bcr investor presentation - cmvm · 2 -bcr corporate structure 3 -business overview 4 -financial...

BCR InvestorPresentation

November 2013

Disclaimer

All data contained in this presentation may contain confidential and/or

privileged information, and it is exclusively intended for its addressees.

Unauthorized copy, reproduction or distribution is strictly prohibited.

This presentation is provided “as is” without any express or implied

warranty. The information here in is provided for general purposes only

and do not constitute professional advice. This presentation may contain

forward-looking information and statements that could, ultimately,

prove inaccurate, due to unexpected risks and uncertainties, such as

economic and market conditions in the geographic areas that are or will

be major markets for this company, changes in laws and regulations,

inflation, fluctuations in currency exchange rates, traffic volumes, or

any legal issues against this company that may affect its business. All

data referred in this document must be reported to the document’s date.

Although every reasonable effort is made to present current and

accurate information, Brisa makes no guarantees of any kind. The

company declines any responsibility to update, revise or correct any of

the information hereby contained

1 - Brisa Group Structure

2 - BCR Corporate Structure

3 - Business Overview

4 - Financial Overview

5 - Wrap-up

6 – Appendix: Key Features of BCR’s Financial Structure

Consistent approach across all Group Concessions

Brisa Group Structure

Brisa Auto-estradas(Parent company)

BCR(100%)

BrisalConcession

(70%)

DouroConcession(100%)*

AtlânticoConcession

(50%)

Litoral OesteConcession

(15%)

Baixo TejoConcession

(30%)

NWP(100%)

BCR> Strong financial profile

> Ring-fenced

> CTA, covenant and security package

Other concessions> Amortising long-term project finance

> Non recourse to Parent Co.

> Douro and Brisal deconsolidation in

2012

Simplified organisationalchart for illustrative purposes

Rated debt:

EIB + Bonds +

Bank debt

Project FinanceProject Finance

BrisaO&M(100%)

Via Verde(60%)

BrisaI&T

(100%)

BrisaEngenharia

(100%)

Controlauto(59.5%)

M-Call(100%)

Service Companies

> O&M expertise

> Funded through Brisa (almost no

debt)

* Brisa has acquired almost all shares of this concession (99,98%) but the grantor's approval for the acquired portion (54,98%) is still pending.

4





5 - Wrap-up


Brisa transferred its Main Concession to Brisa Concessão

Rodoviária (“BCR”) and its operation and maintenance

activities to Brisa O&M in December 2010

Greater ratings stability and predictability� BCR is ring-fenced from the remainder of the Brisa group � Rating was penalised by previous group structure

Higher visibility of assets and cash flow� Clearer portfolio management approach, giving visibility over the value of each business

Higher business unit efficiency� Better definition of priorities and objectives for each business and increased level of specific and central skills

Improved concession agreement management� Maximization of the economic and financial potential, splitting the assets from the servicing companies which do not revert to the State at Concession term

� Focus on operation and relationship with the Grantor

BCR is ring fenced from the remainder of the group

Brisa:Parent Co

Main ConcessionO&M Co

Otherconcessions

Old Structure

New Structure

Brisa:Parent Co

Otherconcessions

BCR(Main Concession)

Brisa O&M

O&M agreement

BCR Corporate Structure

6

Overview of BCR’s Financial Structure

� All senior creditors of BCR rank pari passu and share a common covenant

and security package

Instrument € million

Dec 2014 Retail Notes 225

Mar 2015 Notes 64

Dec 2016 Notes 600

Jan 2018 Notes 300

Dec 2020 Notes 120

Jan 2032 Notes 100

EIB 682

Others (banks) 75

Total 2 165

Current Gross Debt –30 Sept.13

BCR

Other Concessions

BCR SGPS

Common Terms Agreement

Brisa Participacoes SGPS

Brisa

Bondholders

EIB

Others (banks)

Covenants

Intercreditor agreement

Pledge of shares of BCR

Pledge of company’s accounts

BCR has a strong financial profile; is ring fenced; senior creditors share a common package of covenants and security 7

Main advantages for creditors

Improved and stable credit rating position � Fitch published an initial rating of A- (stable) for BCR (since reviewed to BBB Negative Outlook following

the sovereign downgrades)

� Moody’s published an initial rating of Baa1 (stable) for BCR (since reviewed to Ba2 Negative Outlook following the sovereign downgrades)

Exposure to the Main Concession only, ring fenced from the rest of the group� Main Concession is a mature, stable asset, with high cash flow visibility and low business risk

� Generates most of group’s EBITDA

Common covenant package provides funders with greater protection� Borrower only allowed to perform activities related to Main Concession

