing a lot faster than GDP due to ramp up effects in the first two to three years given that the road opened at the end of February

212 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Figure 5.2: Evolution AUSOL II Lights with respect to explanatory variables Source: Steer Davies Gleave 5.11 A regression analysis was carried out using panel data with the longer time series from 2003 to 2014 for both AUSOL I and II traffic data with GDP and Tourism in Andalusia as explanatory variables. Based on this analysis the traffic elasticity to GDP is 0.60 and 0.38 to tourism. We applied these values in 2015 and found that they can explain the traffic growth better than considering GDP as the unique explanatory variable Over the past two years, Spain and Andalucía have seen a record number of tourists, which according to analysts can be explained by the value of the euro, the current situation in Greece and the civil unrest and terrorist attacks in other popular Mediterranean holiday destinations. These effects are probably not captured by the GDP alone and are likely to be short term trends. Hence, in the short term, we believe that traffic patterns in the corridor can be explained by combining these two variables. This way we can take into account the fact that tourism is making a major contribution to the economic recovery of the region An analysis was also carried out using only GDP as the explanatory variable to explain long term growth. The analysis suggested that the elasticity of traffic to GDP is close to 1.0 (0.97) Following our analysis we concluded that the background model for light vehicles should include a short and long term relationship as follows: Short term ( ): traffic will grow in line with tourism and GDP with elasticities of 0.38 and 0.60 respectively. Long term (from 2019 onwards): traffic will grow in line with GDP starting with an elasticity of 0.97 in 2019 and reducing it to 0.7 at the end of the concession period. Heavy Vehicles 5.15 Heavy vehicles traffic in the corridor represents low proportion with respect to the total traffic. They show a more erratic pattern Still it is interesting to see how GDP and Industrial Production (IPI) and traffic behaved before and during the recession period. GDP and IPI indices grew more or less in parallel until February

213 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report After that date the two indices diverged significantly: while GDP continued strong growth IPI growth was much more muted; and after 2007 the IPI fell dramatically more than 16% in 2009 alone Corridor traffic in AUSOL I was more or less stable before 2007 and growing fast on AUSOL II. After that during the recession it continued falling following the IPI index line. In 2013 GDP was still negative but there was an increase in Industrial Production which brought an increase heavy vehicles traffic. Figure 5.3: AUSOL I Heavies with respect to explanatory variables Figure 5.4: Heavies AUSOL II with respect to explanatory variables Source: Steer Davies Gleave February

214 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report 5.18 This analysis suggests that Industrial Production Index (IPI) can explain better how traffic grew just before and during the recession period. We estimated an average elasticity of 1.15 for AUSOL corridor traffic to Industrial Production, but because there are strong variations the regression analysis came out with a low R2. We then decided to undertake a regression analysis using historic truck traffic data across the Spanish road network. This gave us an elasticity of 1.02 (with R2= 0.85). Figure 5.5: Heavy Vehicles-km Traffic across all Spanish Road Network Source: Traffic data obtained from FF18E0D0F1B9/127740/seriehistorica pdf 5.19 We have carried out similar analysis in other countries in Europe, in which industrial production has become recognised as the primary driver. However GDP is still preferred since GDP forecasts are commonly available for use in traffic forecasting, whereas forecasts of industrial production are not Taking this into account, we concluded that the background model for heavy vehicles should include a short and long term relationship as follows: Short term ( ): traffic will increase with and elasticity of 1.0 to Industrial Production Long term (from 2019 onwards): after 2019 we assume that as before the recession GDP and IPI will grow in parallel. Hence we estimated traffic will grow in line with GDP with an elasticity of 1.0. This value remains constant until the end of the concession period. Economic Growth Perspectives 5.21 We reviewed different official sources to get information on how the economy of Spain might grow in the future. February

