teknia manufacturing group, s.l.u. 1 - teknia manufacturing group, s.l.u. (incorporated in spain in...

- 1 -

TEKNIA MANUFACTURING GROUP, S.L.U.

(Incorporated in Spain in accordance with the Spanish Capital Companies Act)

EUR 40,000,000 Senior Unsecured Notes Programme 2018

Teknia Elorrio, S.L.U., Teknia Pedrola, S.L.U., Teknia Barcelona, S.L.U., Teknia

Bilbao XXI, S.L.U., Teknia Montmelo, S.L.U., Teknia Martos, S.L.U., Teknia

Azuqueca, S.L.U., Teknia Manresa, S.L.U., Teknia Epila, S.L.U., Teknia R&D,

S.L., Teknia Brasil Ltda., Teknia Rzeszów S.A., Teknia Kálisz, S.p. z o.o., Teknia

Uherský Brod, a.s., and Teknia Nashville, LLC as Subsidiary Guarantors of the

Programme

INFORMATION MEMORANDUM (DOCUMENTO BASE INFORMATIVO DE

INCORPORACIÓN) ON THE ADMISSION (INCORPORACIÓN) OF MEDIUM-

AND LONG-TERM SECURITIES ON THE ALTERNATIVE FIXED-INCOME

MARKET (“MARF”)

Teknia Manufacturing Group, S.L.U. (indistinctively, “Teknia”, “Teknia Group”, the

“Issuer” or the “Company”) a private company with limited liability (Sociedad Limitada)

organised under the laws of Spain, registered in the Vizcaya Mercantile Registry (Basque

Country, Spain) in volume 3702, folio 22, sheet BI-23069, with tax identification number

B-48.984.090 and LEI code 9598001382GF2BG2PP33 will request the admission of the

Notes (incorporación de valores) to be issued under this Programme on the Alternative

Fixed-Income Market (“MARF”) under the provisions of this Information Memorandum

(Documento Base Informativo de Incorporación).

Admission (incorporación) to MARF will be requested for the Notes issued under the

Programme. MARF is a multilateral trading system and is not a regulated market in

accordance with the provisions of Directive 2004/39/EC of 21 April 2004 on markets in

financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and

Directive 2000/12/EC of the European Parliament and of the Council and repealing

Council Directive 93/22/EEC (“Directive 2004/39/EC”). There is no guarantee that the

price of the Notes in MARF will be maintained. There is no assurance that the Notes will

be widely distributed and actively traded on the market because at this time there is no

active trading market. Nor is it possible to ensure the development or liquidity of the

trading markets for the Notes.

The Notes will be represented by book entries in Iberclear, according to the provisions of

title VIII of the Information Memorandum.

An investment in the Notes involves certain risks.

Read section III of the Information Memorandum on Risk Factors.

This Information Memorandum (Documento Base Informativo de Incorporación) is

not a prospectus (folleto informativo) and has not been registered with the National

Securities Market Commission (CNMV). The offering of the securities does not

constitute a public offering in accordance with the provisions of Article 35 of Royal

Decree 4/2015 of 23 October, approving the revised text of the Securities Market Act

and therefore there is no obligation to approve, register, and publish a prospectus

- 2 -

with the CNMV. The issue of Notes under this Programme is intended exclusively

for professional clients and qualified investors in accordance with the provisions of

Article 205 of Royal Decree 4/2015 and Article 39 of Royal Decree 1310/2005 of 4

November, which partially develops Law 24/1988, of 28 July, on the Securities

Market, with regard to the admission of securities to trading on official secondary

markets, public offerings or subscription, and the prospectus required for this

purpose (“Royal Decree 1310/2005”).

No action has been taken in any jurisdiction to permit a public offering of the Notes

or the possession or distribution of the Information Memorandum or any other

offering material in any country or jurisdiction where such action is required for

said purpose.

This Information Memorandum includes the information required by MARF

Circular 1/2015. The Governing Body of MARF has not made any verification or

checks with respect this Information Memorandum, nor of the rest of the

documentation and information contributed by the Issuer in compliance with said

Circular 1/2015.

ARRANGERS AND PLACEMENT ENTITIES

BANCO DE SABADELL, S.A. and BANKINTER, S.A.

LEGAL ADVISOR OF THE ISSUER

CUATRECASAS GONÇALVES PEREIRA

REGISTERED ADVISOR

PKF ATTEST SERVICIOS EMPRESARIALES, S.L.

The date of this Information Memorandum is 15 of February 2018.

- 3 -

CONTENTS

I. IMPORTANT INFORMATION 8

II. SUMMARY 11

1. Overview of the Business of the Issuer 11

2. History 12

3. Relevant aspects of recent activity 13

4. Organizational Structure 13

5. Strategy 15

6. Financial information 16

III. RISK FACTORS 23

1. Risks related to the Issuer’s Industry and Business 24

2. Financial risk factors 37

3. Risks relating to the Notes issued under the Programme 40

IV. DECLARATION OF LIABILITY 44

1. Person responsible for the information contained in the Information

Memorandum 44

2. Statement of the person responsible for the content of the Information

Memorandum 44

V. FUNCTIONS OF THE REGISTERED ADVISOR OF MARF 44

VI. INDEPENDENT AUDITORS 46

1. Name and address of the auditors of the Issuer for the period covered by

the historical financial information (together with their membership in a

professional body) 46

2. If auditors have resigned, been removed from their duties or have not

been re-appointed during the period covered by the historical financial

information, indicate the details, if material 47

VII. INFORMATION ON THE ISSUER 47

- 4 -

1. Full name of the Issuer including its address and identification data 47

2. Description of the Issuer 48

2.1. Milestones of the Issuer 48

2.2. Main Shareholders 49

2.3. Organizational Structure 49

2.4. Corporate purpose 53

2.5. Administrative and management bodies 54

2.5.1. Board of Directors 54

2.5.2. Senior Management 54

2.6. Industry and Activity 60

2.6.1. Industry introduction 60

2.6.2. Strategy 63

2.6.3. Trends in the industry 64

2.6.4. Business Units 65

2.6.5. International expansion 65

2.6.6. Sectors of activity 66

2.7. Declaration on the absence of significant changes in the prospects of the

Issuer 69

2.8. Information on significant changes in the prospects of the Issuer 69

3. Reasons for the Issue and use of proceeds 69

4. Financial information 69

4.1. Audited historical financial information 69

4.2. Financial Statements of the Issuer 70

4.3. Financial ratios as of 31 December 2016 and 2015 76

4.4. Audit of historical annual financial information 77

- 5 -

4.4.1. Statement that historical financial information has been audited. If audit

reports on the historical financial information have been refused by the

auditors or if they contain qualifications or disclaimers, such

qualifications or disclaimers must be reproduced in full, explaining the

reasons. 77

4.4.2. Indication of other information in the Information Memorandum which

has been audited by the auditors 77

4.4.3. Where financial data in the Information Memorandum is not extracted

from the audited Financial Statements of the Issuer, you must declare the

source of the data and state that the data is unaudited 77

4.5. Age of the most recent financial information 77

4.6. Judicial, administrative and arbitration proceedings 77

5. Significant changes in the financial or trading position of the Issuer 77

VIII. DESCRIPTION OF THE NOTES 78

1. Total amount of the securities issued/admitted to trading 78

2. Date of issue of the Notes 78

3. Form and Denomination 78

4. Status of the Notes and Guarantee 79

5. Price of the Notes 79

6. ISIN Code 80

7. Register, Title and Transfers 80

8. Guarantees and Security 81

8.1. Subsidiary Guarantors 82

8.2. Nature of the Guarantees 84

8.3. Accession of additional Subsidiary Guarantors or Share Pledge over

Subsidiaries 84

8.4. Release of Subsidiary Guarantors 85

8.5. Limitations 86

- 6 -

9. Covenants 86

9.1. Negative Pledge 86

9.2. Change of Control 88

9.3. Related-party Transactions 89

9.4. Limitation on Indebtedness 90

9.5. Limitation on sale of assets and mandatory tender offer for the Notes 91

9.6. Limitation on Dividends 93

9.7. Limitation on Investments 94

9.8. Limitation on Structural Modifications 95

9.9. Transactions with Subsidiaries 95

9.10. Information and Reports 96

10. Interest 97

11. Redemption and Purchase 98

(i) the Issuer has or will become obliged to pay additional amounts as

provided or referred to in Condition 15 (Taxation) as a result of any

change in, or amendment to, the laws or regulations of the Kingdom of

Spain or any political subdivision or any authority thereof or therein

having power to tax, or any change in the application or official

interpretation of such laws or regulations (including a holding by a court

of competent jurisdiction), which change or amendment becomes

effective on or after the Issue Date; and 98

(ii) such obligation cannot be avoided by the Issuer taking reasonable

measures available to it; 99

12. Payments 100

13. Placement of each issue under the Programme 101

14. Further issues 101

15. Taxation 101

16. Events of Default 103

- 7 -

17. Prescription 105

18. Paying Agent 105

19. Syndicate of Noteholders, Modification and Waiver 105

20. Notices 117

21. Governing Law and Jurisdiction 117

IX. ADMISSION OF THE SECURITIES 118

1. Request for admission of the securities to the Alternative Fixed

Income Market. Deadline for admission to trading 118

2. Cost of all legal, financial, and audit services and other costs to the

Issuer regarding the registration of the Programme 119

X. THIRD PARTY INFORMATION, STATEMENT BY EXPERTS

AND DECLARATIONS OF INTEREST 119

XI. REFERENCES 119

- 8 -

I. IMPORTANT INFORMATION

Neither the Issuer nor the Bookrunners have authorized anyone to provide information to

potential investors other than the information contained in this Information Memorandum

and other publicly available information. Potential investors should not base their

investment decision on information other than that contained in this Information

Memorandum and alternative sources of public information.

The Bookrunners assume no liability for the content of the Information Memorandum.

The Bookrunners have signed a contract with the Issuer, but neither the Bookrunners nor

any other entity has made any commitment to underwrite the issue, without prejudice to

the ability of the Bookrunners to acquire part of the Notes on their own behalf.

This Information Memorandum is not a prospectus (folleto informativo) and has not been

registered with the National Securities Market Commission (CNMV). The offering of the

securities does not constitute a public offering in accordance with the provisions of Article

35 of Royal Decree 4/2015 of 23 October, approving the revised text of the Securities

Market Act (“SML”), and therefore there is no obligation to approve, register, and publish

a prospectus with CNMV.

Admission (incorporación) to MARF will be requested for the Notes issued under the

Programme. MARF is a multilateral trading system and is not a regulated market in

accordance with the provisions of Directive 2004/39/EC. This Information Memorandum

includes the information required by MARF Circular 1/2015. The Governing Body of

MARF has not made any verification or checks with respect this Information

Memorandum, nor of the rest of the documentation and information contributed by the

Issuer in compliance with said Circular 1/2015.There is no guarantee that the price of the

Notes in MARF will be maintained.

The Notes will be represented by book entries in Iberclear, according to the provisions of

section VIII of the Information Memorandum.

- 9 -

SELLING RESTRICTIONS

No action has been taken in any jurisdiction to permit a public offering of the Notes or

the possession or distribution of the Information Memorandum or any other offering

material in any country or jurisdiction where such action is required for said purpose.

In particular:

European Union

The Notes are only directed to qualified investors according to the provisions in Article

2.1.e) of Directive 2003/71/EC. Therefore, this Information Memorandum has not been

registered with any competent authority of any Member State.

Spain

This Information Memorandum has not been registered with the National Securities

Market Commission in Spain (“Comisión Nacional del Mercado de Valores” or

“CNMV”). The issue of the Notes will not constitute a public offering in accordance with

the provisions of Article 35 of Royal Decree 4/2015 of 23 October, approving the revised

text of the Securities Market Act. The issue of Notes shall be intended exclusively for

professional clients and qualified investors in accordance with the provisions of Article

205 of Royal Decree 4/2015 of 23 October, approving the revised text of the Securities

Market Act and Article 39 of Royal Decree 1310/2005 of 4 November, which partially

develops Law 24/1988, of 28 July, on the Securities Market, with regard to the admission

of securities to trading on official secondary markets, public offerings or subscription,

and the prospectus required for this purpose (“Royal Decree 1310/2005”).

Portugal

This Information Memorandum has not been registered with the Portuguese Securities

Market Commission (Comissão do Mercado de Valores Mobiliários) and no action has

been undertaken that would be considered a public offer of the Notes in Portugal.

According to the above, the Notes to be issued under this Programme may not be offered,

sold, or distributed in Portugal except in accordance with the provisions of Articles 109,

110 and 111 of the Portuguese Securities Code (Código dos Valores Mobiliários).

Andorra

No action has been undertaken that may require the registration of this Information

Memorandum with any authority of the Principality of Andorra.

Switzerland

This document does not constitute an offer to sell or a solicitation to buy the Notes in

Switzerland. The Notes issued under the Programme shall not be subject to public

offering or advertised, directly or indirectly, in Switzerland and will not be listed on SIX,

- 10 -

the Swiss Exchange, or any other Swiss market. Neither this document nor the issue or

marketing materials of the Notes constitute a prospectus within the meaning of articles

652a or 1156 of the Swiss Code of Obligations, nor a listing prospectus according to the

Admission rules of the SIX Swiss Exchange or any other Swiss market.

United States

This document must not be distributed, directly or indirectly, in (or sent to) the United

States of America (according to definitions of the “Securities Act” of 1933 of the United

States of America – “U.S. Securities Act”). This document is not an offer to sell securities

or a solicitation to buy any securities in any jurisdiction in which such offer or sale is

considered contrary to law. The Notes issued under the Programme will not be registered

in the United States for the purposes of the U.S. Securities Act and may not be offered or

sold in the United States without registration or an exemption application for registration

under the U.S. Securities Act. There will not be a public offering of the notes in the United

States or in any other jurisdiction.

- 11 -

II. SUMMARY

1. Overview of the Business of the Issuer

Teknia Manufacturing Group, S.L.U. was incorporated as a private company with limited

liability under the laws of Spain on 30 July 1998. This Spanish, family-owned company

is engaged in the manufacture of automotive parts, and currently has 20 production plants,

4 commercial offices, and 5 Research & Development (“R&D”) centres.

The Company designs, develops, manufactures and supplies its activities in the

automotive business in three product categories: plastic, metallic (tubing and stamping)

and machining, and sells its products to Tier1 suppliers (c. 80% of sales) and Original

Equipment Manufacturer - “OEMs”- (c.20% of sales).

Teknia Group began its international expansion in 1999 with the acquisition of Tecnotubo

in Brazil. The following graph shows the Teknia Group’s current locations:

In addition, to i) enhancing its product range, ii) providing its clients with the latest

products, and iii) relying on cutting-edge technology, Teknia engages in intense R&D,

which allows the Company to be a leading manufacturer within the industry and a partner

to its clients.

- 12 -

2. History

Teknia is engaged in the manufacture of automotive parts. Since its inception, the

Company has grown significantly in terms of revenues, earnings, and global presence,

becoming an international automotive parts manufacturer operating in 12 countries.

Teknia began as, and remains, a family-owned company. It launched its activity through

the acquisition of Industrias Elix, which became Teknia Elorrio, but it was not until 1998,

after several other acquisitions on Spanish soil, that the Teknia Manufacturing Group was

founded.

The main milestones achieved along the history of the Issuer are the following:

During its 25-year history, the Company’s performance drivers have been:

- Geographical diversification: worldwide presence in the most important automotive

markets, enabling the Company to cover its clients’ needs in terms of quality, time

and costs. Currently, Teknia has 20 production plants (in nine countries), four

commercial offices, and five R&D centres that provide services to the whole Group.

The production plants are located in Spain (7), Brazil (3), Poland (2), USA (1),

Czech Republic (2), Morocco (1), Mexico (2), Serbia (1) and Turkey (1).

- Technological diversification: the Company specializes in the development and

manufacture of automotive components, assembly, and the design of specific

- 13 -

manufacturing processes. These services are carried out in three divisions: plastic,

metallic (including tubing and stamping), and machining. Additionally, Teknia has

an R&D division that supports the automotive business and enables the Group to

remain at the forefront of the industry.

- Close relationship with its major clients, which has led to the joint design of

international expansion strategies, in which Teknia has accompanied its clients as

a key supplier in new markets.

- Continuous growth: the company has made major strides in the commercial field,

with the opening of international sales offices, among others, in USA, Germany,

and South Korea, and a commercial office in China, with the goal of increasing

sales and enhancing its visibility with regard to international expansion.

3. Relevant aspects of recent activity

The Group consists in two main business lines: automotive and R&D. The R&D division

supports the automotive business and enables the Group to remain at the forefront of the

industry.

The Plastic division is the largest in terms of sales (approximately 45% of total aggregated

sales in 2016), followed by the Metallic division (approximately 39% of total sales), and

the Machining division (approximately 16% of total sales).

4. Organizational Structure

As of 31 December 2017, the Group is comprised of 25 registered companies (parent

company included), as follows:

(1) Source: Individual Audited Annual Accounts (Aggregated Data)

- 14 -

Siuled, S.L. is the investment vehicle through which Mr. Javier Quesada owns 100% of

Teknia Manufacturing Group.