� Tighter controls on cash flows and future indebtedness, through financial covenants and distribution tests, with de-leveraging profile to end of concession

� Additional liquidity requirements through debt service and capex reserves

Security package for all lenders� Pledge over shares

� Pledge over bank accounts

Management team exclusively dedicated to BCR

Protected ownership structure� Concession agreement limits potential changes in ownership of BCR

Enhanced credit position for BCR funders 8

Jan-10 Abr-10 Jul-10 Out-10 Jan-11 Abr-11 Jul-11 Out-11 Jan-12 Abr-12 Jul-12 Out-12 Jan-13 Abr-13 Jul-13

Rating Brisa Rating BCR Rating Portugal

Rating development

AA

AA-

A+

A

A-

BBB+

BBB

BBB-

BB+

BB

BB-

B+

Non-Investment Grade

Moody’s

S&P

Fitch

PORT BCRCurrentRating

Ba3

BB

BB+

Ba2

--

BBB

Incorporation of BCR

Investment Grade

BCR Rating impacted by the Sovereign downgrades

Evolution of (average) ratings of Brisa, BCR and Rep. of Portugal

9





5 - Wrap-up


BCR

BCR’s Concession Agreement

Tariffs

Term � 31st December 2035

� Annual automatic increase of:

o 100% of CPI, although from 2012 8.5% of the

increase will revert to EP (State)

� 93% of the Main Concession is tolled, leaving

access to the Lisbon and Porto metropolitan

areas free of charge (under terms of concession

agreement)

� Average toll rates are 0.07 € per km, one of the

lowest rates in Europe

Network

� 1 124 km, 11 motorways

� Fully built since 2007

� Only 22 km to be built (link to the new Lisbon airport)

� Includes the main road corridors with the highest

importance in the Portuguese motorway structure

The backbone of the Portuguese road system; a clear and stable contract with the State

11

Portuguese GDP growth

Macroeconomic context

GDP / Private Consumption quarterly growth (like-for-like)

-2,3%

-3,1%-3,5% -3,8% -3,7%

-5,6%-5,8% -6,0%

-5,3%

-4,0%

Q1 Q2 Q3 Q4 Q1

2012GDP = -3,2%

P. Consumption = -5,6%

2013

GDP

P. Consumption

-2,1%

-2,6%

Q2

-0,8%

-1,8%

Q3

Universidade Católicaforecast

12Recovery trend for GDP and Private Consumption

*For further information on the Portuguese economy: www.peprobe.com

Fuel prices

Macroeconomic context

Fuel Price quarterly growth (like-for-like)

Gasoline (price at the pump - eur./liter) Diesel (price at the pump - eur./liter)

-4,3%-4,9%-0,8%

-3,4%

€1,60

€1,62

€1,64

€1,66

€1,68

€1,70

€1,72

€1,74

€1,76

€1,78

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2012

2013

-4,9%-5,2%-1,7%

-4,0%

€1,34

€1,36

€1,38

€1,40

€1,42

€1,44

€1,46

€1,48

€1,50


2012

2013

13Positive fuel price evolution (average of -3,8%)

142141434914881 15205

15370

16355

18647

21518

16673

14968

1370414238

1257513056

1395314275

14811

15981

17841

21969

16680


2012

2013

Traffic performance

MADT

-4,0%

-9,9%

VKM Growth

-4,4%

-0,6%

95,2%

4,8%

9M Traffic Mix

-4,3%-6,3%

9M Traffic Growth

9M Mix Effect = -0,4%

• Much better results in Q3 2013, following the

recovery trend of the previous quarters

• Better results in light vehicles

14

0,0%

2,1%

-4,3%

-2,3%

-3,6%

-6,1%

-6,2%

-12,1%

-11,5%

Sep

Aug

Jul

Jun

May

Apr

Mar

Feb

Jan

2012 2013

-14,1%

-16,5%

-13,5%

-11,5%

-8,9%

-4,0%

-0,6%

Q1 Q2 Q3 Q4 Q1 Q2 Q3

ADT quarterly growth

15Pace of traffic decline is slowing

Traffic performance

-7,8%

-12,4%

-8,1%

-3,6%

-8,6%-9,4%

-14,4%

-15,7%

-10,3%

-16,1%

-13,2%

-1,0%

-0,3% -0,7%

2,0% 0,6% 1,6%

-5,7%

-1,6% -1,5% -1,6%

0,6%

A1 A2 A3 A4 A5 A6 A9 A10 A12 A13 A14

Q1

Q3

Q3 2013 vs. Q1 2013

ADT quarterly growth per motorway

16Better results in all motorways

Traffic performance

-12,0

+20,0

Changein

EBITDA -Capex

Changein

Revenues

EBITDA - Capex

YOY change(in € m)