215 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report 5.22 In general the outlook put forward by the OECD, IMF and Consensus is very positive. According to the OECD, robust growth is projected over the next two years, driven by very supportive financial conditions, the depreciation of the euro, lower oil prices and strengthening trading partner growth. The fiscal stance is assumed to be mildly contractionary. Private consumption growth will be supported by rising employment and incomes, household tax cuts, and lower fuel prices and interest rates. Export growth will be underpinned by cost competitiveness gains, including from the depreciation of the euro, and stronger growth in Europe. Persistent slack will keep inflation low. GDP is forecast to accelerate to 3.0% in 2015 and 2.6% in 2015 (Consensus Forecasts, Aug 2015). The outlook for private consumption remains positive. Household consumption is expected to grow at around 3.2% in 2015 and at 2.7% in Industrial Production is forecast to grow just slightly more than GDP. Tourism will continue to grow in the next couple of years driven by an increase in household consumption in Spain and the influx of visitors from the United States, UK and other countries in Europe where the economy is performing well The following table presents a summary of the projections for the key drivers of traffic growth: Table 5.1: GDP, Industrial Production and Tourism Projections GDP 3.0% 2.6% 2.2% 2.2% 2.2% 2.2% 1.7% 1.6% IPI 2.4% 2.4% 2.5% 2.2% Tourism 9.6% 5.0% 4.0% 3.0% GDP is from Consensus Forecasts Aug IPI is from Consensus Forecasts Aug 2015 and Abril 2015 ( ). GDP projections from 2028 to 2054 are from OECD Economic Outlook No 95 - May Long-term baseline projections. Tourism: 2015 value was derived from Statistics of Junta de Andalucia. Steer Davies Gleave assumption for years Traffic Capture Methodology 5.24 This section describes the methodology used to calculate the traffic attracted from the free alternative to the concession in future years. The methodology is based on a capture model which evaluates the concession to the free alternative to estimate the allocation of traffic on each facility. This was done by: Analysing generalised cost of the two roads Incorporating behavioural values determined from analysis of Stated Preference survey data 5.25 Generalised time is calculated for each road (concession and free alternative), each sector (Calahonda, San Pedro and Manilva) and for summer and rest of the year periods according to: Where: GT i = T i + (F i /VoT ) + δ GT i : Generalised Time for alternative i February

216 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report T i : Travel Time for alternative i F i : tolls (=0 for the free alternative, toll cost for AUSOL) VoT : Values of Time δ : Constant (a bonus associated with the toll road, capturing quality, comfort, etc.) 5.26 The generalised times are converted into utilities and AUSOL capture is forecast using logit curves. The assignment of traffic to one road or the other is based on the differences in their generalised times and on the probability given by the logit shaped distribution. Thus the greater the generalised time advantage of AUSOL compared with the free alternative, the more capture is likely to be diverted from the alternative. The general form of the logit model is as follows: P ni V V A A(n) j e ni e nj Where: ni is the probability of individual n choosing alternative i from a set of alternatives A(n). Vni is the deterministic utility of alternative i to individual n There is also a random component to the utility of each alternative, which is represented by the use of the exponential function to calculate the choice probabilities The deterministic component of utility is made up of the sum product (or vector product) of a vector of parameters and a vector of time and cost variables, as follows, where is the vector of parameters and x is the vector of variables: V ni x ni 5.29 An example logit curve is shown below where the capture rate (y-axis) is plotted against the difference in generalised time. February

217 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Figure 5.6: Example Logit Curve Source: Steer Davies Gleave Example 5.30 The model was applied to estimate the traffic for each road by toll plaza on each period: summer and rest of the year. Seasonality factors are applied to calculate the yearly traffic and revenues. Model Inputs 5.31 The model uses three main types of inputs, summarised below. Traffic volumes 5.32 Total traffic on the corridor represents the in-scope market size, or demand, for model base year and for future horizon years. We segment demand for each individual sector by vehicle type (lights and trucks), toll facility (troncal and lateral) and period of the year (summer, nonsummer) The model is applied separately to car and trucks (heavy vehicles I and II) and summer and no summer to forecast traffic on an average hour between 6:00 to 21:00h (16 hours). Seasonality factors are applied to estimate the annual AADT. These were calculated using the most recent traffic data available. Tolls 5.34 Tolls for cars and trucks apply to the concession as listed in Table 2.1 and Table 2.2. We have assumed tolls remain constant in real prices for the duration of the concession. Time 5.35 To estimate how journey time on the concession and the free alternative will change in the future we have analysed observed traffic flows and speeds for different sections along the alternative and derived a volume-delay function. This function represents the effect of road February