Beneath has been detailed the main figures of the audited individual financial statements

(Teknia Montmelo, S.L.U.,Teknia R&D, S.L., Componentes de Automoción Marroquíes

figures correspond to limited reviews, audited) of the most relevant subsidiaries with

industrial activity as of 31 December 2016:

Thousand of Euros

Teknia

Elorrio

Teknia

Pedrola Teknia Epila

Teknia

Barcelona

Teknia

Bilbao XXI

Teknia

Montmeló

Teknia

Martos

Teknia

Brasil

Teknia

Manresa Teknia KG

Total assets 10.293 7.780 2.145 10.796 10.138 2.692 13.749 16.792 12.815 1.461

Total Equity 4.186 1.504 1.016 2.446 3.256 868 5.110 8.800 6.533 971

Net turnover 20.020 11.784 2.036 23.489 16.435 3.563 30.329 20.565 24.279 1.507

Results from Operating expenses 1.730 128 192 1.243 515 568 3.120 (2.101) 3.018 25

Profit/ (Loss) for the period 1.505 83 168 877 254 409 2.338 (2.243) 2.369 25

Thousand of Euros

Teknia

Azuqueca

Teknia

Uhersky

Brod Teknia R&D

Teknia

Rzeszów

Teknia

Kálisz

Teknia

Automotive

Mexico

Teknia

Nashville

Component

es de

Automoción

Marroquies

Teknia Mexico

City

Total assets 18.751 20.929 499 15.748 23.647 9.521 19.614 2.911 3.072

Total Equity 6.147 11.096 59 7.384 6.256 3.239 9.305 375 1.228

Net turnover 42.425 25.350 825 22.989 25.063 10.029 20.469 2.874 4.083

Results from Operating expenses 2.190 2.585 (26) 2.524 265 (193) (152) 83 518

Profit/ (Loss) for the period 1.580 2.127 (26) 1.838 (347) (653) (54) 14 207

- 15 -

5. Strategy

The Company’s performance drivers have been:



















sales and enhancing its visibility with regard to international expansion. Moreover,

it has acquired over 20 companies during its existence, which, along with the

company’s growth, has enabled it to achieve its current size.

- 16 -

6. Financial information

The financial information presented in this Information Memorandum includes the

consolidated financial statements of Teknia Group for the years ended 31 December, 2015

and 31 December, 2016, which have been extracted from the audited consolidated annual

accounts of the Group for the years ended 31 December 2016 and 31 December 2015,

included in “Annex 1” and “Annex 2” of this Information Memorandum.

In addition, the individual audited annual accounts of the Subsidiary Guarantors for the

year ended 31 December 2016 have also been included as “Annex 3” to this Information

Memorandum.

The consolidated financial statements as of 31 December 2016 and 2015, have been

prepared from the accounting records of the Group and are presented in accordance with

the commercial legislation and the established rules in the General Accounting Plan

approved by Royal Decree 1514/2007 and the amendments made thereto by Royal Decree

1159/2010.

Certain data contained in this Information Memorandum, including financial information,

have been subject to rounding adjustments. Accordingly, in certain instances, the sum of

the numbers in a column or a row of the tables may not conform exactly to the total figure

given for that column or row, or the sum of certain numbers presented as a percentage

may not conform to the total percentage given.

- 17 -

Audited Consolidated Income Statement for the financial years ended on 31

December 2016 and 2015 (in thousands of Euros)

- 18 -

CO NSO LIDATED INCO ME STATEMENT

2016 2015 Var 16-15

A) CO NTINUING O PERATIO NS

1. Revenue 297.662 246.279 20,9%

a) Sales 294.979 245.031 20,4%

b) Services rendered 2.683 1.248 115,0%

2. Changes in inventories of finished goods and work in progress 2.389 1.048 128,0%

3. Work carried out by the company for own assets 1.100 572 92,3%

4. Supplies (166.666) (138.749) 20,1%

a) Merchandise used (8.847) (5.389) 64,2%

b) Raw materials and other consumables used (130.560) (109.850) 18,9%

c) Subcontracted work (27.217) (23.286) 16,9%

d) Impairment of merchandise, raw materials and other supplies (42) (224) -81,3%

5. O ther operating income 1.340 1.141 17,4%

a) Non-trading and other operating income 1.264 980 29,0%

b) Operating grants taken to income 76 161 -52,8%

6. Personnel expenses (65.646) (52.949) 24,0%

a) Salaries and wages (51.047) (40.877) 24,9%

b) Employee benefits expense (14.476) (12.024) 20,4%

c) Provisions (123) (48) 156,3%

7. O ther operating expenses (42.643) (36.925) 15,5%

a) Losses, impairment and charges in trade provisions (47) (326) -85,6%

b) Other operating expenses (42.596) (36.599) 16,4%

8. Amortisation and depreciation (9.787) (7.705) 27,0%

9. Non-financial and other capital grants 5 5 -

11. Impairment and gain/(losses) on disposal of fixed assets (19) 1.965 -101,0%

a) Impairments and losses - (317) -100,0%

b) Results due to divestment and others (19) 2.282 -100,8%

14. O ther results 135 141 -4,3%

A.1) RESULTS FRO M O PERATING ACTIVITIES

(1+2+3+4+5+6+7+8+9+10+11+12+13+14) 17.870 14.823 20,6%

15. Finance income 250 320 -21,9%

a) Dividends 3 3 -

b) Marketable securities and other financial instruments 10 99 -89,9%

c) Allocation of grants, donations and bequests of a financial nature 237 218 8,7%

16. Finance expenses (2.550) (1.688) 51,1%

18. Exchange gains/(losses) (1.079) (1.989) -45,8%

19. Impairment and profit/loss on divestment of financial instruments - (228) -100,0%


A.2) NET FINANCE INCO ME/(EXPENSE) (14+15+16+17+18+19) (3.379) (3.585) -5,7%

A.3) PRO FIT/(LO SS) BEFO RE INCO ME TAX (A.1 + A.2 ) 14.491 11.238 28,9%

24. Income tax (3.521) (1.629) 116,1%

A.4) PRO FIT/(LO SS) FRO M CO NTINUING O PERATIO NS (A.3 +22) 10.970 9.609 14,2%

B) DISCO NTINUED O PERATIO NS - - -

A.5) CO NSO LIDATED PRO FIT/(LO SS) FO R THE PERIO D (A.4) 10.970 9.609 14,2%

Balance attributed to the parent company 10.987 9.659 13,7%

Balance attributed to external shareholders (17) (50) -66,0%

Thousand of Euros

- 19 -

Audited Consolidated Balance Sheet for the financial years ended on 31 December

2016 and 2015 (in thousands of Euros)

ASSETS

2016 2015 Var 16-15

A) NO N-CURRENT ASSETS 98.442 73.629 33,7%

I. Intangible fixed assets

1. Consolidated goodwill 6.661 2.495 167,0%

2. Research - -

3. Other intangible assets 2.910 2.833 2,7%

9.571 5.328 79,6%

II. Tangible fixed assets

1. Land and buildings 24.945 21.664 15,1%

2. Technical installations and other fixed material assets 47.933 31.517 52,1%

3. Fixed assets under construction and advances 1.276 3.284 -61,1%

74.154 56.465 31,3%

V. Long-term financial investments 2.542 501 407,4%

VI. Deferred tax assets 12.036 11.203 7,4%

VIII. Non-current trade receivables 139 132 5,3%

B) CURRENT ASSETS 115.014 90.597 27,0%

I. Non-current assets held for sale 220 -

II. Inventories 41.555 33.641 23,5%

III. Trade and other receivables

1 Trade receivables for sales and services 53.925 44.299 21,7%

2. Trade receivables from group companies and associates - 16 -100,0%

3. Current tax assets 663 1.109 -40,2%

4. Other receivables 3.247 2.225 45,9%

57.835 47.649 21,4%

IV. Current investments group companies and associates

1 Loans to related parties - 18 -100,0%

2. Other financial assets of group companies and associates - 3.345 -100,0%

- 3.363 -100,0%

V. Current investments 46 1 4500,0%

VI. Current accruals 1.082 1.082 0,0%

VII. Cash and other cash equivalents 14.276 4.861 193,7%

TO TAL ASSETS (A+B) 213.456 164.226 30,0%

Thousands of euros

- 20 -

TO TAL EQ UITY AND LIABILITIES

2016 2015 Var 16-15

A) EQ UITY 68.225 59.057 15,5%

A-1) Capital and reserves without valuation adjustments

I. Capital 20.000 20.000 -

III. Reserves 39.553 33.680 17,4%

VI. Net income attributed to the parent company 10.987 9.659 13,7%

70.540 63.339 11,4%

A-2) Valuation adjustments

II. Translation differences from consolidated companies (3.141) (5.405) -41,9%

(3.141) (5.405) -41,9%

A-3) Grants, donations and bequests received

I. In consolidated companies 662 858 -22,8%

662 858 -22,8%

A-4) External shareholders 164 265 -38,1%

B) NO N-CURRENT LIABILITIES 61.503 36.989 66,3%

I. Non-current provisions 642 491 30,8%

II. Non-current payables

1. Bonds and other marketable securities 19.635 -

2. Debt with credit entities 32.005 22.984 39,2%

3. Finance lease payables 1.021 296 244,9%

4. Other financial liabilit ies

4.1 Fixed assets suppliers 163 179 -8,9%

4.2 Other financial liabilit ies 6.508 11.694 -44,3%

59.332 35.153 68,8%

IV. Deferred tax liabilities 1.528 1.313 16,4%

V. Non-current accruals 1 32 -96,9%

C) CURRENT LIABILITIES 83.728 68.180 22,8%

II. Current provisions 919 1.592 -42,3%

III. Current payables

1. Bonds and other marketable securities 542 - -




4.1 Fixed assets suppliers 814 1.065 -23,6%

4.2 Other financial liabilit ies 690 651 6,0%

23.192 18.917 22,6%

IV. Current debt with group companies and associates

2. Other payables - - -

- - -

V. Trade and other payables

1. Suppliers 41.906 34.614 21,1%

2. Suppliers, group companies and associates - 7 -100,0%

3. Current tax liabilit ies 315 351 -10,3%

4. Other payables 17.136 12.418 38,0%

59.357 47.390 25,3%

VI. Current accruals 260 281 -7,5%

TO TAL EQ UITY AND LIABILITIES (A + B + C) 213.456 164.226 30,0%

Thousands of Euros

- 21 -

Audited Consolidated Cash Flow Statements of the financial years ended on 31


- 22 -

CO NSO LIDATED CASH FLO W STATEMENT

2016 2015 Var 16-15

A) CASH FLO WS FRO M O PERATING ACTIVITIES

1. Profit/(loss) for the period before tax 14.491 11.238 28,9%

2. Adjustments for 13.082 7.610 71,9%

a) Amortisation and depreciation (+) 9.787 7.705 27,0%

b) Valuation allowances for impairment losses (+/-) 973 233 317,6%

c) Changes in provisions (+/-) 270 430 -37,2%

d) Grants recognised in the income statement (-) (242) (5) 4740,0%

e) Proceeds from disposals of fixed assets (+/-) 19 (2.282) -100,8%

g) Finance income (-) (250) (320) -21,9%

h) Finance expenses (+) 2.550 1.688 51,1%

k) Other income and expenses (-/+) (25) 161 -115,5%

3. Changes in operating assets and liabilities (8.782) (3.940) 122,9%

a) Inventories (+/-) (6.624) (1.493) 343,7%

b) Trade and other receivables (+/-) (6.899) (3.345) 106,2%

c) Other current assets (+/-) (45) (266) -83,1%

d) Trade and other payables (+/-) 5.567 1.638 239,9%

c) Other current liabilit ies (+ /-) (770) (413) 86,4%

f) Other non-current assets and liabilit ies (+/-) (11) (61) -82,0%

4. O ther cash flows from operating activities (4.050) (4.346) -6,8%

a) Interest paid (-) (1.964) (1.319) 48,9%

c) Interest received (+) 250 102 145,1%

d) Income tax received (paid) (2.336) (3.129) -25,3%

5. Cash flows from/used in operating activities (+/-1+/-2+/-3+/-4) 14.741 10.562 39,6%

B) CASH FLO W'S FRO M INVESTING ACTIVITIES

6. Payments for investments (-) (21.409) (19.921) 7,5%

a) Group companies, net cash flows in consolidated companies (422) (3.473) -87,8%

d) Intangible assets (618) (876) -29,5%

e) Property, plant and equipment (19.551) (15.572) 25,6%

g) Other financial assets (818) -

7. Proceeds from sale of investment (+) 2.490 8.670 -71,3%

e) Property, plant and equipment 2.425 8.670 -72,0%

g) Other financial assets 65 -

8. Cash flows front/used in investing activities (6+7) (18.919) (11.251) 68,2%

C) CASH FLO WS FRO M FINANCING ACTIVITIES

9. Proceeds from and payments for equity instruments (215) 82 -362,2%

a) Issue of equity instruments (+) - 74 -100,0%

e) Acquisition of equity instrument from external shareholders (-) (215) -

g) Grants, donations and bequests received (+) - 8 -100,0%

10. Proceeds from and payments for financial liability instruments 17.438 (626) -2885,6%

a) Issue

1. Bonds and other marketable securities (+) 19.600 -

2. Debt with credit entities (+) 13.675 19.392 -29,5%

5. Other debts (+) 1.142 528 116,3%

b) Redemption and repayment of

2. Debts with financial institutions (-) (10.751) (18.616) -42,2%

5. Other payables (-) (6.228) (1.930) 222,7%

11. Dividends and interest on other equity instruments paid (3.630) (3.525) 3,0%

a) Dividends (-) (3.630) (3.525) 3,0%

12. Cash flows from/used in financing activities (+/-9+/-10-11) 13.593 (4.069) -434,1%

D) EFFECT O F EXCHANGE RATE FLUCTUATIO NS - -

E) NET INCREASE/DECREASE IN CASH AND CASH EQ UIVALENTS (+/-5+/-8+/-12+/-D) 9.415 (4.758) -297,9%

Cash and cash equivalents at the beginning of the period 4.861 9.619 -49,5%

Cash and cash equivalents at the end of the period 14.276 4.861 193,7%

Thousands of Euros

- 23 -

Financial ratios as of 31 December 2016 and 2015:

III. RISK FACTORS

The following are the risks to which Teknia Group is exposed, including those arising

from the business areas in which it operates, as well as those specifically related to

its business. The materialization of any of these risks could have a negative effect on

its business, financial position, and the results of Teknia Group operations, and

subsequently the nominal and/or interest that investors receive for the Notes.

Prospective investors should carefully consider the risks described below in

conjunction with other information contained in this document. In addition, these

risks are not the only ones to which the Issuer could be exposed; it may be the case

that risks which are currently unknown or not considered relevant at this time could

materialize in the future.

2016 2015

PERFORMANCE

EBT / Total Assets 6,8% 6,8%

Turnover / Total Assets 139,4% 150,0%

ROA (OP/Total assets) 8,4% 9,0%

ROE 16,1% 16,3%

Net Result / Turnover 3,7% 3,9%

EBITDA / Turnover 9,3% 9,1%

BALANCE STRUCTURE

Equity / Total Debt 47,0% 56,2%

Total Debt/ Total Equity and Liabilities 68,0% 64,0%

Non Current Liabilities / Current Liabilities 73,5% 54,3%

Cash and similar / Total Debt 9,8% 4,6%

Net Financial Debt / EBITDA (1)

2,47 2,18

Consolidated Profit for the Period / Financial Cost (2)

4,77 6,02

Bank Financial Debt / Total Debt 37,3% 38,5%

SHORT TERM STABILITY

Current Assets / Current LiabiIities 137,4% 132,9%

Current Assets - Inventories / Current Liabilities 87,7% 83,5%

Current Assets / Total Assets 53,9% 55,2%

(1) Net Debt includes all debt (M&A deferred payments included)

(2) Financial cost: Forex cost not included

- 24 -

1. Risks related to the Issuer’s Industry and Business

1. The automotive industry is cyclical, and cyclical downturns in our business

segments negatively impact our business, financial position, results of

operations, and cash flows

The volume of automotive production and the level of new vehicle purchases are

cyclical and fluctuate, sometimes significantly year-on-year. These fluctuations

are caused by several factors, such as general economic conditions, interest rates,

consumer confidence, patterns of consumer spending, fuel costs, and the

automobile replacement cycle. Such fluctuations give rise to changes in demand

for our products and may have a significant adverse impact on our results of

operations. Additionally, TIER 2 customers commit to purchasing minimum

quantities from their suppliers, but since the economic crisis, their budget gaps

have increased. As our business has certain fixed costs that must be met regardless

of product demand, cyclical downturns can further affect the results of our

operations.

The highly cyclical and fluctuating nature of the automotive industry presents a

risk that is beyond our control and that cannot be accurately predicted. Moreover,

a number of factors that we cannot anticipate could, and have had cyclical effects

in the past. Decreases in demand for automobiles generally, or in the demand for

automobiles that use our products specifically, could materially and adversely

affect our business, financial position, the results of operations, and cash flows.

2. Our business is primarily contingent upon the automotive industry, which is

affected by global economic conditions and geopolitical considerations

A significant economic downturn could have a material adverse effect on our

business. Continued concerns about the systemic impact of a potential long-term

wide-spread recession, energy costs (including the recent volatility in oil prices),

the availability and cost of credit, diminished business and consumer confidence,

and increased persistent unemployment in Europe have contributed to a rise in

market volatility and lower expectations for Western and emerging economies.

