Alstom Experience in Rail Project Structuring & Funding. Semaine de la France Dar Es Salam 04/2017 Pierre SCHWING

Alstom Experience in Rail Project Structuring & Funding Semaine de la France Dar Es Salam 04/2017 Pierre SCHWING

Agenda Alstom presentation Prerequisites for Rail Transportation Project Development Alstom Project and Export Finance Experience Financial solution 1 : Buyer credits with Export credit agencies Financial solution 2 : International Financial Institutions Financial solution 3 : Public Private Partnerships Conclusion Questions and Answers ALSTOM - 12/04/2017 P 2

A leading position in rail transport Tram, metro, suburban/regional, high speed, very high speed, locomotive Components: traction, bogie, motor 45% Maintenance Modernisation Spare parts, repairs & overhaul Support services 23% Signalling solutions portfolio for: - Main lines - Urban - Control and security Sold as products or solutions 20% Integrated solutions Infrastructure 12% A group with annual sales of over 6 billion ALSTOM - 12/04/2017 P 3 Note: all figures including the signalling activity recently acquired from General Electric

An organisation around 7 Regions 32,000 employees working on 105 sites in 60 countries serving 200 customers EUROPE CIS NORTH AMERICA 1,900 EMPLOYEES 9% OF SALES LATIN AMERICA FRANCE 9,200 EMPLOYEES 18% OF SALES 13,600 EMPLOYÉS 40% OF SALES MIDDLE EAST AFRICA 300 EMPLOYEES 1% OF SALES ASIA PACIFIC 2,800 EMPLOYEES 9% OF SALES 1,500 EMPLOYEES 12% OF SALES 2,700 EMPLOYEES 11% OF SALES Being a reference player in each Region ALSTOM - 12/04/2017 P 4 Note: all figures including the signalling activity acquired from General Electric

Alstom Transport: A global leader in the rail industry TRAINS Four activities SYSTEMS* SERVICES SIGNALLING Urban For 2 operating modes Mainlines ALSTOM - 12/04/2017 P 5 *Including Infrastructure

Integrated urban system to enhance efficiency Global approach Comprehensive solutions for optimised costs, reduced delivery times, optimal performance Attractis: new integrated tramway system Axonis: 1 st economical and quick-tobuild metro system Metro system, Panama Infrastructure Track laying: Appitrack Electrification: APS, SRS, Hesop, Citadis Ecopack Electromechanical: stations & depots Dubai Citadis, 100% catenary-free line (UAE) ALSTOM - 12/04/2017 P 6

MEA Presence: More than 2,500 employees Algeria NCA Southern Africa Middle East Tel Aviv/ Jerusalem/ Haifa Oran Rabat Fes Casablanca Mostaganem Algiers Tunis Cairo Annaba Istanbul/Ankara Baghdad Dubai Riyadh Lusail Setif Ouargla Constantine Lagos ALSTOM - 12/04/2017 P 7 Main JVs Cabliance (Morocco), Cital (Algeria), Gibela (SA), Riyadh Track JV (Saudi) Johannesburg Head office / Business office Industrial site Joint venture/ partnership Rolling Stock activity Components activity Services activity Signalling activity Infrastructure activity Laboratory Project

Project Planning of a typical Urban Rail Project Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 1 2 3 4 Feasibility Studies Prepare RFQ Stakeholder Engagement Political GO 1 Tendering Evaluation 2 Contract Signature Design & Engineering First Turn Soil Construction Commissioning 3 4 Start of Commercial Service Operation ALSTOM - 12/04/2017 P 9

Pre-tendering phases STATUS QUO ANALYSIS Transportation master plan Road network operations Origin & destination for existing buses, candongueiros, railways Passenger demand and demographic analysis PRE-PLANNING PHASE Ridership study Land use assessment Social, economic and land use planning strategy Route identification FEASIBILITY STUDY PHASE Identification of public transport strategic corridors Operations conditions and performance Arbitration between transportation modes Technical feasibility Economic viability ALSTOM - 12/04/2017 P 10

Investment vs Operational Costs Operation (Maintenance, Labour, Energy) Investment (Design, Engineering, Construction, Manufacturing, Testing, Commissioning) CAPEX are about equal to OPEX over Lifetime ALSTOM - 12/04/2017 P 11

Fare-box Recovery Ratio Ratio depends on: Ridership Urban traffic policy (tolling, parking, preference given to public transport,...) Tariffs policy (social context, affordability,...) Revenues from trafic do not cover full OPEX costs and can not repay at all CAPEX costs ALSTOM - 12/04/2017 P 12

Highlight on strategic projects with structured financing won by Alstom Transport in the recent years Dubai Al Safooh Tramway : Multisourced ECAs coupled with an islamic facility Kazakhstan KTZ locomotives : To date the largest ECA single ECA for Kazakhstan to date Egypt Cairo Metro L1, L2, L3 : French Agency for Development ( AFD ) Egypt Beni Suef Modernization of railway signalling : Project financed by IBRD/WB India Delhi Metro signalling : JICA loan India Kochi Metro : DMRC has awarded the Contrats for Rolling Stock, Signaling and Electrification to Alstom. Project partially financed by AFD (facility 180MUSD) India Dedicated Freight Corridor between Bhaupur et Khurja : World Bank Morocco 1 st High speed train of Africa : French Soft Loan Morocco Tramway de Casablanca : French soft loan Panama Metro L1 : COFACE and CESCE financings coupled with a 250 MUSD MIGA guaranteed financing Santo Domingo Metro : ONDD (Belgium) Buyer s Credit Venezuela Metro Los Teques Linea 2 : COFACE Buyer s Credit ALSTOM - 12/04/2017 P 14