218 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report capacity on travel times and will be used to predict the additional delays on the alternative when traffic increases. We have used a standard Bureau of Public Roads BRP definition and calibrated curves for the alternative and the concession separately The following table and figure show the parameters and shape of each curve. Table 5.2: BRP curve parameters Parameters Concession Alternative Alpha Beta Source: Steer Davies Gleave based on data provided by Cintra. Figure 5.7: BRP Curves Source: Steer Davies Gleave based on data provided by Cintra 5.37 The delay for each section depends on the estimated traffic and the road capacity. Capacity is normally defined as the maximum flow of vehicles in one hour that can pass through a point. The assumed capacities for the toll road and alternative sections are: Concession AUSOL I/II: 2,200 vehicles/hr/lane Alternative 1: 2,000 vehicles/hr/lane Alternative 2: 1,800 vehicles/hr/lane Alternative 3: 1,600 vehicles/hr/lane 5.38 Travel times and speeds are different in the model in summer and no summer months reflecting the difference in demand in each period. Value of Time 5.39 Based on the data collected by TARYET in May 2010, and our own independent benchmarking, we estimated the willingness to pay (or Values of Time VOT) for road users in the study area. February

219 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report 5.40 The available data was only relating to cars and therefore the initial estimates are only for that vehicle type. For trucks, and based on our experience in other studies in Spain and Europe, we assumed a relationship of 2 times the cars VoT The following table shows the VOT assigned to each vehicle type. Table 5.3: VoT - /hr (2015 prices) Veh type Cars 11.5 Trucks 23.0 Source: Steer Davies Gleave based on data provided by Cintra and Benchmarking data VoT 5.42 We have assumed the VoT remains constant until the end of the concession This might be a conservative assumption as in Spain we have seen willingness to pay falling during the recession due to the rising unemployment and fall in consumer confidence. In a recession people will spend less of their disposable income, save more and will be less willing to spend extra to travel. Going forward we believe that a recovery in consumer confidence following higher economic growth and lower unemployment would trigger a bounce-back in the value of time. However, we feel this will take some time, hence in the bank case we assumed that VoT would remain constant in real terms. We carried out sensitivity tests to see the effect of increasing the values of time as GDP increases in the future. February

220 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report 6 Traffic and Revenue Forecasts Introduction 6.1 In this chapter we first summarise our forecasting assumptions to run the growth and capture models and then present our base case forecasts of AUSOL I and AUSOL II project traffic and revenue streams. This base case includes a series of conservative assumptions and it represents in our opinion a Bank Case forecast (or a P75 scenario). Key Assumptions 6.2 The following table summarises our assumptions for the base case. Table 6.1: Base Case assumptions Assumptions Base Case Comments Base Year 2015 We have used monthly transaction data for 2015 Total Transaction: 14.9 million Total revenue (incl VAT): 60.7 million Macro-economics We have used Consensus Forecast and OECD for the GDP forecast. 2015: 3.0% 2016: 2.6% : 2.2% : 1.7% : 1.6% We have assumed that tourism will continue observed trends in : % % % We used Consensus Forecast for Industrial Production (IPI): % % % Drivers of car traffic growth: GDP and tourism in GDP from 2019 onwards Drivers of truck traffic growth: Industrial Production (IPI) in GDP from 2019 onwards VoT We have estimated VoTs using the data collected by TARYET for road users in the study area. Cars: 11.5 /hr Trucks: 23.0 /hr We have assumed VoTs will remain constant in future. February