Recent macroeconomic data points to a potential slowdown in the emerging

markets economies, a fact that would impact the global automotive industry,

lowering its sales forecast and thus, challenging Teknia Manufacturing Group’s

capacity to meet its business plan.

In addition, any increased financial instability may lead to longer-term disruptions

in the credit markets, which could impact our customers’ ability to obtain

financing for their businesses at reasonable prices, and could impact their

customers when seeking financing for automobile purchases. Our TIER 1 and

OEMs customers typically require significant financing for their respective

businesses. Our suppliers, as well as the other players that supply our customers,

may face similar difficulties in obtaining financing for their businesses.

- 25 -

If capital is not available to our customers and suppliers, or if its cost is

prohibitively high, their businesses would be negatively impacted. Any such

negative impact, in turn, could have an adverse material impact on our company,

either through the loss of revenues to any of our customers so affected, or due to

our inability to meet our commitments without excess expense resulting from

disruptions in supply caused by the suppliers so affected. Financial difficulties

experienced by any major customer could have a material adverse impact on us if

such customer i) were unable to pay for the products we provide, ii) materially

reduced its capital expenditure, and resulting demand for, new product lines, or

iii) we otherwise experienced a loss of, or material reduction in, business from

such customer.

Additionally, protectionist pressures have been rising worldwide, as signaled by

policy statements and opinion polls, as well as by recent developments in

multilateral, regional and bilateral trade negotiations.

The risk of a resurgence of protectionism in the aftermath of the financial crisis

should not be neglected. A resurgence of trade protectionism would not only

significantly impair the global recovery process by further hampering trade flows

and global demand but it would also reduce the global growth potential in the long

run.

As a result of such difficulties, we could experience lost revenues, significant

write-offs of accounts receivable, significant impairment charges, or additional

restructurings beyond the steps taken to date.

3. Geopolitical risks could result in the break-up of the European Union (EU)

In the automotive industry, the European market is one of the most important and

mature. On the other hand, this sector is highly dependent on the ability to finance

companies and individuals. These characteristics make it sensitive to a

hypothetical breakdown of the EU because (i) would have to redesign the

allocation of production units in order to ensure supply industry (ii) probably

would be a new financial crisis that could influence negatively in vehicle purchase

decisions and therefore directly impact on sales and production.

If it happens, it could materially and adversely impact our business, financial

condition, results of operations and cash flows.

4. We operate in a very competitive business environment

Despite the industry’s entry barriers, there are a variety of competing actors who

are reduced to local players in the presence of global suppliers. Each has its

competitive advantages, and the goal is to continue to grow, pro-market in the

case of emerging countries, or at the expense of competitors in more mature

markets. This implies that we must maintain very high standards of quality,

engineering, research and development, logistics, costs and financial solvency.

- 26 -

5. Limited international positioning

The segment of second-tier suppliers has the characteristic of operating as a link

between two large sectors: commodities suppliers (as suppliers) and 'Tier 1'

suppliers and OEMs as customers. These segments are also more mature and with

higher level of concentration. In this competitive environment, there are large

multinational companies of large size and influence in the economy which have a

high bargaining power over Tier 2 companies. The company is gradually

increasing its international footprint and getting strategic position in certain

markets and products. Nevertheless, sometimes the company could be in a weak

negotiation position that could negatively impact in results of operations and cash

flows.

6. A significant decline in business with our key customers could adversely affect

our business, financial position, and the results of operations

Although we supply our products to several leading automobile manufacturers, as

is common in our industry we depend on certain large-value customers for a

significant proportion of our revenues. For example, 2016’s total annual sales

-BOSCH 15%, JCI 6%, CONTINENTAL 7%, VALEO 8%, RENAULT-NISSAN

4%, AUTOLIV 4%, TRW/ZF 4%- would represent 48% of the estimated revenue.

The loss of all or a substantial portion of our sales to any of our large-volume

customers could have a material adverse effect on our business, financial position,

or the results of operations, by reducing cash flows and limiting our ability to

spread our fixed costs over a larger revenue base. We may make fewer sales to

these customers for a variety of reasons, including, but not limited to:

• Loss of awarded business;

• Reduced or delayed customer requirements;

• TIER 2s sourcing business traditionally outsourced to us;

• Strikes or other work stoppages affecting our customers’ production;

• Bankruptcy or insolvency of a customer; or

• Reduced demand for our final customers’ products.

7. We are dependent on the ability to obtain and maintain sufficient capital

financing, including working capital lines and credit insurance, which impacts

the liquidity and financial position of all players

Our working capital requirements can vary significantly, depending in part on the

level, variability and timing of our customers’ worldwide vehicle production and

the payment terms with our customers and suppliers.

- 27 -

Moreover, if our suppliers were to suspend normal trade credit terms and require

payment in advance or payment on delivery. If our available cash flows from

operations are not sufficient to fund our ongoing cash needs, we would be required

to look to our cash balances and availability for borrowings under our credit

facilities to satisfy those needs, as well as potential sources of additional capital,

which may not be available on satisfactory terms and in adequate amounts, if at

all.

There can be no assurance that we, our customers, and our suppliers will continue

to have such ability. This may increase the risk that we will be unable to produce

our products or will have to pay higher prices for our inputs. These higher prices

may not be recovered in our sales prices.

Our suppliers often seek to obtain credit insurance based on the strength of the

financial position of our subsidiary with the payment obligation, which may be

less robust than our consolidated financial position.

Access to funding could also be adversely impacted as Central Banks around the

world begin to withdraw liquidity from global markets because of the improving

growth and higher inflation expectations.

If we were to experience liquidity issues, our suppliers may not be able to obtain

credit insurance and, in turn, would likely not be able to offer us the payment

terms we have received historically. Our failure to receive such terms from our

suppliers could have a material adverse effect on our liquidity.

8. Risks related to Research and Development (R&D) project success

Teknia has a R&D division that provides services such as: product development,

prototype manufacturing, and simulations for the automotive business.

In 2016, the Group allocated EUR 1,978 thousand to research and development

projects (according to Spanish tax regulation), with dedicated 11 employees. This

amount is pending to be accredited by a certification entity approved by Entidad

Nacional de Acreeditación (ENAC). Teknia relies on this division to ensure one

of the most updated product ranges in the industry with cutting-edge technology

in its three divisions, and to be a true partner for its clients rather than a mere

provider.

The Strategic Plan includes allocating the expenses incurred by the Company’s

R&D projects.

The allocation of these expenses is constrained by the following aspects:

• The expenses have to be specifically itemized by project and the related costs

clearly identified so that they can be allocated over time.

- 28 -

There must be sound reasons for believing in the technical success and economic-

commercial profitability of the project(s). In the event of non-compliance with

any of these conditions, the Company may not be able to allocate all of the

expenses anticipated in the Strategic Plan.

9. Risk of loss of key personnel

We have a management team with a substantial amount of expertise in the

automotive industry. The departure of key members of management could result

in the loss of valuable know-how and/or less or unsuccessful implementation of

strategies.

10. Risk linked with post-merger integration and synergies of the companies

acquired

We have made strategic acquisitions and divestitures, and may consider or

undertake further acquisitions in the future. We may also consider or undertake

strategic divestitures when they are aligned with our strategy.

However, we may not be able to identify suitable acquisition candidates in the

future, or may not be able to close acquisitions on favourable terms. We may lack

sufficient management, financial and other resources to successfully integrate

future acquisitions or to ensure that such future acquisitions will perform as

planned or prove to be beneficial to our operations. We may not be offered suitable

terms, including price, for the divestitures we wish to make. Acquisitions and

divestitures involve numerous other risks, business concerns, undisclosed risks

impacting the target, and potential adverse effects on existing business

relationships with current customers and suppliers. In addition, any acquisitions

or divestitures could affect our financial position, cash flow or create dilution for

our stockholders. In certain transactions, our acquisition analysis includes

assumptions regarding the consolidation of operations and improved operating

cost structures for combined operations. Such synergies or benefits may not be

achieved according to the anticipated schedule or in the anticipated amount, if at

all. Any future acquisitions may result in significant transaction expenses,

unexpected liabilities, and risks associated with entering new markets, in addition

to integration and consolidation risks.

As a result of our acquisitions or divestments, we may assume continuing

obligations, deferred payments, and liabilities. Any past or future acquisitions may

result in exposure to third parties for liabilities, such as liability for faulty work

done by the acquired business, and liability of the acquired business or assets that

may or may not be adequately covered by insurance or by indemnification, if any,

from the former owners of the acquired business or assets. In connection with

divestitures, we may remain exposed to the buyer for tax or environmental

purposes, or other liabilities of the divested business. The occurrence of any of

these liabilities could have a material adverse effect on our business and the results

of operations.

- 29 -

11. We base our strategy on investing substantial resources in markets where we

expect growth and take the time to alter this strategy in case expectations are

not realized

Our future growth is dependent on us making the right investments at the right

time to support product development and manufacturing capacity in areas where

we can support our customer base. We have identified certain markets, including

NAFTA, ASIA, Turkey, Japan and PACIFIC AREA, as key markets where we

are likely to experience substantial growth, and accordingly have made, and

expect to continue making, substantial investments, both directly and through

participation in various partnerships and joint ventures to support anticipated

growth in those regions. If we are unable to expand customer demand in these

regions, we may not only fail to achieve the expected rates of return on our

existing investments, but we may incur losses on such investments and be unable

to redeploy the invested capital in a timely manner to take advantage of other

markets, potentially resulting in lost market share. Our results will also suffer if

these regions do not grow as quickly as we anticipate.

12. Other risks of doing business in foreign countries

International operations are subject to various risks that could have a material

adverse effect on those operations and our business as a whole, including but not

limited to:

o Exposure to local economic and social conditions, including logistical and

communication challenges;

o Exposure to local political conditions;

o Exposure to local public health issues and the resulting impact on economic

and political conditions;

o Exposure to potentially undeveloped legal systems, which make it difficult

to enforce contractual rights; and exposure to potentially adverse changes in

laws and regulatory practices;

o Exposure to local tax requirements and obligations;

o Foreign currency exchange rate fluctuations and currency controls;

o Greater risk of uncontrollable accounts and longer collection cycles;

o The necessity of foreign representatives and/or consultants;

o The risk of government sponsored competition;

o The difficulty of managing and operating an enterprise spread over various

countries;

o Controls on the repatriation of cash, including the imposition or increase of

withholding and other taxes on remittances and other payments by foreign

subsidiaries; and

o Export and import restrictions.

13. Our success depends in part on our ability to leverage our engineering

capabilities, as well as research and development initiatives to pursue new

business opportunities

- 30 -

Typically, the terms and conditions of the agreements with our customers include

a commitment regarding minimum purchase volumes from us. However, such

contracts routinely state that customers have the contractual right to unilaterally

terminate our contracts with them with no notice or limited notice. If such

contracts are terminated by our customers, our ability to obtain compensation from

our customers for such termination is generally limited to the direct out-of-pocket

costs that we incur for materials, works-in-progress, and in certain instances,

underappreciated capital expenditures and tooling. Further, there is no guarantee

that our customers will renew their purchase orders with us. We cannot assure you

that the results of our operations will not be materially and adversely impacted in

the future if we are unable to realize revenues from our awarded business, if our

customers cancel the awarded business or if our customers fail to renew their

contracts with us.

14. Infringement of intellectual property license rights and the failure to protect the

Group’s intellectual property may adversely affect our business

We believe that we either own or may validly use all of the intellectual and

industrial property rights required for our business operations, and that we have

taken all reasonable measures to protect our rights or obtain warranties from the

owners of third party rights. However, we cannot rule out the risk that our

intellectual and industrial property rights may be disputed by a third party on the

grounds of pre-existing rights or for any other reason. Furthermore, for countries

outside of Europe and North America, we cannot be sure of holding or obtaining

intellectual and industrial property rights that offer the same level of protection as

those in Europe and North America.

15. We may not realize all of the sales expected from our entire order backlog

Although not a common occurrence, occasionally some projects in the backlog do

not end in production and sales. This may be due to different reasons: i) projected

drop in vehicle sales, ii) changes in strategic production decisions, iii) faulty

planning and design tools, and iv) other unforeseen circumstances. At the same

time, investment in productive capacity can be made before any changes in the

production schedule, resulting in poorly sized assets.

Moreover, during the industrialization process of an order (usually 6-18 months),

we may realise the infeasibility of the project. In the majority of cases, this is

discussed and resolved with the customer and with the appropriate joint actions.

In others cases, however, we have to decide cease production on the project.

All these circumstances may cause a decline in sales compared with the provisions

and the profitability of the company.

16. Increases in labour costs, potential labour disputes and work stoppages at our

facilities and the facilities of our suppliers or customers could materially

adversely affect our financial performance

- 31 -

We have specific exposure to labour strikes at our companies, mainly in

international operations. For example, in 2014, we had a strike at our plant in

Jacarei, Brazil due to a dispute regarding a 10% wage increase (the Brazilian

Subsidiary is not profitable). If major work disruptions involving our employees

were to occur, our business could be adversely affected by a variety of factors,

including a loss of revenues, increased costs and reduced profitability. We cannot

assure that we will not experience a material labour disruption at one or more of

our facilities in the future. We cannot guarantee that we will be able to successfully

extend or renegotiate our collective bargaining agreements as they expire from

time to time. If we fail to extend or renegotiate any of our collective bargaining

agreements or are only able to renegotiate them on terms that are less favourable

to us, we may need to incur additional costs, which could have a material adverse

effect on our business, financial position, and the results of operations.

Furthermore, many of the manufacturing facilities of our customers and suppliers

are unionized and are also subject to the risk of labour disruptions. A significant

labour disruption could lead to a lengthy shutdown of our customers’ or our

suppliers’ production lines, which could have a material adverse effect on our

operations and profitability.

17. Our business is subject to environmental, health and safety laws and regulations,

and our ongoing operations may expose us to related liabilities

The nature of our operations subjects us to various statutory compliance and

litigation risks under health, safety and employment laws. Although we make

continuous efforts to comply with regulations, we cannot guarantee that there will

be no accidents or incidents suffered by our employees, our contractors, or other

third parties on our sites. If any of these incidents occur, we could be subject to

prosecution and litigation, which may lead to the imposition of fines, penalties,

and other damages, and may harm our reputation. Such events could have a

material adverse effect on our business, financial position, and operational results.

18. Delivery interruptions of raw materials or components, or an increase in prices

could impact our manufacturing process

We depend on regular deliveries from particular suppliers of components and raw

materials. The foregoing means that interruptions or stoppages in such deliveries

could materially and adversely affect our operations until an alternative is found.

In addition, we may not be able to find acceptable alternatives, and any such

alternatives could result in increased costs and potential losses on certain contracts.

Even if acceptable alternatives are found, the process of locating and securing

such alternatives might be disruptive to our business and might lead to the

termination of supply agreements with our customers.

If any of our suppliers fail or refuse to deliver materials to us for an extended

period of time, or if we are unable to negotiate acceptable terms for the supply of

materials with these or alternative suppliers, our business could suffer. We may

- 32 -

not be able to find acceptable alternatives, and any such alternatives could result

in increased costs and potential losses on certain contracts. Even if acceptable

alternatives are found, the process of locating and securing such alternatives might

be disruptive to our business and might lead to the termination of supply

agreements with our customers.

We depend on the ability of our suppliers to provide materials and components

that meet our customers’ technical specifications, quality standards, and delivery

schedules.

19. Our operations depend on our ability to maintain continual, uninterrupted

production at our manufacturing facilities, as well as the continual,

uninterrupted performance of our information technology (“IT”) system

Like any industrial society, the maintenance of production equipment is essential

for the proper functioning of the business. This investment requires dedication

and funding. However, we cannot guarantee that our efforts can prevent any event

that could result in production problems.

On the other hand, the increasingly intense need for better

management/production information systems is a key business element. Moreover,

many customers require us to share information systems (Case EDI) with

commercial, technical, and logistics areas. Teknia is investing in IT systems and

implementing an adequate Enterprise Resource Planning (“ERP”) throughout the

Group to ensure the quality and easy management of the information.

If any of these key elements suffers a loss, it could cause problems in the

production and shipping of parts and therefore affect profitability.

20. Product liability claims and recall costs could harm profitability and damage

our reputation

We face an inherent business risk of exposure to product liability claims in the

event of the failure of our products to perform to specifications, or if our products

are alleged to result in property damage, bodily injury or death. We are generally

required under our customer contracts to indemnify our customers for product

liability claims concerning our products. Accordingly, we may be materially and

adversely impacted by product liability claims.

If any of our products are, or are alleged to be, defective, we may be required to

participate in a recall involving those products. In addition, our customers demand

that we bear the cost of the repair and replacement of defective products, which

are either covered under warranty or are the subject of a recall.

Warranty provisions are established based on our best estimate of the amounts

necessary to settle existing or probable claims on product defect issues. Recall

costs are costs incurred when government regulators or our customers decide to

recall a product due to a known or suspected performance issue and we are

- 33 -

required to participate either voluntarily or involuntarily. Currently, under most

customer agreements, we only account for existing or probable warranty claims.

We have no warranty and recall data that allows us to establish accurate estimates

of, or provisions for, future warranty or recall costs relating to new products,

assembly programmes, or technologies being brought into production. In addition,

our insurance covering product recalls is limited in amount and coverage and in

some jurisdictions non-existent. The obligation to repair or replace such products

could have a material adverse effect on our profitability and financial position.