Million Euro9M12 9M13 YOY change

Op. revenues1 346,4 334,4 -4%

Toll revenues 335,0 326,0 -3%

Operating costs1 94,5 91,7 -3%

EBITDA 251,9 242,7 -4%

EBITDA margin 72,7% 72,6% -0,1pp

Depreciation & prov. -113,9 -117,4 3%

EBIT 138,0 125,3 -9%

EBIT margin 39,8% 37,5% -2,3pp

Net financials -89,4 -96,1 8%

EBT 48,6 29,2 -40%Net profit 35,1 19,2 -45%

Capex 45,2 16,0 -65%

EBITDA-Capex 206,7 226,7 10%1 Net of construction impact (IAS 11)

17Strong cash-flow resilience

Capex

2006

to

2010

€163 M

Million Euro 2010 2011 % 9M11 9M12 % 9M13 %

Total 102,1 83,1 -19% 57,8 37,8 -35% 16,0 -58%

New stretches 13,8 17,7 28% 12,3 6,3 -49% 3,0 -52%

Major repairs1 11,5 16,8 46% 9,9 7,3 -26% 5,4 -26%

Widening works 58,5 37,4 -36% 19,6 16,3 -17% 0,4 -98%

Other 18,3 11,2 -39% 16,0 7,9 -51% 7,2 -9%1 Under the framework of IFRIC12, major repairs are provision costs, not CAPEX

� Future capex (mainly major repairs/widening works) highly linked to traffic

levels, thus providing for a natural hedge in stressful scenarios

� Average yearly capex until concession end projected to be around €61 M

18

Revenue decrease was more than offset by CAPEX and OPEX decreases





5 - Wrap-up


Stronger balance sheet

Million Euro 2010 2011 % 2012 % 9M13 %

Assets 3 447 3 305 -4% 3 362 2% 3 103 -8%

Non current 3 133 3 066 -2% 2 971 -3% 2 879 -3%

Current 231 174 -25% 345 98% 177 -49%

Deferred tax 83 65 -21% 46 -29% 47 2%

Equity 563 632 12% 655 4% 678 4%

Liabilities 2 884 2 672 -7% 2 707 1% 2 426 -10%

M/Long term fin. debt 2 153 2 061 -4% 1 882 -9% 1 994 6%

Short term fin. debt 364 332 -9% 583 76% 145 -75%

Other 367 279 -24% 242 -13% 287 19%

Net debt (IFRS*) 2 349 2 252 -4% 2 154 -4% 1 980 -8%

*Corresponds to the nominal value of the debt + accrued interest - non-amortized costs related to the issuance and placing of such debt - cash

Balance Sheet evolution (IFRS)

20Net debt decreased by c.16% in less than 3 years

BCR debt structure (nominal)

Net debt decreased by €210 million in 9M2013 21

€ Million YE11 YE12 3Q13

Bonds 1 213 1 788 + 575 1 408 - 380

Securitization 80 - - 80 - -

EIB 741 702 - 39 682 - 20

Bank facilities 423 36 -387 75 + 39

Total 2 457 2 526 + 69 2 165 - 361

Cash 141 310 + 169 159 - 151

Net debt 2 316 2 216 -100 2 006 -210

� BCR net debt decreased by c. € 210M in 2013

� Drawings under the Bank facilities remain low, thus leaving additional available liquidity at high levels

0

100

200

300

400

500

600

700

800

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Funds raised on DCM

Above € 800 of m/l term bonds issued since early 2012 22

Current concessionholder (BCR)

Previous concession holder (BAE)

€Million

Eurobond € 500M Sept. 034,797%

Eurobond € 600M Dec. 064,5%

Securitization € 400M Dec. 07

E3m + 1,15%

PPlacement € 63,3M Oct. 09

E6m + 1,75%

PPlacement € 50M Sept. 11

E6m + 3,5%

PPlacement €63,5M - Mar.12 – 6,4%Domestic retail € 225M - Jul.12 – 6,25% PPlacement €100M - Jul.12 – 6% & Inf. linkedEurobond €300M - Oct.12 – 6,875%

PPlacement € 120M – Jun.13 - Floating

Debt amortization profile

� 2014 and 2015 refinancing needs already covered

� Next significant redemption not until Dec 2016

0

100

200

300

400

500

600

700

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

€M

EIB Old Bonds New Bonds

23

Refinancing risk successfully addressed: Higher average maturity with lower debt redemptions concentration