221 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Assumptions Base Case Comments We have estimated elasticities using two models: Model 1: GDP of Spain: 0.97 Car Traffic Elasticities Model 2: GDP of Spain: 0.60 Tourism in Andalucía: 0.38 We applied the model 2 from 2015 to 2018 and then the model 1 from 2019 until the end of the concession but reducing the car elasticity from 0.97 in 2030 to 0.70 in Truck Traffic Elasticities In : Industrial Production of Spain: 1.0 From 2019 onwards: GDP of Spain: 1.0 Volume delay function We have derived volume-delay functions for the concession and the alternative road with the following parameters. Concession: Alpha: 0.3 Beta: 8.0 Alternative: Alpha: 0.5 Beta: 5.0 Road Capacities We have assumed road capacities for the concession and alternative. Concession AUSOL I/II: 2,200 veh/hr/lane Alternative 1: 2,000 veh/hr/lane Alternative 2: 1,800 veh/hr/lane Alternative 3: 1,600 veh/hr/lane In-scope demand Future Infrastructure Projects 20% of the traffic on the alternative of AUSOL I is part of the in-scope demand of the concession. 25% on AUSOL II There will not be road or rail projects that could compete with AUSOL. Source: Steer Davies Gleave Bank Case Forecasts 6.3 We applied the modelling approach described in the preceding chapters to develop traffic and revenue forecasts for each one of the concessions Traffic 6.4 Future traffic was estimated applying the capture model in 2015, 2030, 2040, 2050 and Intermediate years are obtained by interpolating between modelled years. February

222 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report 6.5 Figure 6.1 presents the total traffic observed and forecast for AUSOL I and AUSOL II. From the figure it can be observed that: In 2014 and following the recession period, the traffic in both concessions started growing again. This positive growth continued in the first semester of 2015 and it is expected to continue until the end of the concession period. The initial projected growth at AUSOL I is between 6% and 5% pa, slightly higher than the one observed before the recession (about 3.5% pa). After 2020 the growth starts slowing down to reach levels of 3.0% pa. AUSOL II is expected to grow at a lower rate than AUSOL I, around 3.2% p.a. for the first years to then slow down to 2% pa. AADT in AUSOL I is expected to be higher than in AUSOL II by 2022, similar to the conditions before the recession. The traffic peak observed in 2007 will be reached again by both concessions in Captures rates observed in 2007 are not reached within the concession period. AUSOL I in 2046 is expected to have an AADT of 31,000 and AUSOL II 20,000. Figure 6.1: Observed and forecast traffic not sure where this chart is? Source: steer Davies Gleave February

223 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Corridor and Motorway Traffic Growth 6.6 The following tables show the Compound Annual Growth Rate (CAGR) for the total demand for the corridor and only for the motorway. Total corridor demand on is equivalent to adding the traffic on the alternative (N340/A7) and the motorway together, calculated as the sum of the plazas on each section. For the year 2015 growth is with respect to Table 6.2: AUSOL I Traffic Growth (CAGR) TOTAL CORRIDOR TRAFFIC (AUSOL I + Alternative) Cars 5.3% 2.4% 1.8% 1.4% 1.0% Trucks 8.8% 2.8% 2.0% 1.8% 1.5% Total 5.5% 2.4% 1.8% 1.4% 1.0% AUSOL I (Mainline + ramp toll plazas) Cars 12.5% 4.8% 3.2% 2.2% 2.1 Trucks 13.3% 7.0% 3.4% 3.4% 1.9% Total 12.5% 4.9% 3.3% 2.3% 2.1% Source: Steer Davies Gleave Table 6.3: AUSOL II Traffic Growth (CAGR) TOTAL CORRIDOR TRAFFIC (AUSOL II + Alternative) Cars 6.2% 3.0% 2.4% 2.0% 1.4% Trucks 9.2% 2.8% 2.0% 1.8% 1.3% Total 6.4% 3.0% 2.4% 2.0% 1.4% AUSOL II (Mainline + ramp toll plazas) Cars 10.0% 3.1% 2.5% 2.3% 2.0% Trucks 13.6% 2.9% 2.1% 2.2% 1.6% Total 10.4% 3.1% 2.5% 2.3% 2.0% Source: Steer Davies Gleave 6.7 It can be seen that traffic on the concession is growing faster than the corridor. This reflects the attractiveness of the toll road compared to the increasingly congested free alternative route. These estimates from the capture model are in line with historical differential growth rates observed between the N340/A7 and AUSOL I and II, before the recession. Capture rates: 6.8 To validate and understand these results, we reviewed the capture rates of the concessions, which indicate the percentage of vehicles in the corridor taking the toll road rather than the free alternative. Table 6.4 shows these results. 6.9 The results for 2015 are those observed by Cintra, currently, 20% and 44% of vehicles traveling on the corridor choose to use AUSOL I and AUSOL II, respectively. The motorways reached record high levels of capture in year 2007, when 31% and 55% of vehicles traveling on the corridor used AUSOL I and AUSOL II, respectively. February