A decrease in the actual and perceived quality of our products could damage our

image and reputation, as well as the image and reputation of one or more of our

brands. Defective products could result in loss of sales, loss of customers and loss

of market acceptance. In turn, any major defect in one of our products could also

have a material adverse effect on our reputation and market perception, which in

turn could have an adverse effect on our sales and the results of our operations.

21. Increased capital expenditure requirements for our ongoing operations will

consume cash from our operations and borrowings

Our ability to undertake such operational and maintenance measures largely

depends on the cash flow from our operations and our access to capital. We intend

to continue to fund our cash needs through cash flows from operations.

However, there may be unforeseen capital expenditure needs for which we may

not have adequate capital. The timing of capital expenditures may also cause

fluctuations in our operational results.

22. Our inability to offset price concessions or additional costs from our customers

could negatively impact our profitability

We face continual pricing pressure, in addition to pressures to absorb costs related

to product design and engineering, as well as other items previously paid for

directly by TIER 1, such as tooling. Typically, in line with our industry practice,

our customers benefit from price reductions during the lifecycle of a contract. We

expect to offset these price concessions by achieving production efficiencies;

however, we cannot guarantee that we will do so. If we fail to achieve production

efficiencies that fully offset price concessions or do not otherwise offset such price

concessions, our profitability and the results of our operations could be adversely

affected.

23. A breach of the covenants of our Notes or financing contracts could adversely

affect our financial position

This Programme contemplates several covenants that the Teknia Group has to

meet at the end of the period. Such covenants are reflected in section 8 of the

Information Memorandum.

- 34 -

Additionally, the Teknia Group has Notes, Commercial Paper and financing

contracts amounting to EUR 82,52 million (excluding market interest

adjustments for interest-free loans) as of 31 December 2016. This financing

requires the Teknia Group to meet during its term, mainly, covenants related to:

i) the indebtedness ratio (net financial debt/Consolidated EBITDA), and ii) the

solvency ratio (equity/financial debt).

Any breach of the covenants of the Notes or syndicated loan terms may require

the Teknia Group to repay the Notes or syndicated loan early, which may

adversely affect our business, its results, or its financial, economic or equity

situation.

24. Shareholding concentration situation

The Company has an ownership structure concentrated on one partner (and

founder) almost since its inception. This situation limits the ability, if necessary,

to obtain funds from shareholders in a hypothetical distress situation. The

Company also faces the usual risks associated with a possible succession process.

Although it is not close in time, it could rush in case of an event or incident. It

could distract the management, the shareholders, and impact negatively in

strategic targets of the company, and therefore, in the growth, results and cash

flows generation.

25. The value of our deferred tax assets could become impaired, which may

materially and adversely affect our operating results

The deferred tax assets included as of December 2016 are related with net

operating loss carry forwards and non-used tax deductions that can be used to

offset taxable income in future periods and reduce the income taxes payable in

those future periods. Our ability to utilize our net operating loss carry forwards

may be limited or delayed. We periodically determine the probability of the

realization of deferred tax assets, using significant judgments and estimates with

respect to, among other things, historical operating results, expectations of future

earnings, and tax planning strategies. If we determine in the future that there is not

sufficient evidence to support the valuation of these assets, due to the factors

described above or other factors, we may be required to adjust the valuation

allowance to reduce our deferred tax assets. Such a reduction could result in

material non-cash expenses in the period during which the valuation allowance is

adjusted and could have a material adverse effect on the results of our operations.

In addition, adverse changes in the underlying profitability and financial outlook

of our operations in several foreign jurisdictions could lead to changes in our

valuation allowances against deferred tax assets and other tax accruals that could

adversely affect our financial results.

Finally, the Company and some of its Spanish subsidiaries and holding companies

form a tax group subject to the special tax consolidation regime for corporate

income tax purposes. If, for whatever reason, the consolidated tax regime were

forfeited or the tax group extinguished, the right to offset the tax loss carry

- 35 -

forwards and use the tax credits of the tax group would be assigned to the

companies that generated them. This could limit the ability of the companies to

effectively make use of these deferred tax assets and that could adversely affect

our financial results.

26. Our profitability may be adversely affected by our inability to utilize tax losses

in certain jurisdictions

We have incurred losses in some countries in which we may not be able to partially

offset against income we have earned therein. In some cases, we may not be able

to utilize these losses at all if we cannot generate profits in those countries or if

we have ceased conducting business in those countries altogether. Our inability to

utilize material tax losses could materially and adversely affect our profitability.

At any given time, we may face other tax exposures arising from changes in tax

laws, tax reassessments or otherwise. To the extent that we cannot implement

measures to offset these exposures, they may have a material adverse effect on

our profitability.

This could limit the ability of the companies to effectively make use of these

deferred tax assets and that could adversely affect our financial results.

27. We are subject to a complex local and international tax environment that often

requires us to make subjective determinations (i.e. Transfer pricing,

international and local laws, regulations and criteria)

We are subject to many different forms of taxation including but not limited to

income tax, value added tax, social security, and other payroll-related taxes. Tax

law and administration is complex and often requires us to make subjective

determinations. The tax authorities may not agree with the determinations that we

make with respect to the application of tax law. Such disagreements could result

in lengthy legal disputes and, ultimately, in the payment of substantial amounts of

tax, interest, and penalties, which could have a material effect on the results of our

operations.

28. At certain times, we may not be adequately insured

We currently have insurance arrangements in place for products and public

liability, property damage, business interruption (including for sudden and

unexpected environmental damage). However, these insurance policies may not

cover losses or damages resulting from the materialization of any of the risks we

are subject to. Furthermore, significant increases in insurance premiums could

reduce our cash flow. It is also possible that, in the future, insurance providers

may no longer wish to insure businesses in our industry against certain

environmental occurrences.

- 36 -

29. Significant changes in laws and governmental regulations could have an

adverse impact in our profitability

The legal, regulatory, and industry standard environment in our principal markets

is complex and dynamic, and future changes to the laws, regulations and market

practices concerning, for example, CO2 emissions and safety tests and protocols,

could have an adverse effect on the products we produce and our profitability.

Additionally, we could be adversely affected by changes in taxation or other laws

and jurisprudence which impose additional costs on automobile manufacturers or

consumers, or more stringent fuel economy and emissions requirements on

manufacturers from which we derive some of our sales.

30. Terrorism, other acts of violence, wars or political changes in geographical

areas where we operate may affect our business and results

Terrorism, other acts of violence, or war may negatively affect our business and

the results of our operations. There can be no assurance that there will not be

terrorist attacks or violent acts that may directly affect us, our customers, or

partners. In addition, political changes in certain geographical areas where we

operate may affect our business and the results of operations. Any of these

occurrences could cause a significant disruption in our business and could

adversely affect our business operations, financial position, and operational results.

31. Natural catastrophe affecting any of our plants

The Company’s plants are exposed to natural disasters. Should a natural disaster

occur, the effect could damage part or all of the machinery and thus cease

production for a certain period of time. In this case, the Company may have to

assume high costs to repair or substitute the affected equipment in order to restore

production. Such events could have a material adverse effect on our business

operations, financial position, and operational results.

32. We may be subject to current or future restrictions on the transfer of funds

Under the current foreign exchange regulations in certain countries in which we

operate, there are restrictions on the transfer of funds to and from such countries,

which may include restrictions on the disposition of funds deposited with banks

and restrictions on transferring funds abroad, and may require official approval to

buy foreign currency. Additionally, we have trapped cash in certain jurisdictions

in which we operate in relation to our joint ventures and local law. These

restrictions could impact the payment of dividends to us by certain of our

subsidiaries. If we were unable to repatriate funds from any such countries, we

would not be able to use the cash flow from our businesses to finance our operating

requirements elsewhere and satisfy our debt obligations, including the Notes.

33. The automotive industry’s reputation is at risk due to recent events involving

the manipulation of vehicle emission software

- 37 -

Given the strict legislation in automotive sector and high level of quality, from

time to time a global loss may occur (for instance, TAKATA Corp. is facing the

most important recall in history). In addition other type of events, as Volkswagen

Group admission to having installed software to manipulate the emission readings

of US Environmental Protection Agency tests, could deteriorate reputation of

those companies and its supply chain. As of now, it is uncertain how much those

events will impact in our business or the car industry in general. One thing is sure;

the world no longer considered the companies in this sector to be reliable, efficient,

and trustworthy.

Our activity depends greatly on the automotive industry. If this industry lowers its

sales forecast and thus its production levels due to reputation problems, Teknia

could see some of their future deliveries compromised and their financial results

affected. The results could result in the failure to achieve the projected business

plan.

34. The Catalan situation may adversely affect our business in Catalonia

In connection with the political situation in Catalonia, although the recent

measures taken by the Spanish Government have helped to mitigate the

uncertainty level in that region, originated by a movement seeking independence,

to the date of registration of this Information Memorandum, there is still some

uncertainty on the outcome of the political and economic outlook in Catalonia,

that could derive in volatility in the stock markets or affect in any other way to

the economic activity in Spain, and particularly, in Catalonia. As a whole, it could

bring an adverse impact on the geographical region of Cataluña and therefore on

the automotive production plants located in this region and, in general, on the

companies incorporated in this region. The Issuer cannot predict the outcome of

this continuing constitutional tension and how it would affect the Notes to be

issued under the Information Memorandum, or the ability of the Issuer to pay

interest and repay principal to the Noteholders.

2. Financial risk factors

Our activities are exposed to a number of financial risks: market risk (fair value risk

and price risk), exchange risk, and interest rate risk on cash flows. Our Company seeks

to minimize potential adverse effects on our financial performance. Risk management

is controlled by our financial department in accordance with policies approved by the

President of the Company and the Steering Committee.

Our Financial Department identifies, evaluates, and implements measures to reduce or

match risks in close cooperation with our operating units. Our Steering Committee and

the President of Teknia determine policies for the global management of risk, and for

specific risk areas such as currency risk, interest rate risk, liquidity risk, non-derivative

financial instruments, and the investment of cash surpluses.

1. Market risk (fair value and price risk)

- 38 -

We are not exposed to the risk of changes in market value of the investments held

as “available for sale,” which are classified under “non-current financial assets”

in the consolidated statement of financial position.

The risk deriving from a possible increase in the prices of materials, including the

purchase of components used in the production processes, is mitigated by the fact

that we operate with our main suppliers under long-term agreements, which

provide price-stability. On the other hand, we negotiate with our customers to pass

on the price increases of certain materials.

The terms of the agreements with some customers have resulted in lower prices,

which could reduce our margins. We nevertheless develop improvement

programmes and tools to offset these decreases with increases in productivity. We

also negotiate with our suppliers to help them absorb these price reductions.

2. Credit risk

Our customer portfolio is diversified across the major TIER 1 and OEM groups.

As a result, there is no particular concentration of credit risk (major concentration

is 16%). In the past, automobile manufacturers were deemed not to have a major

credit risk, all of our Top 10 customers maintain an Investment Grade from the

rating agencies. We therefore consider that, in spite of the difficulties facing the

automobile sector, the credit ratings of its debtors are sound and its receivables

will be collectable as normal.

In the automotive components industry, the costs to transfer, duplicate or develop

a new supplier are so high that TIER 2 companies like Teknia usually works with

a unique mould/tooling for stamping, plastic injection, and tube manipulating

technologies. It lets TIER 2 companies ensure collection of credit if necessary.

We have set a policy of hedging credit risk with insurance companies for certain

machine technology customers to ensure that those sales are collected.

The credit risk on cash and cash equivalents, financial investments and deposits

with banks and financial institutions is deemed to be immaterial, as these

operations are only entered into with financial institutions with high credit ratings.

3. Liquidity risk

We manage liquidity risk prudently, based on maintaining sufficient cash and

equivalents and the availability of funding by means of sufficient committed

credit.

Furthermore, the centralized cash pooling system we have set up allows us to

manage financial resources with greater efficiency. Our Financial Department

aims to keep financing flexible through its use of the Corporate Facilities.

- 39 -

4. Exchange risk

Significant long-term fluctuations in relative currency values, in particular a

significant change in the relative values of the non-euro currencies in which we

operate could have an adverse effect on our profitability and financial position,

and any sustained change in such relative currency values could adversely affect

our competitiveness in certain geographic regions.

Economic instability in the countries in which we operate where the euro is not

the local currency, and the related decline in the value of the relevant local

currency in these countries, could have a material adverse effect on our business,

financial position, results of operations and cash flows.

Our company operates in nine different currencies: EUR (the Group’s reference

and consolidation currency), USD, BRA, PLN, MXN, CZK, TRY, MAD and

RSD. It is Group policy not to make any currency hedge. However, the

subsidiaries and the parent plants have the necessary tools to implement a "natural

hedge." Thus, when operating with local currency markets, approximately 80% of

the transactions related to the activity are covered by them. We cannot ensure the

success of this 100% natural hedge since, despite having tools to minimize the

risk of the approximately 20% remaining, it is not always possible to avoid an

exchange cost, which would negatively affect profitability.

In this case, we are subject to risk if the foreign currency in which our costs are

paid appreciates against the currency in which we generate revenues, because the

appreciation effectively increases our cost in that country. The financial position,

results of operations, and cash flows of some of our operating entities are reported

in foreign currencies and then translated into Euros at the applicable foreign

exchange rate for inclusion in our consolidated financial statements. As a result,

appreciation of the euro against these foreign currencies generally will have a

negative impact on our reported sales and profits, while depreciation of the euro

against these foreign currencies will generally have a positive effect on reported

revenues and profits.

5. Interest risk

Given the nature of our business (intensive in production capital) and that we do

not carry major amounts of interest-earning assets, our operating revenues and

cash flows are fairly independent of the variations in market interest rates.

Our interest rate risk stems from our current and non-current floating rate

borrowings and credit lines. Our variable rate borrowings expose us to interest

rate risks for cash flows. As of the December 2016 reporting period,

approximately 45% of borrowings were at fixed interest rates.

6. Risk derived from Teknia’s borrowings

- 40 -

In order to carry out its activities, Teknia has received financing from credit

institutions and the bond issuance carried out during the fiscal year 2016.

Therefore, Teknia is exposed to the risk of non-compliance with the obligations

arising from its borrowings.

In particular, under the commitments assumed by reason of the bond issuance

carried out in 2016, Teknia is currently subject to the fulfilment of various

financial covenants (including indebtedness limitation, negative pledge, dividend

payments restrictions, restrictions on sales of assets and mandatory tender offers

of the bond, investment restrictions, etc.), which derive from the Information

Memorandum registered on June 20, 2016 at the Alternative Fixed-Income

Market (MARF). Teknia regularly monitors compliance with these financial

covenants in order to anticipate any risk of non-compliance and to take corrective

measures.

On or about the date hereof, Teknia has renewed the commercial paper

programme which was initially registered in MARF with a maximum aggregate

amount of Eur 25 millon on February 2017

3. Risks relating to the Notes issued under the Programme

1. Early redemption of the notes risk

The Programme provides the possibility of early redemption of the Notes issued

there under by the Issuer, who then proceeded with the transaction, an investor

might not be able to reinvest the outcome on comparable values at the same

interest rate.

2. Risk of having the credit rating downgraded

The Issuer which notes are incorporated into the MARF under the Programme is

subject to a credit rating by rating agencies. The credit rating is the rating scale

that seeks to classify the extent of the obligations the Issuer may have regarding

the issuance of the notes.

The rating reflects only the view of the rating agency and, at the time of the

evaluation, takes into consideration the credit rating of the Issuer and, where

appropriate, the Subsidiary Guarantor(s), as well as the structural characteristics

and other aspects of the issue. However, the rating may not reflect the potential

impact of risks related to structure, market and other factors in the valuation of

securities.

There is no assurance that any of the credit ratings assigned to the securities will

endure over time or will not be subject to suspension, reduction or withdrawal at

any time by the rating agency, because of certain circumstances (e.g. change of

evaluation criteria). If the rating assigned was reduced or withdrawn, the market

value of the securities may be reduced. Future events, including those affecting

- 41 -

the Issuer and the Subsidiary Guarantors, if any, may adversely affect the rating

of the securities.

Therefore, any change in creditworthiness, or the perception of it, that could also

adversely affect the market value of the securities’ credit ratings are not a

recommendation to buy, subscribe, sell or hold securities and will depend, among

other circumstances, on certain characteristics of the business and the financial

position of the Issuer and/or Subsidiary Guarantor(s).

3. Future sale of Notes on the secondary market after the offering could

negatively affect the Notes’ market price

Sales of a substantial number of the Company's Notes on the public market

following this offering, or the perception that such issuance or sale might occur,

could adversely affect the market price of the Notes and/or the Company's ability

to raise capital through a future public offering.

4. The Notes price could be volatile and subject to sudden and significant

declines

The market price of the Notes may be volatile. Factors beyond the Company's

control, such as changes in the results of operations and the financial position of

the Company's competitors, negative publicity, or changes in financial market

conditions, may have a significant effect on the market price of the Company's

Notes. In addition, during the past few years, the markets in Spain and worldwide

have experienced significant volatility in prices and trading volumes. This

volatility could have a negative impact on the market price of the Notes, regardless

of the Company's financial position and the results of its operations.