Developing tailor-made financing approaches to support our customers Alstom has a centralized and highly skilled team of professionals at the forefront of financial engineering, whose mission is to secure the best financing solutions for our Customers. 4 deals awarded «deal of the year» by the finance community (Trade Finance Magazine). ALSTOM - 12/04/2017 P 15

Tied financing vs. untied financing Typical source Constraints Advantages ALSTOM - 12/04/2017 P 17 Tied Financing ECA backed financing: COFACE for French sourcing SACE for Italian sourcing CESCE for Spanish sourcing DD for Belgian sourcing KUKE for Polish sourcing Soft Loans: French Protocol Credito del Rey (Spain) Ruled by OECD consensus Minimum ECA national content requirement Tied to our offer Allows direct negotiation without RFP Up to 14 years repayment Includes security of payment scheme Can be politically supported Untied financing (IFI) Multilateral agencies: World Bank / EBRD Asian Development Bank European Development Bank African Development Bank (ADB) Bilateral agencies: Agence Française de Développement KFW Strict agencies rules Does not allow direct negotiation procurement Contract often awarded to the lowest priced offer «Free»PIO Better transparency in procurement process

Solution 1 : Buyer s credit How does it work? Buyer s Credits are ruled by an OECD gentlemen agreement : Allows long reimbursement periods, up to 14 years for railway projects Can finance up to 85% of imported/offshore part Can finance the local part for an amount up to 30% of the imported part Can finance the ECA s premium and the Interest During Construction Minimum interest rates are defined by the OECD Fixed or floating rates are possible Reimbursements usually start at provisional acceptance of the equipment Environmental & social impacts must be considered ALSTOM - 12/04/2017 P 18

Solution 1 : Buyer s credit How does it work? Contractual structure reflected in financing documents Delivery contract Tanzanian transport authority Tanzania Ministry of Finance Financing documentation largely standardised Direct payments from the lending bank hence quicker collection of cash Loan can be disbursed directly to exporter as work is performed under contract and/or to borrower in reimbursement of amounts already paid to exporter ALSTOM - 12/04/2017 P 19 Export credit Agency (e.g. COFACE or Other) Guarantee Commercial Bank As an example, the French Export Credit Agency is named COFACE (Compagnie Française d Assurance pour le Commerce Extérieur). Support from Coface can be obtained subject to s sufficient French eligible content. Each file will require the approval by the French Ministry of Finance. Loan agreement Guarantee Or borrower

Solution 2 : International Financial Institutions Abidjan ALSTOM - 12/04/2017 P 21

Examples of contracts financed by IFIs Egypt: Beni Suyef- ENR - Modernization of railway signalling- TIS 120 MEUR Customer : Egyptian National Railways (ENR) Project financed by IBRD/WB. India : Kochi Metro: DMRC has awarded the Contrats for Rolling Stock, Signaling and Electrification to Alstom. Project partially financed by AFD (facility 180MUSD) Vietnam: Hanoi Line 3 metro project estimated to 1.2billion Euro. It will be financed by EIB, AFD, ADB and RPE Greece: Several projects (revamping of electrification Acharnae Tithorea 9 ME, electrification of the extension of Metro line 3, 30 ME, etc...) all financed by European Cohesion Fund and own funds of the governement, but this latter being also financed by EIB. ALSTOM - 12/04/2017 P 22 22 22

Buyer s credit, versus IFI loans : what s the difference? Export Credit IFI Loan Local Market Lender Banks (with ECA guarantee) International Financial Institutions Local banks Borrower Client (Government guarantee) Local public Authorities Client Repayment period 14 years maximum 10 / 15 years Short Cost of financing OECD framework Expensive Process & timing ALSTOM - 12/04/2017 P 23

PPP : Generic Contractual Structure Public Authority Fare Lenders Capital subsidy Concession contract Availability-based payments Passengers Project Company (SPC) Shareholders EPC Contract (turnkey) Interface contract O & M contract Construction Consortium (EPC) Operation & Maintenance Company (O&M) ALSTOM - 12/04/2017 P 25

Nottingham LRT PPP SPV : Tramlink Contract type : Concession contract with public support - 660 million euros - Length : 30 years - CAPEX : Private financing : 60 %; Public financing: 40% - Operating subsidy ALSTOM s roles in the project : - Co-sponsor and minority shareholder of the SPV - Member of the EPC and O&M subcontractor 17 km lines 2 & 3 including Rolling Stock: - 22 LRVs - Civil Work - Power supply, signalling, track - System engineering - Operation & Maintenance Project history : > 12 months between award and financial close Main milestones : - Contract signature : December 2011 - Financial Close: December 2011 - Revenue service phase for new lines: June 2015 ALSTOM - 12/04/2017 P 26

Prerequisites to reach PPP bankability Strong support of gov/public authorities major public subsidies upfront no traffic risks for the concessionaire company availability payments based on performance Legal concession frame with international standards, including: adequate compensation in case of early termination possibility for banks to step-in prior to termination Strong experienced international partners for construction, operation & finance New lines / greenfield scope of works ALSTOM - 12/04/2017 P 27

Conclusions and Way Forward A mix of various financial solutions is usually required for large infrastructure projects A bilateral financing is faster and easier to implement vs International Financial Institutions The Sovereign guarantee is a prerequisite to cover the project financial feasibility Government should also strongly support the Project with state funding ALSTOM - 12/04/2017 P 29

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