224 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report 6.10 The capture rates in AUSOL I are expected to increase faster than in AUSOL II reflecting the relatively lower capture rates of the concession now but also the more variable journey times of the alternative route. AUSOL II capture rates are already high and therefore a less pronounced change is expected. Table 6.4: Capture rates AUSOL I Cars 20% 22% 26% 28% 30% Trucks 19% 24% 27% 32% 32% Total 20% 23% 26% 28% 30% Source: Steer Davies Gleave Table 6.5: Capture rates AUSOL II Cars 43% 44% 44% 45% 49% Trucks 60% 60% 61% 63% 65% Total 45% 45% 45% 47% 50% Source: Steer Davies Gleave 6.11 According these forecasts even by the end of the concession capture rates are expected to be lower than those achieved in This might suggest that our forecasts are on the conservative side The increase in capture rates is a result of traffic increases, which in turn increases travel times on the alternative road and diverges traffic to the concessions. Table 6.6 summarises the change in journey times on the alternative road. Speeds on the concessions remain fairly constant in future. Table 6.6: Times (min) Section Source: Steer Davies Gleave 6.13 The following figures show the traffic forecast breakdown by background growth and additional growth due to traffic diverted from the alternative. February

225 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Figure 6.2: AUSOL I traffic forecasts Source: Steer Davies Gleave Figure 6.3: AUSOL II traffic forecasts Source: Steer Davies Gleave February

226 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report 6.14 The following table presents the final forecast by vehicle type for each concession. Further details by plaza are included in the appendix A. Table 6.7: AUSOL I traffic forecast (AADT) Year Light Heavy Total , , , , , , , , , , ,565 1,024 15, ,251 1,092 16, ,870 1,136 17, ,488 1,180 17, ,107 1,225 18, ,725 1,269 18, ,343 1,314 19, ,962 1,358 20, ,580 1,403 20, ,199 1,447 21, ,817 1,491 22, ,436 1,536 22, ,971 1,598 23, ,507 1,660 24, ,043 1,722 24, ,579 1,784 25, ,114 1,846 25, ,650 1,907 26, ,186 1,969 27, ,722 2,031 27, ,257 2,093 28, ,793 2,155 28, ,388 2,196 29, ,983 2,237 30, ,578 2,277 30, ,173 2,318 31, ,768 2,359 32, ,364 2,399 32,763 Source: Steer Davies Gleave February

227 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Table 6.8: AUSOL II traffic forecast (AADT) Year Light Heavy Total ,481 1,394 12, ,630 1,555 14, ,054 1,604 14, ,479 1,652 15, ,903 1,700 15, ,328 1,749 16, ,752 1,797 16, ,171 1,839 17, ,590 1,881 17, ,009 1,923 17, ,428 1,965 18, ,846 2,007 18, ,265 2,049 19, ,684 2,091 19, ,103 2,133 20, ,522 2,175 20, ,941 2,217 21, ,430 2,271 21, ,920 2,324 22, ,410 2,377 22, ,900 2,430 23, ,389 2,483 23, ,879 2,537 24, ,369 2,590 24, ,859 2,643 25, ,349 2,696 26, ,838 2,749 26, ,384 2,801 27, ,929 2,853 27, ,475 2,904 28, ,021 2,956 28, ,566 3,007 29, ,112 3,059 30, ,657 3,111 30, ,203 3,162 31, ,748 3,214 31, ,294 3,266 32, ,886 3,307 33, ,478 3,348 33,827 February