5. Noteholders in countries with currencies other than the euro will be exposed

to exchange rate risks

Noteholders residing in countries that have not adopted the euro as their official

currency will be exposed to an additional investment risk related to variations in

the rate of exchange between the currency of their country of residence and the

euro. Notes will only be issued and listed in Euros.

6. The Teknia Group may not be able to obtain the funds required to repurchase

Notes upon a change of control

The Terms and Conditions of the Notes issued under the Programme shall contain

provisions relating to certain events constituting a “Change of Control” of the

Teknia Group. Upon a Change of Control, the Teknia Group would be required to

offer to repurchase all outstanding Notes at a price equal to 101% of their principal

amount, plus accrued and unpaid interest and additional amounts, if any, as of the

date of repurchase. If a Change of Control were to occur, the Teknia Group cannot

assure you that it would have sufficient funds available at such time to pay the

repurchase price of the outstanding Notes under the Programme. A Change of

- 42 -

Control may result in a prepayment or default event, and the acceleration of other

indebtedness. The repurchase of the Notes pursuant to such an offer could

precipitate a default under such indebtedness, even if the Change of Control itself

does not. Sufficient funds may not be available when necessary to make any

required repurchases. In addition, the Teknia Group expects that it would require

third-party financing to make an offer to repurchase the Notes upon a Change of

Control. The Teknia Group cannot assure you that it would be able to obtain such

financing. Any failure by the Issuer to offer to purchase the Notes would constitute

a default under the Terms and Conditions of the Notes issued under the

Programme.

The Change of Control provision may not necessarily afford protection in the

event of certain important corporate events, including a reorganization,

restructuring, merger or other similar transaction, involving the Teknia Group that

may adversely affect the Noteholders, because such corporate events may not

involve a shift in voting power or beneficial ownership or, if they do, may not

constitute a “Change of Control” as defined in the Terms and Conditions of the

Notes issued under the Programme.

7. There may not be an active trading market for the Notes, in which case the ability

to sell the Notes may be limited

The Teknia Group cannot assure Noteholders of the liquidity of any market, their

ability to sell the Notes, or the sale price of the Notes. Future trading prices for the

Notes will depend on many factors, including, among other things, prevailing

interest rates, the Teknia Group’s operating results, and the market for similar

securities.

Although an application will be submitted to list the Notes issued under the

Programme on the Spanish Mercado Alternativo de Renta Fija (MARF), the

Teknia Group cannot assure that the Notes will be or will remain listed. Although

no assurance is made as to the liquidity of the Notes as a result of admission

(incorporación) to the MARF market, failure to be approved for admission or

exclusion (whether or not for an alternative admission to listing on another stock

exchange) of the Notes from the MARF market may have a material effect on a

Noteholder’s ability to resell the Notes, as applicable, on the secondary market.

8. Credit ratings may not reflect all risks and are not recommendations to buy or

hold securities, and may be subject to revision, suspension or withdrawal at any

time

AXESOR has assigned the Issuer a credit rating of BB, with a stable outlook. The

agency rating is a way to measure the risk. In the market, investors demand higher

returns on higher risks and should assess the likelihood of a downward variation

in the credit quality of the Issuer or the securities (if any is assigned), which could

lead to a loss of liquidity in the securities purchased on the market and a loss in

value.

- 43 -

The Teknia Group’s credit rating may be revised upward or downward, suspended,

or even withdrawn by the rating agency. A downward revision, suspension, or

withdrawal of the credit rating by the rating agency could alter the price of the

Notes from a market perception and hinder the Teknia Group’s access to debt

markets, thus affecting its ability to achieve financing.

9. The decisions of the Noteholders Syndicate may be contrary to those of

individual Noteholders

The Terms and Conditions of the Notes issued under the Programme may include

clauses regarding the Noteholders Syndicate assemblies which may take place to

resolve matters regarding the interests of Noteholders. These clauses establish

specific majorities which will be binding for all Noteholders, including those who

have not come nor voted in the assembly, or who have voted against the majority,

thus being bound by the decisions taken in a validly convened and held assembly.

Therefore, it is possible that the Noteholders Syndicate takes a decision with

which an individual Noteholder is not in agreement, but to which all Noteholders

are bound.

10. Risks related to the Notes’ Subsidiary Guarantors

The Notes issued under the Programme will be guaranteed by the Subsidiary

Guarantors.

The enforcement of any of the Guarantees against any Subsidiary Guarantor will

be subject to certain defences available to Subsidiary Guarantors in the relevant

jurisdiction. Although laws differ among these jurisdictions, these laws and

defences generally include those that relate to corporate purpose or benefit,

fraudulent conveyance or transfer or voidable preference, insolvency or bankruptcy

challenges, financial assistance, preservation of share capital, thin capitalization,

capital maintenance, set-off counter-claims, and prescription (time bar) or similar

laws, regulation or defences affecting the rights of creditors generally. If one or

more of these laws and defences are applicable, a Subsidiary Guarantor may have

no liability or decreased liability under its Guarantee, as applicable, depending on

the amounts of its other obligations and applicable law.

11. Risk related to the Issuer as an entity with no operations of its own

The Issuer is an entity with no independent business operations and no significant

assets, other than the equity interests the Company holds in its subsidiaries. The

Issuer will be dependent upon the cash flows from its subsidiaries in the form of

dividends or others distributions or payments to meet its obligations, including its

obligations under the Notes. The amounts of dividends and distributions available

to the Company will depend on the profitability and cash flows of its subsidiaries

and the ability of its subsidiaries to issue dividends to it under the applicable law.

The subsidiaries of the Issuer, however, may not be permitted to make distributions,

move cash, or advance upstream loans to the Issuer to make payments in respect

of its indebtedness, including the Notes. Applicable laws and regulations, including

- 44 -

tax laws, may also limit the amounts that the subsidiaries of the Issuer are permitted

to pay as dividends or distributions. Any restrictions on distributions by such

subsidiaries could adversely affect the ability of the Issuer to make payment on the

Notes.

IV. DECLARATION OF LIABILITY

1. Person responsible for the information contained in the Information

Memorandum

(a) Mr. Javier Quesada, as representative, in the name and on behalf of Teknia

Manufacturing Group, S.L.U. (interchangeably, “Teknia,” the “Company”

or the “Issuer”), duly authorized by virtue of the resolution of the board of

directors granted on 21 December 2018, is responsible for the entire contents

of this Information Memorandum (Documento Base Informativo de

Incorporación), which conforms to Circular 1/2015 of 30 September, on

admission (incorporación) and removal of securities on the Alternative

Fixed-Income Market (the “MARF”).

(b) Mr. Javier Quesada is expressly authorized to grant such public or private

documents as may be necessary for the proper processing of the Notes issued

under this Programme, as representative of the Company.

2. Statement of the person responsible for the content of the Information

Memorandum

Mr. Javier Quesada, as representative of Teknia Manufacturing Group, S.L.U.,

hereby declares that, after acting with reasonable care, the information contained in

this Information Memorandum is, to his knowledge, in full accordance with the

facts and contains no omissions likely to affect its content.

V. FUNCTIONS OF THE REGISTERED ADVISOR OF MARF

PKF ATTEST SERVICIOS EMPRESARIALES, S.L. is a company incorporated on

August 21st, 2002, before the notary public of Bilbao, Mr. Ignacio Alonso Salazar, duly

registered in the Commercial Registry of Vizcaya, Volume 4,205, Page 112, Sheet BI-

34713, and in the Registry of Registered Advisors pursuant to Operative Instruction

(Instrucción Operativa) 14/2014, of 12 November, in accordance with section 2 of the

Circular 3/2013, of 18 July, on Registered Advisors on the Alternative Fixed-Income

Market (“PKF Attest” or the “Registered Advisor”).

PKF Attest has been designated as Registered Advisor of the Issuer. Accordingly, the

Registered Advisor shall enable the Issuer to comply with the obligations and

responsibilities to be assumed on incorporating its issues into the multilateral trading

system, the Alternative Fixed-Income Market (“MARF” or the “Market”), acting as

specialist liaison between both, MARF and Teknia, and as a means to facilitate the

insertion and development of the same under the new securities trading regime.

- 45 -

Therefore, PKF Attest must provide MARF with any periodically information it may

require and, on the other hand, MARF may require as much information as it may deem

necessary regarding the actions to be carried out and its corresponding obligations, being

authorized to perform as many actions as necessary, where appropriate, in order to verify

the information provided.

The Issuer must have, at any time, a designated Registered Advisor registered in the

“Market Registered Advisor Registry” (Registro de Asesores Registrados del Mercado).

PKF Attest has been designated as Registered Advisor of the Issuer in order to provide

advisory services to Teknia (i) on the admission to trading (incorporación) of the

securities issued, (ii) on compliance with any obligations and responsibilities applicable

to the Issuer for taking part on MARF, (iii) on compiling and presenting the financial and

business information required, and (iv) in order to ensure that the information complies

with these regulatory requirements.

As Registered Advisor, PKF Attest with respect to the request for the admission

(incorporación) to trading of the securities on MARF:

(i) has verified that the Issuer complies with the requirements of MARF’s

regulations for the admission (incorporación) of the securities to trading;

(ii) has assisted the Issuer in the preparation of the Information Memorandum,

has reviewed all the information provided by the Issuer to the Market in

connection with the request for the admission (incorporación) to trading

of the securities on MARF and has checked that the information provided

complies with the requirements of applicable regulations and does not

leave out any relevant information that could lead to confusion among

potential investors.

Once the securities are admitted to trading, the Registered Advisor will:

(i) review the information that the Issuer prepares for MARF periodically or

on a one-off basis, and verify that this information meets the requirements

concerning content and deadlines set out in the regulations;

(ii) advise the Issuer on the events that might affect compliance with the

obligations assumed when including its securities to trading on MARF,

and on the best way of treating such events in order to avoid breach of said

obligations;

(iii) report to MARF any events that could represent a breach by the Issuer of

its obligations in case it notices any potential and relevant breach that had

not been rectified following notification; and

(iv) manage, answer and deal with queries and requests for information from

MARF regarding the situation of the Issuer, progress of its activity, the

- 46 -

level of compliance with its obligations and any other data the Market may

deem relevant.

Regarding the previous, the Registered Advisor shall perform the following actions:

(i) maintain regular and necessary contact with the Issuer and analyze any

exceptional situations that may arise concerning the evolution of the price,

trading volumes and other relevant circumstances regarding trading of the

Issuer’s securities;

(ii) sign any declarations which, in general, have been set out in the regulations

as a consequence of the admission (incorporación) to trading of the

securities on MARF, as well as with regard to the information required

from companies with securities on the Market;

(iii) forward to MARF, without delay, the communications received in

response to queries and requests for information the latter may send.

VI. INDEPENDENT AUDITORS

1. Name and address of the auditors of the Issuer for the period covered by the

historical financial information (together with their membership in a

professional body)

Moore Stephens AMS, S.L. (“Moore Stephens”), with registered office at

Cardenal Gardoqui, 9, Bilbao, tax identification number B-48.146.948 and

registered in ROAC with number S0516, has audited the consolidated annual

accounts of Teknia corresponding to the financial years ended 31 December 2016

and 2015.

Additionally, Moore Stephens AMS, S.L. is the auditor of all the Spanish

subsidiaries guarantors (Teknia Elorrio, S.L.U., Teknia Azuqueca, S.L.U., Teknia

Martos, S.L.U., Teknia Bilbao XXI, S.L.U., Teknia Pedrola, S.L.U., Teknia

Manresa, S.L.U., Teknia Epila, S.L.U., Teknia R&D, S.L and Teknia Montmelo,

S.L.U. -last two subsidiaries, limited review-) with the exception of Teknia

Barcelona, S.L.U. which is audited by Moore Stephens Addveris Auditores, S.L.,

and Moore Stephens network firms the auditor of all the international subsidiaries

guarantors (Moore Stephens Lima Lucchesi for Teknia Brasil Ltda., Moore

Stephens Central Audit S.p. z o.o. for Teknia Rzeszów S.A. and Teknia Kálisz, S.p.

z o.o., Moore Stephens s.r.o. for Teknia Uherský Brod, a.s, Moore Stephens

Revizija i Računovodstvo D.O.O. for Teknia KG D.O.O. and Marcelo de los Santos

y Cía, S.C. for Teknia Automotive Mexico S.A. de C.V.) except for Teknia

Nashville, LLC whose auditor as of December 2016 is Elliott Davis Decosimo

(Moore Stephens group).

- 47 -

2. If auditors have resigned, been removed from their duties or have not been re-

appointed during the period covered by the historical financial information,

indicate the details, if material

The Company's auditor has not resigned nor been removed from its duties during

the financial years 2016 and 2015.

The Sole Shareholder decided on 10 October, 2014 to appoint Moore Stephens

AMS, S.L. as independent auditors of the consolidated financial statements for the

year 2016. In addition to this, the Sole Shareholder has appointed MOORE

STEPHENS AMS, S.L. and other Moore Stephens network firms as: i) auditors of

the individual financial statements for each company, except Teknia USA, Teknia

Germany GmbH that are non-audited as Group consider them not significant ii)

responsible of the limited review of the individual financial statements of Teknia

Montmeló, S.L.U., Componentes de Automoción Marroquíes SARL and Teknia

R&D, S.L.U.

VII. INFORMATION ON THE ISSUER

1. Full name of the Issuer including its address and identification data

The full name of the Issuer is TEKNIA MANUFACTURING GROUP, S.L.U.

(“Teknia” or the “Issuer”). Its registered office is at Barrio San Agustín, s/n, 48230

Elorrio (Vizcaya).

The Issuer is a private limited company (sociedad limitada) incorporated on 30 July, 1998

by means of a public deed granted before the notary public of Bilbao, Mr. Andrés Mª

Urrutia Badiola, and duly registered in the Commercial Registry of Vizcaya, Volume

3,702, Page 22, Sheet BI-23069.

Its share capital amounts to twenty million and seventeen Euros and ninety cents (EUR

20,000,017.90), represented by three hundred and thirty-two thousand seven hundred and

seventy-nine (332,779) shares with a nominal value of sixty Euros and ten cents (EUR

60.10) per share.

The Tax Identification Number of the Issuer is B-48984090.

The Legal Entity Identifier (LEI) of the Issuer is 9598001382GF2BG2PP33.

Website: http://www.tekniagroup.com/

http://www.tekniagroup.com/

- 48 -

2. Description of the Issuer

2.1. Milestones of the Issuer

Teknia is engaged in the manufacture of automotive parts. Since its inception, the

Company has grown significantly in terms of revenues, earnings, and global presence,

becoming an international automotive parts manufacturer operating in 12 countries.

Teknia began and remains, as a family-owned company. It launched its activity through

the acquisition of Industrias Elix, which became Teknia Elorrio, but it was not until 1998,

after several other acquisitions on Spanish soil, that the Teknia Manufacturing Group was

founded.

The main milestones achieved along the history of the Issuer are the following:

During its 25-year history, the Company’s performance drivers have been:







- 49 -













sales and enhancing its visibility with regard to international expansion.

2.2. Main Shareholders

The sole shareholder of Teknia, the Issuer of the transactions, is Mr. Javier Quesada, with

100% share participation in Teknia Manufacturing Group, S.L.U. through the investment

vehicle Siuled, S.L.

2.3. Organizational Structure

As of 31 December 2017, the Group is comprised of 25 registered companies (parent

company included), as follows:

- 50 -

1. Teknia Manufacturing Group, S.L.U., is the parent company of the Group and

bears its central costs, including the Management Team, Financial

Department, Human Resources Department, etc.

2. Teknia Elorrio, S.L.U. (Vat number: B48054225), manufactures metal parts

at the Elorrio and Eibar production facilities (Spain). Its Registered Office is

in Barrio de San Agustín, S/N Elorrio, (C.P.48230), Vizcaya, Spain.

3. Teknia Bilbao XXI, S.L.U. (Vat number: B48094288) together with Teknia

Montmelo, S.L.U. form Teknia Bilbao and manufacture machine parts at the

T. Bilbao facility (Spain). Its Registered Office is in Parque Empresarial Abra

Industrial, Vial H, Parcela 1,2,3; (C.P.48500), Abanto y Ciérvana, Spain.

4. Teknia Montmeló, S.L. (Vat number: B64857428) is included in the T. Bilbao

production facility as an independent business unit with the same technology.

Its Registered Office is in Pol. Ind. El Eixample C/ Comte de Montemolín,

39 Parets del Vallés, (C.P. 08150), Barcelona, Spain.

5. Teknia Pedrola, S.L.U. (Vat Number: B50871110) manufactures metal parts

at the Pedrola production facility (Spain). Its Registered Office is in Polígono

Industrial el Pradillo C/ Aneto, 23 Pedrola, (C.P.50690), Zaragoza, Spain.

6. Teknia Martos, S.L.U. (Vat number: B23068091) manufactures plastic

injection parts at the Martos production facility (Spain). Its Registered Office

is in C/Bailen 53, (C.P.23600), Martos, Jaén, Spain.

7. Teknia Azuqueca, S.L.U. (Vat number: B19101948) manufactures plastic

injection parts at the Azuqueca production facility (Spain). Its Registered

Office is in Polígono Industrial Miralcampo, calle Aluminio 4, (C.P.19200),

Azuqueca de Henares, Guadalajara, Spain.