�June 2013:

Private placement of €120M; maturing in Jun 2020; floating rate; forward start (issued

only on Sep 24th)

�July 2013:

Maturity extension of BST line (€100 M) until Oct 2016 at significantly improved terms

�October 2013:

Maturity extension of Barclays line until Oct 2015; bank retains option to further

increase until Oct 2016; increase from €89.4 M to €100 M; significantly improved terms

�4Q 2013 (under negotiation):

Maturity extension until Nov.14 of BES line (already approved by bank)

Maturity extension of CGD line (€100 M)

BCR liquidity facilities

24

BCR reinforced its liquidity position and decisively mitigated its refinancing risk (next significant redemption not until Dec 2016)

Banks Amount Drawn Maturity Observ.

Barclays € 100M € 0M 31 Oct 15

Bank retains

option to extend

until Oct 16

CGD € 100M € 0M 31 Oct 14

Under negotiation

for maturity

extension

Santander € 100M € 75M 31 Oct 16 Signed in July

BES € 20M € 0M Nov 14

Terms agreed;

Signing expected

soon

Total € 320M € 75M

Committed credit lines

25

Strong support from long-term relationship banks

0

50

100

150

200

250

300€M

� Strong free cash-flow

� Net debt decrease of c. € 210M

Cash flow analysis

Operating cash flow Capex

Financial expenses

Netdebt

reduction

26

BCR’s business resilience is demonstrated in a very challenging macro-economic environment

9M 2013

1) Inputs for these ratios may slightly differ from reported figures due to the adjustments made in order to reflect the CTA ratio definitions

Interest coverage ratio1

2.36 2.12

<2.25(Trigger/Lock-up level)

2H2012 1H2013

Without the impact of these one-off effects in the 2H2013, the ICR is projected to stand significantly above lock-up level (2.25) by YE13

ICR lock-up in 1H2013 only due to one-off effectsImprovement in Net Debt / EBITDA

> ICR (Available Cash-flow / Financing Costs) penalised

by one-off factors in 2H12 and 1H13:

> Financing costs negatively impacted by:

> Upfront fees paid during 2H12 related to bond

issuance/prefunding

> Negative carry due to prefunding of Sep 2013 Bond

>6.5(Trigger/Lock-up level)

2H2012 1H2013

7.01 6.88

Net debt / EBITDA1

Effect from lower EBITDA more than compensated by net debt reduction

BCR financial covenants

27

The ratios referred in the documentation that governs the senior debt of BCR as “Historic ICR” and “Net debt / EBITDA” are, with reference to the applicable calculation date (June 30th, 2013), below and above, respectively, the Trigger Event level determining the occurrence of a Trigger Event under such documentation





5 - Wrap-up


Effectiveness of BCR’s credit protective financial structure has been demonstrated

Wrap-up

� CAPEX/OPEX savings more than compensated revenue decrease

thus increasing cash flow generation

� Even with some traffic decline (as currently is the case) BCR is able

to reduce net debt significantly and improve ratios

� Ability to increase savings through the re-negotiation of OPEX

contracts (reflecting the efficiency gains on BCR’s operational cost

structure)

29

Effectiveness of BCR’s credit protective financial structure has been demonstrated

Wrap-up

� Liquidity position has been significantly reinforced and refinancing

risk strongly mitigated:

� BCR issued more than €800 M of m/l term bonds since the beginning of

2012

� BCR negotiated and extended several short term committed credit lines

� Funding needs covered up to Dec 2016

� Even in a very challenging environment cash flow generation has

enabled a continued deleveraging process

30





5 - Wrap-up


Appendix – Key Features

Key provisions

Security Pledge over shares in BCR and over BCR bank accounts

Assignment of concession agreement and other contracts

Covenants Comprehensive set of covenants, including historic and forward looking financial covenants

Trigger Events No distributions if, inter alia, lock-up ratio tests are not met and investment grade rating is not maintained

Liquidity Reserves Debt Service Reserve Account equivalent to 12 months of debt service

Capex Reserve Account equivalent to 6 months of future capex

Hedging Policy Comprehensive set of terms regarding hedging transactions which BCR will have to comply with

Others Additional credit protective provisions such as

� Minimum of 3 independent directors, who must approve distributions and contracts with Brisa entities

� Restrictions on nature of activities

� Intercreditor arrangements

Stable structure with credit enhancing features valid for the full life of the concession 32


Financial covenant definitions

� Three financial ratios are defined in the CTA, which are used to set default tests, distribution lock-up tests and tests for the incurrence of additional indebtedness