228 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Year Light Heavy Total ,070 3,390 34, ,663 3,431 35,094 Source: Steer Davies Gleave Assessment of Service Levels 6.15 The analysis of Level of Service (LOS) considered the forecast AADT in each of the concessions sections for the period between 2015 and the end of the corresponding concession period. It was based on the methodology proposed by the Highway Capacity Manual 2000, where LOS range from A to F and A represent the best operating conditions and F the worst According to the contract when the LOS changes from D to E, the concessionaire is under the obligation of building an extra lane The tolled sections of AUSOL have two lanes per direction. With the traffic levels forecast to use these sections, the LOS would always be good (A or B) Traffic on the A7 free sections (Benálmadena, Marbella and Estepona bypasses) that are also part of AUSOL I concession is higher than on the tolled sections. Benalmádena bypass and Marbella bypass have three lanes in each direction, while Estepona has two. The free flow speed is 120 kph. Benálmadena bypass is the busiest. The level of service is C, change to D in 2021 and reaches E in Marbella bypass LOS changes from C to D in 2037, maintaining this level of service until the end of concession in Estepona bypass currently has a service level of B which changes to C in It maintains this service level A throughout rest of the years Appendix B of the report presents a summary of the levels of service per year of each bypass. February

229 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report 7 Sensitivity Analysis 7.1 We conducted sensitivity testing in order to understand the impacts that different model assumptions would have on the forecasts. This allowed us to identify the severity of the risks posed if events were to materialize differently than expected. Specifically, we evaluated the following four scenarios against the base case: Economic Growth: This sensitivity is focused on changes on the country's economic growth assumed for the traffic forecast. We have analysed changes in GDP of ±0.5% annually over the baseline that we assume (see Table 5.11). Values of Time: This sensitivity shows the impact of assuming the VOT increases in real terms in line with the assumed GDP forecast with an elasticity of 0.5. We have assumed that the VOT will start growing after Alternative road capacity: This sensitivity refers to the impact of reducing the free road capacity for the sector of Calahonda and San Pedro (competing with AUSOL I) due to various traffic calming measures on the N340/A7. We have assumed that the free road capacity at Calahonda changes from 2,000 veh/hr to 1,800 veh/hr and at San Pedro changes from 1800 to 1,600 veh/hr. This is close to a 10% reduction.. Free road capacity at Manilva (competing with AUSOL II) stays constant at 1,600 veh/hr. Impact of Tourism and Industrial Production on traffic growth: This sensitivity is focused on the short term traffic growth assumptions. We have analysed extending the effect of Tourism and IP until 2020 as well as assuming the traffic growth is solely explained by GDP. 7.2 Scenarios with more conservative assumptions, like a reduction in GDP of -0.5%, can be considered as P90. Results 7.3 Figure 7.1 and Figure 7.2 present the results of the sensitivity testing, comparing 2020 (short term) and 2040 (long-term scenario) concession s traffic forecasts against the base scenario for each corresponding year. Results are shown for AUSOL I and AUSOL II separately. February

230 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Figure 7.1: Change in traffic for sensitivity scenarios (2020) Source: Steer Davies Gleave Figure 7.2: Change in traffic for sensitivity scenarios (2040) Source: Steer Davies Gleave February