8. Teknia Barcelona, S.L.U. (Vat number: B08658379) together with Segove

Cataluña S.L.U. form Teknia Barcelona (Spain) and manufacture machine

parts at the Barcelona facility (Spain). Its Registered Office is in Pol. Ind. El

Eixample C/ Comte de Montemolín, 39 Parets del Vallés, (C.P. 08150),

Barcelona, Spain.

9. Teknia Epila S.L.U. (Vat number: B11511565) is responsible for the purchase,

transfer, maintenance, storage and sale of machinery within the Group (Spain).

Its Registered Office is in Polígono Industrial Valdemuel, Avda. Opel España

S/N (C.P. 50.290) Épila, Zaragoza, Spain.

10. Teknia Manresa, S.L.U. (Vat number: B08575672) manufactures metal

parts at the Manresa production facility (Spain). Its Registered Office is in

C/Esteve Terradas, nº39; Polígono Industrial Bufalvent, (C.P.08243)

Manresa; Barcelona, Spain.

- 51 -

11. Teknia R&D, S.L. (Vat number: B85841351) handles the Company’s R&D

activity, including personnel, though each facility has R&D experts on its

workforce. Its Registered Office is in Plaza Marqués de Salamanca, 9, 7º

Izda, 28006, Madrid, Spain.

12. Teknia Germany GmbH (Vat number: DE262981717) includes the

Company’s central commercial department in Germany. Its aim is to

centralize the Company’s commercial activity and control the various

relations with the same client within the different divisions. It also plays an

important role in terms of R&D activity. Its Registered Office is in

Zimmermannstrasse 5, (C.P. 70182) Stuttgart, Germany.

13. Componentes de Automoción Marroquíes SARL (Vat number: 40281341)

manufactures plastic injection parts at the Tangier production facility

(Morocco). Teknia owns a 100% stake in the Rzeszow facility, the other 1%

stake is held by employees. Its Registered Office is in Zona Franca de

exportación ilot 13 lot 5, (C.P. 90000) Tanger, Morocco.

14. Teknia Polska Sp. z.o.o. (Vat number: 7010013924) manages the

Company’s activity in Poland and is the parent company of Teknia Kalisz

Sp.z.o.o. (Kalisz production facility) and Teknia Rzeszow S.A.(Rzeszow

production facility). Teknia owns a 100% stake in the Rzeszow facility. Its

Registered Office is in Warsaw (Poland).

15. Teknia Kálisz Sp. z.o.o. (Vat number: PL6181011972) manufactures metal

parts at the Kalisz and Popovek production facilities (Poland). Its Registered

Office is in ul. Złota 20ª (C.P.62-800) Kalisz, Poland.

16. Teknia Rzeszow, S.A. (Vat number: PL8130268113) manufactures plastic

injection parts at the Rzeszow production facility (Poland). Its Registered

Office is in ul. Przemyslowa 4, (C.P. 35-105) Rzeszow, Poland.

17. Teknia Uhersky Brod a.s (Vat number: CZ49971034) manages the

Company’s activity in the Czech Republic.It manufactures plastic injection

parts at the Nivnice and Uhersky Brod production facilities (Czech Rep). Its

Registered Office is in Rybarska, 2330 (C.P. 688 01) Uhersky Brod, Czech

Republic.

18. Teknia KG D.O.O. (Vat number: SB104487899) manufactures metal parts

at the Kragujevac production facility (Serbia). Its Registered Office is in

34000 Kragujevac, Serbia. Dragoslava Srejovica 56, Serbia.

19. TekniaSan Luis Potosí, S.A. de C.V. .. (Vat number: TAM 101202895)

manufactures plastic injection parts at the San Luis de Potosí production

facility (Mexico).Teknia owns a 97,090% stake in Mexico facility, the other

15% stake is held by a local partner who helps manage activities. Its

Registered Office is in Avenida CFE 788, Zona Industrial Rural, (C.P.

78395) San Luis Potosí, S.L.P., Mexico.

- 52 -

20. Teknia U.S.A., LLC (Vat Number: 80-0962044) is in charge of the technical

and commercial activities in the NAFTA area. Its Registered Office is in

Orchard Hill PL STE 600, Novi MI (USA).

21. Teknia Brasil Ltd. (Vat Number: 61.147.518/0001-47) manufactures plastic,

metal and machine parts at the three production facilities that the Company

currently operates in Brazil. Teknia owns a 100% stake in the Brazil facility,

the other 14.1% stake is held by a local partner who helps manage activities.

Its Registered Office is in Rua Ioneji Matsubayashi, 1.221 - Bairro Itaquera

- Sao Paulo - (CEP: 08260-050), Brasil.

22. Teknia Mexico City, S.A. de C.V. (Vat number: SAM8111234G2)

manufactures machine parts at the Mexico City production facility (Mexico).

Its Registered Office is in Avena 218, Colonia Granjas Mexico D.F. C.P.

08400, Mexico D.F., Mexico.

23. Teknia Nashville, LLC (formerly named Orchid Mt. Juliet) is engaged in

the production of hinges. Its Registered Office is 94 Belinda Parkway, Mt

Juliet, 37122 Tennessee, USA.

On July 2017 Teknia Manufacturing Group, SL, has segregated its corporate service unit

in a subsidiary service company named Teknia Entidad de Gestión, SL. It belongs 100%

to Teknia Manufacturing Group,SL and implies no change in day by day operating and

has no impact in Group Equity.

Beneath has been detailed the main figures of the audited individual financial statements

(Teknia Montmelo, S.L.U., Teknia R&D, S.L., Componentes de Automoción Marroquíes

figures correspond to limited reviews, not audit, and Teknia Nashville, LLC figures are

post due diligence process, not audited) of the most relevant subsidiaries with industrial

activity as of 31 December 2016:

Thousand of Euros

Teknia

Elorrio

Teknia

Pedrola Teknia Epila

Teknia

Barcelona

Teknia

Bilbao XXI

Teknia

Montmeló

Teknia

Martos

Teknia

Brasil

Teknia

Manresa Teknia KG

Total assets 10.293 7.780 2.145 10.796 10.138 2.692 13.749 16.792 12.815 1.461

Total Equity 4.186 1.504 1.016 2.446 3.256 868 5.110 8.800 6.533 971

Net turnover 20.020 11.784 2.036 23.489 16.435 3.563 30.329 20.565 24.279 1.507

Results from Operating expenses 1.730 128 192 1.243 515 568 3.120 (2.101) 3.018 25

Profit/ (Loss) for the period 1.505 83 168 877 254 409 2.338 (2.243) 2.369 25

Thousand of Euros

Teknia

Azuqueca

Teknia

Uhersky

Brod Teknia R&D

Teknia

Rzeszów

Teknia

Kálisz

Teknia

Automotive

Mexico

Teknia

Nashville

Component

es de

Automoción

Marroquies

Teknia Mexico

City

Total assets 18.751 20.929 499 15.748 23.647 9.521 19.614 2.911 3.072

Total Equity 6.147 11.096 59 7.384 6.256 3.239 9.305 375 1.228

Net turnover 42.425 25.350 825 22.989 25.063 10.029 20.469 2.874 4.083

Results from Operating expenses 2.190 2.585 (26) 2.524 265 (193) (152) 83 518

Profit/ (Loss) for the period 1.580 2.127 (26) 1.838 (347) (653) (54) 14 207

- 53 -

2.4. Corporate purpose

In accordance with article 5 of the Teknia Manufacturing Group, S.L.U. bylaws, the

corporate purpose of the Company is:

“…

1. The company's primary purpose is the promotion and development of companies

through temporary participation in their capital.

The following activities also constitute the corporate purpose of the Company:

a) The identification, investigation, negotiation, execution and monitoring of

investments in the capital of companies engaged in business activities.

b) The subscription, acquisition, holding, use and disposal, under any title, of

shares or other securities issued by those companies.

c) Offering loans, secured or unsecured, including participatory loans to these

companies;

d) Participation in the management of the subsidiaries and the provision of

services of:

e) Technical, economic and financial advice to them.

f) The purchase and sale, transfer, use, donation, lease and exploitation of

real estate.

g) The transfer, lease and by any other means, transmission of all types of

patents and trademarks.

h) The design, manufacturing, trading and marketing of related to the

automotive auxiliary, appliance and electrical, electronic and

telecommunications products industry.

i) Industrial research and exploitation of industrial property resulting from

that or the acquired.

j) By any other means, as rent or transfer.

- 54 -

2. The above activities may be carried out by the Company, in whole or in part,

either directly or indirectly through participation in other companies with similar

or identical object.

3. Expressly excluded are all activities for which the law mandates specific

requirements that cannot be met by this Company. In any case, the achievement

of social order shall be made in compliance with the existing legal regime.

4. If the laws demand any professional or administrative authorization or

registration in public records in order to exercise of any of the activities included

in the corporate purpose, such activities should be performed by persons having

the appropriate professional qualifications and, where appropriate, they may not

start before having completed the administrative requirements.

…”

2.5. Administrative and management bodies

2.5.1. Board of Directors

Since July 2017 the management of Teknia is entrusted to an Executive Board,

who is, as of the date of this Information Memorandum, composed of:

- President: Siuled, SL (represented by Mr. Javier Quesada Suescun)

- Board Members: Mr. Javier Lazpita Sarriugarte and Mr. Seth Ossorio Herrería

- Non-counsel Secretary: Mr. Diego Martel Muñoz-Cobos

2.5.2. Senior Management

The Senior Management structure of Teknia, as of the date of preparation of this

Information Memorandum, is as follows:

- 55 -

CVs of Senior Managers of the Teknia Manufacturing Group, S.L.U. are as

follow:

- Mr. Javier Quesada, representative of mercantile Siuled, SL, acting as

President of Teknia Group Board of Directors

- Javier has a degree in Industrial Engineering from Universidad de

Bilbao and a degree in Business Administration from IESE Business

School.

- Javier has more than 36 years of professional experience, most as the

Sales Director or CEO of several companies related to the

automotive components sector.

- Through the acquisition of a small company in 1992, Javier was able

to create an international auto parts manufacturer, currently present

in 12 countries.

- Javier speaks Spanish, French and English.

- 56 -

- Mr. Javier Lázpita, CEO

- Javier has a degree in Business Administration from Universidad del

País Vasco and completed a General Direction Program at IESE

Business School.

- Javier has more than 28 years of professional experience (the last 8

at Teknia) in the automotive component sector having held several

positions of responsibility.

- His main responsibility in Teknia is to achieve greater interaction

among the Company’s business lines. His main tasks include

identifying and approving industrial targets, evaluating the

implementation of strategic plans, and ensuring their success, etc.

- Javier speaks Spanish and English.

- Mr. Diego Martel, Non-Counsel Secretary. Legal Manager

- Diego has a degree in Law from Universidad Autónoma de Madrid.

- Diego has more than 22 years (the last 6 at Teknia) of professional

experience in positions of responsibility in the Legal and Human

Resources departments of major Spanish companies.

- Diego prepares and reviews the Group contracts and agreements,

advises on commercial and labour law, provides tax advice, and

coordinates with external legal firms.

Diego speaks Spanish and English.

- Mr. Javier Quesada de Luis, Commercial, Innovation and Strategy

Vice-President. CCO

- Javier has a degree in Business Administration from Universidad

Complutense de Madrid.

- Javier has more than 6 years of experience working in Teknia in

several positions, including managerial, focused his whole career on

Business Development activities.

- As C.I.&S Vice-President, is the responsible of Comercial and

Marketing áreas, R&D and Strategy and Planification areas.

- As CCO, his main responsibility is leading the area of Business

Development and Sales, managing all sale departments of the Group,

- 57 -

including Sales Offices, together with the COO’s and reporting to

the CEO.

Javier speaks Spanish, English and German.

- Mr. Rafael Morales, Industrial Vice-President. CPMO

- Rafael has a degree in Mechanical Industrial Engineering from

Escuela Tecnica Superior de Ingenieros Industriales de Sevilla.

- Rafael has more than 20 years of professional experience in the

automotive sector, 19 of them at Teknia in several positions of

responsibility such as product engineering manager, commercial

manager and plant manager.

- He is in charge of Quality, Lean Manufacturing, Procurement,

Energy & Environment, IT and Real Estate areas of the Group

Rafael speaks Spanish and English.

- Mr. Antonio Miralles, Corporate Vice-President. CFO

- Antonio has a degree in Business Administration from Universidad

de Jaen, an Executive Master Degree in Finance from Instituto de

Empresa and a Master Degree in Commercial Management and

Marketing from ESIC.

- Antonio has more than 17 years of professional experience. The last

11 years, he has been part of Teknia’s team, occupying different

financial positions.

- As Corporate Vice-President is the responsible of HR, Legal,

Accounting, Controlling, Taxation, M&A and Financial areas of the

Group.

- As CFO Antonio is in charge of the Group’s economic and financial

management, defined as: the preparation and presentation of

financial statements, management control, financial and insurance

management, investor’s relationship, optimization of tax policy and

investment appraisal, among others.

Antonio speaks Spanish and English.

- Mr. Juan Antonio Rendón, COO Nafta

- Juan Antonio has a degree in Technical Mechanical Industrial

Engineering from Universidad Politécnica de Cádiz, a masters in

- 58 -

Quality and Production Direction from IDE-CESEM, and a masters

in Business Administration from Instituto de Empresa.

- Juan Antonio has more than 15 years of experience in the automotive

sector, 14 of them at Teknia in several positions of responsibility

such as commercial manager, facility manager, and division

manager.

- Juan Antonio speaks Spanish and English.

- Mr. Robert Wdowczyk, COO Metallic

- Robert has a degree in Engineering from the Technical University of

Posen and completed a master in Mechanics and Mechanical

Engineering from the Technical University of Posen along with an

MBA from the Wielkopolska Business School / The Posen

University of Economics.

- Robert has more than 23 years (8 of them at Teknia) of experience

in the managerial positions.

- His main responsibility is the strategic direction and management of

the whole Metallic Division, and the control of its short, medium and

long term objectives.

- Robert speaks Polish and English.

- Mr. José María Sánchez, COO Plastic

- José has a degree in Technical Mechanical Industrial Engineering

from Universidad Pontificia Comillas - I.C.A.I.

- José has more than 25 years (12 of them at Teknia) of experience in

the automotive sector.


the whole Plastic Division, and the control of its short, medium and


- José speaks Spanish and English.

- Mr. Michel Peña, COO Machining

- Michel has a degree in Technical Industrial Electronic Engineering

from Escuela Universitaria de Ingeniería Técnica Industrial de

- 59 -

Bilbao and completed a General Direction Program at IESE

Business School.

- Michel has more than 26 years of experience as an engineer, 20 at

Teknia where he has held several positions of responsibility such as

facility manager and purchase director.


the whole Machining division, and the control of its short, medium

and long term objectives.

- Michel speaks Spanish and English.

- Mr. Seth Ossorio, COO Brazil

- Seth has a Bachelor´s degree in Industrial Engineering from

Universidad de Bilbao and a a Master in Business Administration

from UPV.

- Seth has more than 14 years of professional experience. The last 6

years he has been part of Teknia’s team, occupying different

managerial positions.


Teknia’s Brazilian business, and the control of is short, medium and


- Seth speaks Spanish, Portuguese and English.

- Mrs. Ángeles Martín, Human Resources Manager

- Ángeles has degree on Human Resources and Labor Relations by Rey

Juan Carlos University, Madrid.

- Ángeles career has been developed 100% in Human Resources area.

She is over 20 years experienced. Ángeles has performed the position

as Human Resources Manager in Teknia Azuqueca for the last 6 years.

Nowadays she is facing a new challenge as Teknia´s Corporative

Human Resources Manager. She started on this position last October

2017.

- Ángeles is responsible for of all Human Resources’ aspects as

recruitment & selection, labor relations, reward strategy

implementation and follow up , management performance & its

development, training definition & development, talent search &

retention, absenteeism management, etc.

- 60 -

- Mr. Lars Peter. CQO.

- Graduated with a Master degree in Industrial Management from

Osnabrueck University of Applied Science, Germany, Lars

enhanced his education with an Executive MBA from IE Business

School and an Executive Development Program coursed at ESIC

Business and Marketing School.

- Lars has 20 years of professional experience, most of them in the

automotive industry. He held managerial positions in international

project management and quality assurance. Lars joint Teknia as

Chief Quality Office in February 2017.

- Lars is responsible for all quality related aspects of the group,

including the global quality strategy and standards.

- Besides his German mother tongue Lars speaks Spanish and English.

2.6. Industry and Activity

2.6.1. Industry introduction1

The automotive manufacturing industry, which comprises the production of trucks,

passenger’s cars and motorcycles, has grew yearly since the “big crisis”. In terms of light

vehicles, its production reached 94.9 million units in 2016 (92,8 million units assembled

according to PwC analysis).

Most automotive OEMs’ (Original Equipment Manufacturer) are based in North America,

Western Europe and Japan/Korea (53.07% total global production), what has led to the

existence of a historically strong automotive industry in these areas. However, in recent

years, the competitive pressure in the industry, together with increased globalization, has

led to the flourishing of an industry increasingly important in emerging areas, especially

in China with a 29.6% of total manufactured light vehicles in 2016.

Among other emerging areas, China, India and Mexico could be highlighted because of

their future growth forecast.

1 Font: OICA. 2016 Production Statistics

- 61 -

This growing presence in emerging countries of the OEMs is forcing the rest of the

automotive industry players to become also global players, especially suppliers, which

should be very close to OEM’s production plants and manufacture 70-75% of the parts

constituting a vehicle. In this sense, many companies in the industry are making efforts

during the last years to increase their international presence.