� Net Senior Debt / EBITDA

• The ratio of (i) Senior Debt less balances on BCR’s accounts, to (ii) EBITDA for last 12 months

� Interest Coverage Ratio on a historic (“Historic ICR”) and forward looking basis (“Forward Looking ICR”)

• The ratio of Available Cashflow to Financing Costs

• Available Cashflow equal to (i) EBITDA, plus (ii) interest income, less (iii) tax paid, less (iv) net change in working capital, and (v) adjusted for the changes in the amount standing to the credit of the Capex Reserve Account

• Financing Costs equals interest and fees and hedging payments on Senior Debt

� Concession Life Coverage Ratio (“CLCR”)

• The ratio of (i) net present value of the Available Cashflow until the scheduled expiry date of the Concession Contract and the amount standing to the credit of the Debt Service Reserve Account to (ii) Net Senior Debt

In addition to financial covenants, financial ratio tests also applied to determine whether distributions can be paid or additional indebtedness incurred 33


Trigger Event definitions

� The CTA defines a series of Trigger Events, which are aimed at providing early warning signals to Senior Creditors

� Trigger Events include:• Breach of the Trigger level financial ratio tests• Debt Service Reserve Account required balance, equivalent to 12 months of debt service, not

being met• Capex Reserve Account not being funded with an amount equal to the next 6 months of capex• Any solicited rating falls below Baa3/BBB- or the company ceases to maintain 2 solicited

ratings� No distributions can be made while a Trigger Event is outstanding, so as to conserve cash in the

company� Following the occurrence of a Trigger Event, Senior Creditors have certain additional rights, aimed

at helping them to try to get the problems giving rise to the Trigger Event resolved, including:• Right of access to additional information • Right to appoint an independent adviser to review the circumstances which have caused the

Trigger Event and to propose a plan to remedy it

Trigger Event regime provides early warning system and leads to distribution lock-up 34


Additional Indebtedness Tests

� BCR’s financing structure will be a dynamic one, with new debt being raised and existing debt maturing and being refinanced on a regular basis

� The CTA defines certain tests that must be satisfied for the company to be able to raise Additional Senior Debt, including that:

• Specified Net Debt / EBITDA ratios are complied with through to the end of concession (taking into account, if relevant, that the new debt raised will be used to refinance or cash collateralise existing debt)

• No more than €750 M (indexed) of debt may mature in any 2-year period and, during the last five years of the concession, no debt amount equivalent to more than 50% of EBITDA for the relevant year may mature in a single year

• No debt may mature later than 2 years before the end of the concession

• Hedging policy is complied with

• No Trigger Event or Event of Default is outstanding (taking into account, if relevant, that the new debt raised will be used to refinance or cash collateralise existing debt)

� The providers of Additional Senior Debt are required to execute a Senior Creditor Accession Document so that they become parties to the CTA and ICA also

� The CTA contains restrictions on BCR having debt other than Senior Debt, with a carve-out of €5 M for leases and hire purchase contracts

Additional indebtedness tests protect on-going credit profile of BCR 35


Years before end of concession

Trigger/

AdditDebt

Years before end of concession

Default

Up to 22.0 6.50x Up to 20.0 8.00x

Up to 21.0 6.25x Up to 18.0 7.75x

Up to 20.5 6.00x Up to 17.0 7.25x

Up to 17.0 5.75x Up to 16.0 7.00x

Up to 16.0 5.50x Up to 15.0 6.75x

Up to 15.0 5.25x Up to 14.0 6.50x

Up to 14.0 5.00x Up to 13.0 6.25x

Up to 13.0 4.75x Up to 12.0 5.75x

Up to 12.0 4.25x Up to 11.0 5.50x

Up to 11.0 4.00x Up to 10.0 5.00x

Up to 10.0 3.50x Up to 9.0 4.50x

Up to 9.0 3.00x Up to 8.0 4.25x

Up to 8.0 2.75x Up to 7.0 3.75x

Up to 7.0 2.25x Up to 6.0 3.25x

Up to 6.0 1.75x Up to 4.0 3.00x

Up to 4.0 1.50x Up to 2.0 2.50x

Up to 2.0 1.00x

Net Senior Debt to EBITDA

Trigger/

Addit DebtDefault

Historic ICR 2.25x 1.75x

Forward Looking ICR 2.25x 1.75x

CLCR 2.00x 1.80x

ICR and CLCR

� Leverage and coverage ratios valid for the life

of the concession

� Net Debt to EBITDA profile designed to ensure

deleveraging over time

• Levels based on years before concession

end to ensure flexibility if concession is

extended

� Ratios consistent with strong investment grade

rating

De-leveraging profile 36

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