231 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Economic Growth: 7.4 As discussed previously, the macro-economic inputs of GDP have been taken from Consensus Forecast (CF - Aug 2015) and the Organisation for Economic Co-operation and Development (OECD - May 2014). CF was used for the short and medium term up to 2027 and the OECD forecast beyond A change in these economic projections directly impacts future rates for all vehicle types using the concession. 7.5 The sensitivity analysis results show that an annual increase of 0.5 points has a positive impact of 3.0% and 1.8% in traffic in AUSOL I and AUSOL II in In 2040 the impact is greater given the cumulative effect. Values of Time: 7.6 The VOT scenario reflects the case where the base model underestimates travelers willingness to pay a toll to use the tolled road. This scenario could occur if current VOTs, or the rate at which they will grow in the future, were underestimated. 7.7 For the base case scenario we have taken a conservative assumption that VOTs remain constant in real terms. This sensitivity shows the impact of assuming that, from 2017, the VOT increases in real terms in line with the assumed GDP forecast with an elasticity of 0.5. The results show an increase in AUSOL I traffic of 7.6% for 2020 and 18.8% for The impact in AUSOL II is lower, 2.6% for 2020 and 12.3% for Alternative road capacity: 7.8 We understand that the municipality is evaluating different projects to improve the geometry of the N340/A7 as well as adding roundabouts and vehicle crossings in key locations along the road. These and other traffic calming measures are expected to be put in place to improve safety for vehicles, pedestrians and cyclists, and at the same time improve the connectivity from both sides of the road: the beaches and the residential/commercial areas on the other side. 7.9 The following map shows the locations of the roundabouts proposed along the route. February

232 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Figure 7.3: Location of New Roundabouts on the N340/A7 Source: Steer Davies Gleave based on information provided by AUSOL 7.10 All these measures will inevitable have an impact on road capacity. We carried out a sensitivity test to understand the impact they could have on AUSOL concessions traffic and revenue forecasts Considering that the free road competing with AUSOL II (between Guadiario y Estepona) already has some of these measures in place, we have assumed that only the free road competing with AUSOL I (between Estepona and Fuengirola) would be affected with a reduction in capacity (and hence speeds), the sector of Calahonda from 2,000 to 1,800 veh/h and the sector of San Pedro from 1,800 to 1600 veh/hr. The sensitivity shows an increase of AUSOL I traffic of 9.1% and 12.0% in 2020 and 2040 respectively. Impact of Tourism and Industrial Production on traffic growth: 7.12 For the base case we have assumed that traffic growth in the short term (between 2015 and 2018) will be explained not only by GDP but also by Tourism, in the case of light vehicles, and by IP, in the case of trucks. This sensitivity focuses on the impact of assuming that the traffic will be explained only by GDP (removing the effect of Tourism and IP) or the scenario where the impact of these two variables is extended for another two year until The sensitivity analysis results show that removing Tourism and IP lead to a reduction in 2020 in traffic of 3.1% and 2.0% for AUSOL I and AUSOL II respectively. Due to the short term impact of these two variables the results in 2040 are similar. Overall results 7.14 The graphs below summarise the results for all the sensitivity tests. February

233 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Figure 7.4: Sensitivity test results AUSOL I Source steer Davies Gleave Figure 7.5: Sensitivity test results AUSOL II Source: Steer Davies Gleave February

234

235 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Appendices February

236 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report A Traffic Forecasts by toll plaza February

237 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Table A.1: Calahonda Mainline traffic forecast (AADT) Year Light Heavy 1 Heavy 2 Total , , , , , , , , , , , , , , , , , , , , , , , , , , , ,000 25, , ,034 26, , ,068 27, , ,101 27, , ,146 28, , ,190 29, , ,234 30, , ,278 30, , ,323 31, , ,367 32, , ,411 32, , ,455 33, , ,500 34, ,411 1,017 1,544 34, ,088 1,032 1,568 35, ,764 1,048 1,591 36, ,440 1,063 1,615 37, ,116 1,079 1,639 37, ,792 1,095 1,662 38, ,468 1,110 1,686 39,264 Source: Steer Davies Gleave February

238 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Table A.2: Calahonda Ramp traffic forecast (AADT) Year Light Heavy 1 Heavy 2 Total , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,120 Source: Steer Davies Gleave February

239 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Table A.3: San Pedro Mainline traffic forecast (AADT) Year Light Heavy 1 Heavy 2 Total , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,009 19,265 Source: Steer Davies Gleave February

240 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Table A.4: San Pedro Ramp traffic forecast (AADT) Year Light Heavy 1 Heavy 2 Total , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,665 Source: Steer Davies Gleave February