By geographical areas, European markets are still significantly below saturation.

Nevertheless, after a year of important growth (+4,5%), industrial analyst of PwC2 gives

this market a short growth pause. Same analysts report considers “North America market

seems close to saturation, while local production capacity is being built up further”.

Talking about China, current potential of growth is the most important, not only because

of the demand highly growth, but also the sheer magnitude of the productions increase is

drastic. More upward potential is expected by PwC from a large number of emerging

markets, such as Russia, Brazil and Thailand, which have significant room for recovery

after extended crisis. “India, in particular seems set for a long-term growth increase, after

a temporary relapse in the last quarter of 2016 due to the cancellation of several

circulating rupee notes”.

2 PwC Autofacts. Analyst Note January 2017

- 62 -

The main characteristics of TIER 2 (Parts Manufacturers) industry are summarized in

these four points:

- Mature, atomized and highly competitive: due to the automotive sector’s

long trajectory, companies in this industry have a high degree of maturity.

Moreover, the requirement for specialized products and the proximity to the

client favour the existence of a high number of competitors (EUR 20-30 million

average sales). Due to these factors, there is a limited number of companies

that have been able to gain significant size with a diversified portfolio of

products and markets.

- High bargaining power agents: TIER 2 suppliers act as a link between

commodity suppliers and TIER 1 suppliers, both of which are sectors with a

high level of maturity and concentration. In this competitive atmosphere, some

small players have to negotiate with multinational companies, which have a

much higher bargaining power.

- High entry barriers: High investment requirements for manufacturing and

R&D related to processes and products, along with the difficulty associated

with integrating the production process to clients, are the barriers that make

entering this industry complex.

- Low threat of substitute products: The products offered by the automotive

industry are very well established in the market, almost considered a need in

the current society and thus the threat of substitution is estimated to be low.

- 63 -

2.6.2. Strategy

In order to continue with its international expansion and reinforce its role as a key global

automotive supplier for its clients, Teknia has designed a 2017-2021 Strategic Plan.

The plan consists of two main lines: i) an organic growth plan based on expanding current

facilities, and ii) an international acquisition plan, especially in those markets where the

Company is not currently operating.

The following map shows the target markets to be developed under the Strategic Plan:

- Market development-

The organic growth of the Company is based mainly on the following assumptions:

➢ Strong product, technology and process specialization, with the long-term goal of

providing state-of-the-art manufacturing capacities.

➢ Continuous incorporation of value added processes in all products/technologies.

➢ R&D annual investment of around 1.5% of total sales.

➢ Efforts in facility competitiveness.

➢ Global coordination of production facilities.

➢ Consolidation of operations in Brazil.

➢ Development of Mexican and NAFTA markets.

2

Teknia’s track-record in M&A transactions shows a prudent and conservative approach.To reinforce this inorganic growth, minority investor/s will be incorporated.

MID. EAST (Turkey)

ASIA (China & India)

NAFTA (USA & Mexico)

Teknia Group Strategy (Inorganic Growth)

SOUTH AMERICA(Brasil)

PACIFIC (Japan & S. Korea)

- 64 -

Additionally, market recovery is expected, as is the contribution of new plants at Teknia

Brazil, Kalisz (Poland), and Azuqueca (Spain).

In order to provide adequate support to its global customers, Teknia is developing an

intensive commercial plan, with the opening of technical & commercial offices:

➢ Stuttgart (Germany) – Opened in 2007, its main objective is to centralize and

coordinate commercial activity within the Company.

➢ Schenzhen (China) – Opened in 2008, its main objective is to help the tooling and

components purchase process, and to launch commercial activity in view of the

upcoming activity in the country.

➢ Seoul (South Korea) – Opened in 2011, its main objective is to be in charge of

commercial activity in the Asia area.

➢ Michigan (USA) – Opened in 2013, it is responsible for commercial activity in

the NAFTA area.

Regarding inorganic growth, i) acquisitions and ii) joint ventures are the potential options

envisaged by Teknia for growth in those markets where the Company wants to enter or

increase its presence.

The expertise of Teknia’s Management Team in identifying, acquiring and integrating

new businesses will play a key role in this process.

2.6.3. Trends in the industry

Suppliers are suffering intense price pressures while the demands for a greater

international presence are increasing. These require greater investments and increased

management complexity, which threatens the viability of a number of players and leads

to a consolidation process within the industry.

Suppliers should now follow OEMs in their emerging market activity, pursuing global

product concepts, global engineering launches and supply chains, which require global

coordination of regional production facilities, and a balanced cost reduction in order to

improve margins and profitability. In this sense, improved market conditions present

opportunities to obtain growth funds.

The market is, therefore, becoming more and more global in two main ways: while mature

market suppliers are trying to expand their activity via joint-ventures, acquisitions and

greenfield projects in the emerging markets (with the aim of adding flexible capacity to

meet new, higher production volumes and new programme launches), emerging market

suppliers are strengthening their capabilities through acquisitions in mature markets as a

result of intensified competition in their home markets.

Additionally, many emerging market companies are acquiring or reaching strategic

agreements with European/North American companies, with the aim of acquiring product

know-how. This is mainly due to the increasing demands of technology and quality in the

recently implemented OEMs.

- 65 -

2.6.4. Business Units

The Group consists in two main business lines: automotive and R&D. The R&D division

supports the automotive business and enables the Group to remain at the forefront of the

industry.

In the automotive business, the development and manufacture of automotive

components, assembly and the design of specific manufacturing processes, operates

through 3 divisions: plastic, metallic (including tubing and stamping) and machining.

The Plastic division is the largest in terms of sales (approximately 45,2% of total

aggregated sales in 2016), followed by the Metallic division (approximately 38,4% of

total sales), and the Machining division (approximately 16,4% of total sales).

The Company plans to continue focusing on i) the above mentioned technologies, in

which the Company has extensive expertise, knowledge and competitive advantages, ii)

the development of its business in Brazil, where the Company has carried out an important

investment (in terms of assets and commercial relationships) and expects high growth

rates in the coming years, and iii) the development of its business in Mexico.

The R&D division provides services such as: product development, prototype

manufacturing, and simulations for the automotive business.

Teknia relies on this division to ensure one of the most updated product ranges in the

industry with cutting-edge technology in its three divisions, and to be a true partner for

its clients rather than a mere provider.

The Head Office provides services such as: management, finance, human resources, IT,

sales and commercial activities, among others.

2.6.5. International expansion

According to the Strategic Plan, international expansion is one of ourmain growth pillars.

Teknia has a successful track record in cross-border M&A transaction. This enables the

company to havea large experience in identifying, acquiring and integrating industrial

companies into the Group.

Teknia’s will boost its international presence under the Strategic Plan with the entry into

new markets (India and China principally, but also NAFTA, Russia, Turkey and other

Eastern Europe countries) and the consolidation of the existing ones.

-Teknia’sBusiness Lines-

Teknia

Plastic Division Metallic Division Machining Division R&D Division Head Office

Automot ive business

- 66 -

The selection of those countries where Teknia wants to expand its activity is based on i)

client requests to accompany them in their international expansion, and ii) the expected

growth of selected target markets.

2.6.6. Sectors of activity

In this section information about each division is explained. The economic data reflected

corresponds to audited individual annual accounts aggregated Figures.

Plastic Division

The Plastic division is engaged in the manufacture of plastic automotive parts using

different technologies and semi or fully large-scale automated stations and assembly lines.

This division represented nearly 45,2% of the Group’s total aggregated sales in 2016,

with total aggregated turnover of EUR 138.2M in 2016 (around 80% to TIER 1 and the

rest to OEMs) and aggregated EBITDA of EUR 12.7M (9.2% margin). The aggregated

turnover for this division in previous years was: EUR 118.9M in 2015 and EUR 103.2M

in 2014. The aggregated EBITDA for this division in previous years was: EUR 9.3M in

2015 and EUR 5.4M in 2014. Additionally, it constitutes Teknia’s largest international

presence, with seven production facilities: Spain (2), Czech Republic (2), Poland (1),

Morocco (1), Brazil (1), Mexico (1) and Turkey3 (1).

In terms of sales, the facility located in Azuqueca (Spain) is the largest, with 31% of total

sales, followed by Martos (Spain) representing 22%.

The Plastic division manufactures its products through a wide variety of technologies and

machinery. Among them:

The Plastic division’s product range is as follows:

3 Shared facility with Metallic Division

Technology

• Inject ion moulding• Blow moulding• Surface coat ings / print ings

• Welding• Die-cut t ing

• Tool shop• Assembly

Machinery(# machines)

• Up to 100 tons (32)• From 100 - t o 300 tons (84)• From 300 - t o 500 tons (33)

• From 500 - t o 850 tons (20)• From 850 - t o 1100 tons (6)

• Over 1100 tons (5)• Blow moulding machines (3)

- 67 -

Metallic Division

The Metallic division is engaged in the manufacture of metallic automotive parts,

including tubing and stamping.

This division represented nearly 38.4% of the Group’s total sales, with total aggregated

turnover of EUR 117.4M in 2016 (around 80% to TIER 1 and around 20% to OEMs) and

aggregated EBITDA of EUR 5.5M (19.7% margin). The aggregated turnover for this

division in previous years amounted: EUR 85.6M in 2015 and EUR 85.3M in 2014. The

aggregated EBITDA for this division in previous years was: EUR 7.5M in 2015 and EUR

7.2M in 2014.The division has six production facilities; Spain (3), Brazil (2), Poland (1),

USA (1), Serbia (1) and Turkey (1).

In terms of sales, Manresa is the division’s largest plant, with 21% of sales. Nashville

(18,6%) and Kalisz (18,5%) are two other important plants for the division.

The Metallic division manufactures its products through a wide variety of technologies

and machinery. Among them:

The Metallic division’s product range is as follows:

Reservoirs

Brake f luid reservoirsCaps and f ilters

Fluid level indicatorsFloaters

Safety systems

Airbag coversSide seat airbags

Airbag mountingsHorn plates

Locking systems

Inter ior components

Cockpit and pillar coversMiddle consoles

Sun visorsBezels

Exter ior components

Water def lectorRocker panel cover

BumperWheel cut moulding

Roof rack

Other products

Other interior componentsHousing and channels

Cluster partsSeating systems

Air ducts

Trim / FabricsLight ing parts

Surge TanksAd-Blue Tanks

Windscreen bott les

Engine partsSolar parts

Technology

• Stamping• Transfert t ube vending• Bending & end-forming

• Welding & brazing• Assemblies

• Plat ings and coat ings• Leak-test ing


• Press 631 - 800 TN (1)• Press 451 - 630 TN (2)• Press 300 - 450 TN (11)

• Press up t o 299 TN (61)• Benders 24 –64 mm diam. (40)

• Transfert s benders (5)

- 68 -

Machining Division

The machining division is engaged in the manufacture of precision metallic components

for the automotive industry.

This division represented nearly 16,4% of the Group’s total aggregated sales, with total

aggregated turnover of EUR 45.9M in 2016 (around 95% to TIER 1 and around 5% to

OEMs) and aggregated EBITDA of EUR 5.0M (10.9% margin). The aggregated turnover

for this division in previous years amounted: EUR 47.9M in 2015 and EUR 39.5M in

2014. The aggregated EBITDA for this division in previous years was: EUR 5.0M in

2015 and EUR 3.0M in 2014. The division has four production facilities: Spain (2), Brazil

(1), and Poland4 (1).

In terms of sales, the facility located in Barcelona is the largest, with 47% of total sales,

followed closely by Bilbao (40%).

The Machining division manufactures its products through a wide variety of technologies

and machinery. Among them:

The Machining division’s product range is as follows:

4 Shared facility with Metallic Division

Fuel filler pipes

Complete Headrest

assemblies &

components

Pedalsets

Wiper Mechanism

Engine-cooling

climatization & turbo

Dipsticks, decantation

plates, filter covers

Oil tubes & strainers

Truck & Civil Engineer ing

tubes

Seat-belt pre -tensioners

& airbag deployment

components

Brakes

Tubes

Wiper Motor Brackets

Structural components

Electr ical Motor housings

Seat-pans

Pivot & motor cranks

Seat-podium for industr ial

vehicles

Hand-brake system

components

Other products

Technology

• Bar-turning• Second operat ions in t ransfer

machines

• Grinding and deburring• Small-scale sub-assemblies

• Stamping and folding


• Schut te mec 16-42 (20)• As14/sas16 mec 14-16 (31)• Wickman mec 16-42 (28)

• Schut te cnc 36 (2)• Index cnc 32-42 (8)

• Deco I cnc 13-32 (8)• Deco II cnc 20 (6)• Bs20 cnc 20 (6)

• Monohusillo cnc (6) • Others (5)

- 69 -

2.7. Declaration on the absence of significant changes in the prospects of the Issuer

Since the publication of the latest audited consolidated financial information as of 31

December 2016 and until the date of this Information Memorandum, there has been no

material adverse change in the outlook for the Teknia Manufacturing Group, S.L.U.

However, between 31 December 2016 and the date of this Information Memorandum, the

Teknia Group highlights the following facts:

- Teknia Manufacturing Group, S.L.U. acquired on January 11, 2017 the Turkish

company USTUN MAKINE, A.S. This company will be the base of the

development of all Teknia technologies in the Turkish market. Initially, it will be

focused on the Metallic Division.

Enterprise Value: EUR 4M, debt included

Payment: 100% upfront

- In February 2017, Teknia registered a commercial paper programme in MARF

with a maximum aggregate amount of Eur 25 million.

2.8. Information on significant changes in the prospects of the Issuer

As of the date of this Information Memorandum, Teknia Manufacturing Group, S.L.U. is

not aware of any trend, uncertainty, demand, commitment or adverse event which could

reasonably have a material effect on the prospects for the financial year 2017.

3. Reasons for the Issue and use of proceeds

The main purpose of the proceeds from this Programme will be to finance the corporate

acquisitions that are currently under analysis.

4. Financial information

4.1. Audited historical financial information

This section includes the Consolidated Financial Statements of the Teknia Group for

the years ended 31 December 2016 and 2015, which have been extracted from the

audited consolidated annual accounts of the Group for the years ended 31 December

2016 and 31 December 2015, included in “Annex 1” and “Annex 2” of this

Information Memorandum.

Fuel injection Transmission & EngineGear Shifts Braking SystemsAir conditioning &

Electr ical sector

- 70 -

The consolidated annual accounts as of 31 December 2016 and 2015, have been

prepared from the accounting records of the Group and are presented in accordance

with the commercial legislation and the established rules in the General Accounting

Plan approved by Royal Decree 1514/2007 and the amendments made thereto by

Royal Decree 1159/2010.

4.2. Financial Statements of the Issuer

Audited Consolidated Income Statement for the financial years ended on 31


- 71 -

CO NSO LIDATED INCO ME STATEMENT

2016 2015 Var 16-15

A) CO NTINUING O PERATIO NS

1. Revenue 297.662 246.279 20,9%

a) Sales 294.979 245.031 20,4%

b) Services rendered 2.683 1.248 115,0%

2. Changes in inventories of finished goods and work in progress 2.389 1.048 128,0%

3. Work carried out by the company for own assets 1.100 572 92,3%

4. Supplies (166.666) (138.749) 20,1%

a) Merchandise used (8.847) (5.389) 64,2%

b) Raw materials and other consumables used (130.560) (109.850) 18,9%

c) Subcontracted work (27.217) (23.286) 16,9%

d) Impairment of merchandise, raw materials and other supplies (42) (224) -81,3%

5. O ther operating income 1.340 1.141 17,4%

a) Non-trading and other operating income 1.264 980 29,0%

b) Operating grants taken to income 76 161 -52,8%

6. Personnel expenses (65.646) (52.949) 24,0%

a) Salaries and wages (51.047) (40.877) 24,9%

b) Employee benefits expense (14.476) (12.024) 20,4%

c) Provisions (123) (48) 156,3%

7. O ther operating expenses (42.643) (36.925) 15,5%

a) Losses, impairment and charges in trade provisions (47) (326) -85,6%

b) Other operating expenses (42.596) (36.599) 16,4%

8. Amortisation and depreciation (9.787) (7.705) 27,0%

9. Non-financial and other capital grants 5 5 -

11. Impairment and gain/(losses) on disposal of fixed assets (19) 1.965 -101,0%


b) Results due to divestment and others (19) 2.282 -100,8%

14. O ther results 135 141 -4,3%

A.1) RESULTS FRO M O PERATING ACTIVITIES

(1+2+3+4+5+6+7+8+9+10+11+12+13+14) 17.870 14.823 20,6%

15. Finance income 250 320 -21,9%

a) Dividends 3 3 -

b) Marketable securities and other financial instruments 10 99 -89,9%

c) Allocation of grants, donations and bequests of a financial nature 237 218 8,7%