241 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Table A.5: Manilva Mainline traffic forecast (AADT) Year Light Heavy 1 Heavy 2 Total , , , , , , , , , , , , , ,015 15, , ,039 16, , ,063 16, , ,086 16, , ,110 17, , ,134 17, , ,158 18, , ,182 18, , ,206 19, , ,230 19, , ,253 19, , ,284 20, , ,314 20, , ,345 21, , ,375 22, , ,406 22, , ,436 23, , ,466 23, , ,497 24, ,055 1,006 1,527 24, ,521 1,026 1,558 25, ,045 1,045 1,587 25, ,569 1,065 1,617 26, ,093 1,084 1,647 26, ,617 1,104 1,676 27, ,141 1,123 1,706 27, ,665 1,143 1,735 28, ,189 1,162 1,765 29, ,713 1,182 1,795 29, ,237 1,201 1,824 30, ,761 1,221 1,854 30, ,335 1,236 1,877 31, ,909 1,252 1,901 32, ,483 1,268 1,925 32,676 February

242 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Year Light Heavy 1 Heavy 2 Total ,057 1,283 1,949 33,289 Source: Steer Davies Gleave February

243 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report Table A.6: Manilva Ramp traffic forecast (AADT) Year Light Heavy 1 Heavy 2 Total , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,569 February

244 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report , ,609 Source: Steer Davies Gleave February

245 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report B Levels of Service Table B.1: Service Levels Year Benalmadena bypass Marbella bypass Estepona bypass to Cádiz from Cádiz to Málaga from Málaga to Cádiz to Málaga to Cádiz to Málaga 2015 C C C C B B B B 2016 C C C C B B B B 2017 C C C C B B B B 2018 C C C C B C B B 2019 C C C C C C B B 2020 C C C C C C B B 2021 D C C C C C B B 2022 D C D C C C B B 2023 D C D C C C B B 2024 D C D C C C B B 2025 D D D C C C B B 2026 D D D C C C B B 2027 D D D C C C B B 2028 D D D D C C B B 2029 D D D D C C B B 2030 D D D D C C B B 2031 D D D D C C C B 2032 D D D D C C C C 2033 E D D D C C C C 2034 E D E D C C C C 2035 E D E D C C C C 2036 E D E D C C C C 2037 E E E D C D C C 2038 E E E D D D C C 2039 E E E D D D C C 2040 E E E E D D C C 2041 E E E E D D C C 2042 F E E E D D C C 2043 F E F E D D C C 2044 F E F E D D C C 2045 F E F E D D C C 2046 F E F E D D C C February

246 AUSOL I and AUSOL II Concession Traffic and Revenue Forecasts for lenders Final Report February

247 CONTROL INFORMATION Prepared by Steer Davies Gleave Upper Ground London SE1 9PD Prepared for AUTOPISTA DEL SOL (AUSOL) Pza. Manuel Gómez Moreno, 2 Edificio Alfredo Mahou, Madrid (Spain) SDG project/proposal number Client contract/project number Author/originator Lucia Ferreira Reviewer/approver Other contributors Alejandro Obregon Nati Armentia Nandini Ravindranath Grace Francombe Distribution Client: SDG: Version control/issue number Date 1 Preliminary Forecast 7/08/ Preliminary Forecast with comments 13/09/ Final Report 23/09/ Update with Sep/Oct data 23/11/ Updated with full 2015 data 7/02/2016 CONTROL INFORMATION Prepared by Steer Davies Gleave Upper Ground London SE1 9PD Prepared for AUTOPISTA DEL SOL (AUSOL) Pza. Manuel Gómez Moreno, 2 Edificio Alfredo Mahou, Madrid (Spain) SDG project/proposal number Client contract/project number Author/originator Lucia Ferreira Reviewer/approver Other contributors Distribution Client: SDG: Version control/issue number Date C:\1-SDG\2 -Projects\Malaga\ AUSOL T&R _ lenders_report.docx Control Information