16. Finance expenses (2.550) (1.688) 51,1%

18. Exchange gains/(losses) (1.079) (1.989) -45,8%

19. Impairment and profit/loss on divestment of financial instruments - (228) -100,0%


A.2) NET FINANCE INCO ME/(EXPENSE) (14+15+16+17+18+19) (3.379) (3.585) -5,7%

A.3) PRO FIT/(LO SS) BEFO RE INCO ME TAX (A.1 + A.2 ) 14.491 11.238 28,9%

24. Income tax (3.521) (1.629) 116,1%

A.4) PRO FIT/(LO SS) FRO M CO NTINUING O PERATIO NS (A.3 +22) 10.970 9.609 14,2%

B) DISCO NTINUED O PERATIO NS - - -

A.5) CO NSO LIDATED PRO FIT/(LO SS) FO R THE PERIO D (A.4) 10.970 9.609 14,2%

Balance attributed to the parent company 10.987 9.659 13,7%

Balance attributed to external shareholders (17) (50) -66,0%

Thousand of Euros

- 72 -

Audited Consolidated Balance Sheet for the financial years ended on 31 December

2016 and 2015 (in thousands of Euros)

ASSETS

2016 2015 Var 16-15

A) NO N-CURRENT ASSETS 98.442 73.629 33,7%

I. Intangible fixed assets

1. Consolidated goodwill 6.661 2.495 167,0%

2. Research - -

3. Other intangible assets 2.910 2.833 2,7%

9.571 5.328 79,6%

II. Tangible fixed assets

1. Land and buildings 24.945 21.664 15,1%

2. Technical installations and other fixed material assets 47.933 31.517 52,1%

3. Fixed assets under construction and advances 1.276 3.284 -61,1%

74.154 56.465 31,3%

V. Long-term financial investments 2.542 501 407,4%

VI. Deferred tax assets 12.036 11.203 7,4%

VIII. Non-current trade receivables 139 132 5,3%

B) CURRENT ASSETS 115.014 90.597 27,0%

I. Non-current assets held for sale 220 -

II. Inventories 41.555 33.641 23,5%

III. Trade and other receivables

1 Trade receivables for sales and services 53.925 44.299 21,7%

2. Trade receivables from group companies and associates - 16 -100,0%

3. Current tax assets 663 1.109 -40,2%

4. Other receivables 3.247 2.225 45,9%

57.835 47.649 21,4%

IV. Current investments group companies and associates

1 Loans to related parties - 18 -100,0%

2. Other financial assets of group companies and associates - 3.345 -100,0%

- 3.363 -100,0%

V. Current investments 46 1 4500,0%

VI. Current accruals 1.082 1.082 0,0%

VII. Cash and other cash equivalents 14.276 4.861 193,7%

TO TAL ASSETS (A+B) 213.456 164.226 30,0%

Thousands of euros

- 73 -

TO TAL EQ UITY AND LIABILITIES

2016 2015 Var 16-15

A) EQ UITY 68.225 59.057 15,5%

A-1) Capital and reserves without valuation adjustments

I. Capital 20.000 20.000 -

III. Reserves 39.553 33.680 17,4%

VI. Net income attributed to the parent company 10.987 9.659 13,7%

70.540 63.339 11,4%

A-2) Valuation adjustments

II. Translation differences from consolidated companies (3.141) (5.405) -41,9%

(3.141) (5.405) -41,9%

A-3) Grants, donations and bequests received

I. In consolidated companies 662 858 -22,8%

662 858 -22,8%

A-4) External shareholders 164 265 -38,1%

B) NO N-CURRENT LIABILITIES 61.503 36.989 66,3%

I. Non-current provisions 642 491 30,8%

II. Non-current payables

1. Bonds and other marketable securities 19.635 -




4.1 Fixed assets suppliers 163 179 -8,9%

4.2 Other financial liabilit ies 6.508 11.694 -44,3%

59.332 35.153 68,8%

IV. Deferred tax liabilities 1.528 1.313 16,4%

V. Non-current accruals 1 32 -96,9%

C) CURRENT LIABILITIES 83.728 68.180 22,8%

II. Current provisions 919 1.592 -42,3%

III. Current payables

1. Bonds and other marketable securities 542 - -




4.1 Fixed assets suppliers 814 1.065 -23,6%

4.2 Other financial liabilit ies 690 651 6,0%

23.192 18.917 22,6%

IV. Current debt with group companies and associates

2. Other payables - - -

- - -

V. Trade and other payables

1. Suppliers 41.906 34.614 21,1%

2. Suppliers, group companies and associates - 7 -100,0%

3. Current tax liabilit ies 315 351 -10,3%

4. Other payables 17.136 12.418 38,0%

59.357 47.390 25,3%

VI. Current accruals 260 281 -7,5%

TO TAL EQ UITY AND LIABILITIES (A + B + C) 213.456 164.226 30,0%

Thousands of Euros

- 74 -

Audited Consolidated Cash Flow Statements of the financial years ended on 31


- 75 -

CO NSO LIDATED CASH FLO W STATEMENT

2016 2015 Var 16-15

A) CASH FLO WS FRO M O PERATING ACTIVITIES

1. Profit/(loss) for the period before tax 14.491 11.238 28,9%

2. Adjustments for 13.082 7.610 71,9%

a) Amortisation and depreciation (+) 9.787 7.705 27,0%

b) Valuation allowances for impairment losses (+/-) 973 233 317,6%

c) Changes in provisions (+/-) 270 430 -37,2%

d) Grants recognised in the income statement (-) (242) (5) 4740,0%

e) Proceeds from disposals of fixed assets (+/-) 19 (2.282) -100,8%

g) Finance income (-) (250) (320) -21,9%

h) Finance expenses (+) 2.550 1.688 51,1%

k) Other income and expenses (-/+) (25) 161 -115,5%

3. Changes in operating assets and liabilities (8.782) (3.940) 122,9%

a) Inventories (+/-) (6.624) (1.493) 343,7%

b) Trade and other receivables (+/-) (6.899) (3.345) 106,2%

c) Other current assets (+/-) (45) (266) -83,1%

d) Trade and other payables (+/-) 5.567 1.638 239,9%

c) Other current liabilit ies (+ /-) (770) (413) 86,4%

f) Other non-current assets and liabilit ies (+/-) (11) (61) -82,0%

4. O ther cash flows from operating activities (4.050) (4.346) -6,8%

a) Interest paid (-) (1.964) (1.319) 48,9%

c) Interest received (+) 250 102 145,1%

d) Income tax received (paid) (2.336) (3.129) -25,3%

5. Cash flows from/used in operating activities (+/-1+/-2+/-3+/-4) 14.741 10.562 39,6%

B) CASH FLO W'S FRO M INVESTING ACTIVITIES

6. Payments for investments (-) (21.409) (19.921) 7,5%

a) Group companies, net cash flows in consolidated companies (422) (3.473) -87,8%

d) Intangible assets (618) (876) -29,5%

e) Property, plant and equipment (19.551) (15.572) 25,6%

g) Other financial assets (818) -

7. Proceeds from sale of investment (+) 2.490 8.670 -71,3%

e) Property, plant and equipment 2.425 8.670 -72,0%

g) Other financial assets 65 -

8. Cash flows front/used in investing activities (6+7) (18.919) (11.251) 68,2%

C) CASH FLO WS FRO M FINANCING ACTIVITIES

9. Proceeds from and payments for equity instruments (215) 82 -362,2%

a) Issue of equity instruments (+) - 74 -100,0%

e) Acquisition of equity instrument from external shareholders (-) (215) -

g) Grants, donations and bequests received (+) - 8 -100,0%

10. Proceeds from and payments for financial liability instruments 17.438 (626) -2885,6%

a) Issue

1. Bonds and other marketable securities (+) 19.600 -

2. Debt with credit entities (+) 13.675 19.392 -29,5%

5. Other debts (+) 1.142 528 116,3%

b) Redemption and repayment of

2. Debts with financial institutions (-) (10.751) (18.616) -42,2%

5. Other payables (-) (6.228) (1.930) 222,7%

11. Dividends and interest on other equity instruments paid (3.630) (3.525) 3,0%

a) Dividends (-) (3.630) (3.525) 3,0%

12. Cash flows from/used in financing activities (+/-9+/-10-11) 13.593 (4.069) -434,1%

D) EFFECT O F EXCHANGE RATE FLUCTUATIO NS - -

E) NET INCREASE/DECREASE IN CASH AND CASH EQ UIVALENTS (+/-5+/-8+/-12+/-D) 9.415 (4.758) -297,9%

Cash and cash equivalents at the beginning of the period 4.861 9.619 -49,5%

Cash and cash equivalents at the end of the period 14.276 4.861 193,7%

Thousands of Euros

- 76 -

4.3. Financial ratios as of 31 December 2016 and 2015

2016 2015

PERFORMANCE

EBT / Total Assets 6,8% 6,8%

Turnover / Total Assets 139,4% 150,0%

ROA (OP/Total assets) 8,4% 9,0%

ROE 16,1% 16,3%

Net Result / Turnover 3,7% 3,9%

EBITDA / Turnover 9,3% 9,1%

BALANCE STRUCTURE

Equity / Total Debt 47,0% 56,2%

Total Debt/ Total Equity and Liabilities 68,0% 64,0%

Non Current Liabilities / Current Liabilities 73,5% 54,3%

Cash and similar / Total Debt 9,8% 4,6%

Net Financial Debt / EBITDA (1)

2,47 2,18

Consolidated Profit for the Period / Financial Cost (2)

4,77 6,02

Bank Financial Debt / Total Debt 37,3% 38,5%

SHORT TERM STABILITY

Current Assets / Current LiabiIities 137,4% 132,9%

Current Assets - Inventories / Current Liabilities 87,7% 83,5%

Current Assets / Total Assets 53,9% 55,2%

(1) Net Debt includes all debt (M&A deferred payments included)

(2) Financial cost: Forex cost not included

- 77 -

4.4. Audit of historical annual financial information

4.4.1. Statement that historical financial information has been audited. If

audit reports on the historical financial information have been refused

by the auditors or if they contain qualifications or disclaimers, such

qualifications or disclaimers must be reproduced in full, explaining the

reasons.

The historical consolidated financial information of the Teknia Manufacturing

Group, S.L.U. corresponding to the years 2016 and 2015 has been audited by

Moore Stephens AMS, S.L. and the audit reports thereon contained no

qualifications.

4.4.2. Indication of other information in the Information Memorandum

which has been audited by the auditors

Non-applicable.

4.4.3. Where financial data in the Information Memorandum is not

extracted from the audited Financial Statements of the Issuer, you must

declare the source of the data and state that the data is unaudited

Componentes de Automoción Marroquíes, Teknia Montmeló, Teknia R & D and

Teknia Germany subsidiaries have been subject to a limited review of their

Financial Statements.

4.5. Age of the most recent financial information

The most recent consolidated financial information contained in this Information

Memorandum refers to the audited financial information as of and for the year

ended 31 December 2016.

4.6. Judicial, administrative and arbitration proceedings

As of the date of this document, the Teknia Group is not involved in any material

civil or administrative legal proceedings.

5. Significant changes in the financial or trading position of the Issuer

From 31 December 2016 until the date of this Information Memorandum, the

following loans have been obtained:

(a) Eur 2.824k funded to finance subsidiaries CAPEX. All those funds were

borrowed directly to subsidiary companies.

(b) On or about the date hereof Teknia established a Commercial Paper Programme

in the Spanish Alternative Fixed-Income Market (MARF) with a maximum

aggregate amount of Eur 25 million. With this new Commercial Paper

- 78 -

Programme Teknia continues to diversify its financing sources and reinforces its

presence in the capital markets.

VIII. DESCRIPTION OF THE NOTES

1. Total amount of the securities issued/admitted to trading

The maximum nominal amount of this Programme will be FORTY MILLION

EUROS (40,000,000 €). The securities to be issued under this Programme will be

senior unsecured simple notes (the “Notes”). Regarding the terms and conditions of

the securities, the Notes under the Programme will be issued pursuant to the template

attached as “Annex 4” hereto (the “Final Conditions”).

The Final Conditions of each issue will specify the nominal and total effective

amount of the Notes admitted to trading and the nominal and effective amount and

number of Notes to be admitted. The amount of each issue of the Notes under the

Programme could range between ONE MILLION EUROS (1,000,000 €) and

FORTY MILLION EUROS (40,000,000 €).

2. Date of issue of the Notes

The Final Conditions of each issue of Notes will establish the envisaged dates of

issue of the Notes, which may not exceed the validity period of this Programme.

The validity of this Programme is one (1) year as from the admission (incorporación)

of the same to MARF.

3. Form and Denomination

The Notes will be in uncertified, dematerialised book-entry form (anotaciones en

cuenta), subject to Royal Decree 878/2015 of 2 October on compensation, liquidation

and recording of marketable securities represented by book-entries, on the legal

regime of central securities depositories and central counterparties and on the

transparency requirements of the issuers of securities admitted to trading on an

official secondary market, as amended by Royal Decree 827/2017 of September 1

(Real Decreto 878/2015, de 2 de octubre sobre compensación, liquidación y registro

de valores negociables representados mediante anotaciones en cuenta, sobre el

régimen jurídico de los depositarios centrales de valores y de las entidades de

contrapartida central y sobre requisitos de transparencia de los emisores de valores

admitidos a negociación en un mercado secundario oficial en su redacción dada por

el Real Decreto 827/2017 de 1 de septiembre) (“RD 878/2015”).

Each Note will have a nominal value of EUR 100,000 (the “Authorised

Denomination”).

- 79 -

4. Status of the Notes and Guarantee

a) Status of the Notes:

The Notes constitute direct, senior, unconditional, unsubordinated and, subject to the

provisions of Condition 9.1 (Negative Pledge), unsecured obligations of the Issuer

which (unless they qualify as subordinated credits under Article 92 of the Insolvency

Law) in the event of the insolvency (concurso) of the Issuer will, at all times, rank

pari passu among themselves and pari passu with all other present and future

unsecured and unsubordinated obligations of the Issuer, save for such obligations as

may be preferred by provisions of law that are both mandatory and of general

application, and in particular, save for such payment obligations that are preferred by

law under Articles 84, 90 and 91 of the Insolvency Law.

In the event of the insolvency (concurso) of the Issuer, under the Insolvency Law,

and assuming that the Notes remain unsecured, claims relating to the Notes (unless

they qualify as subordinated credits under Article 92 of the Insolvency Law) will be

ordinary credits (créditos ordinarios) as defined in the Insolvency Law. Ordinary

credits rank below credits against the insolvency estate (créditos contra la masa) and

credits with a privilege (créditos privilegiados). Ordinary credits rank above

subordinated credits. Accrued and unpaid interest due in respect of the Notes at the

commencement of an insolvency proceeding (concurso) of the Issuer will qualify as

subordinated credits. Under Spanish law, accrual of interest on the Notes shall be

suspended from the date of any declaration of insolvency.

b) Status of the Guarantee:

The Subsidiary Guarantors will unconditionally and irrevocably guarantee the due

and punctual payment of all sums from time to time payable by the Issuer in respect

of the Notes issued under the Programme.

This Guarantee of the Notes will constitute direct, general, unsubordinated and,

subject to the provisions of Condition 9.1 (Negative Pledge), unsecured obligations

of the Subsidiary Guarantors which (unless they qualify as subordinated credits under

Article 92 of the Insolvency Law) in the event of the insolvency (concurso) of the

Subsidiary Guarantors will, at all times, rank pari passu with all other present and

future unsecured and unsubordinated obligations of the Subsidiary Guarantors, save

for such obligations as may be preferred by provisions of law that are both mandatory

and of general application, and in particular, save for such payment obligations that

are preferred by law under Articles 84, 90 and 91 of the Insolvency Law.

5. Price of the Notes

The Notes may be issued at par value or for a lower or higher amount, as established

in the Final Conditions.

- 80 -

6. ISIN Code

The information relating to the ISIN Code (International Securities Identification

Number), or any other codes used internationally, of each of the issues made under

this Programme will appear in the Final Conditions of the relevant issue.

7. Register, Title and Transfers

(a) Registration: The Notes issued under this Programme will be registered with

the Spanish Sociedad de Gestión de los Sistemas de Registro, Compensación

y Liquidación de Valores, S.A. Unipersonal, with its registered address at

Plaza de la Lealtad, 1, Madrid (“Iberclear”) that records all aggregate

securities balances for each of its participating entities (entidades

participantes) (the “Iberclear Members”). Each Noteholder's (as defined

below) title to the corresponding principal amount of the Notes is set out in

the registries maintained by the respective Iberclear Member or the Spanish

Central Registry itself if the holder is an Iberclear Member.

(b) Title: Title of the Notes issued under this Programme will be evidenced by

book-entry forms (anotaciones en cuenta), and each person shown in the

registries maintained by the respective Iberclear Members, as being a holder

of Notes shall be (except otherwise required by the applicable Spanish law)

considered the holder of the principal amount of the Notes recorded therein.

The "Holder" of a Note means the person in whose name such Note is for the

time being registered in the book-entry forms (anotaciones en cuenta) at

Iberclear or, as the case may be, the relevant Iberclear Member accounting

book and "Noteholder" shall be construed accordingly. One or more

certificates (each, a "Certificate") attesting to the relevant Holder's holding

of the Notes in the relevant registry will be delivered by the relevant Iberclear

Member or, where the Holder is itself an Iberclear Member, by Iberclear (in

each case, in accordance with the requirements of Spanish law and the

relevant Iberclear Member's or, as the case may be, Iberclear's procedures) to

such Holder upon such Holder's request.

(c) Transfers: The Notes issued under this Programme will be issued without any

restrictions on their transferability. Consequently, the Notes may be

transferred and title to the Notes may pass (subject to Spanish law and to

compliance with all applicable rules, restrictions and requirements of

Iberclear or, as the case may be, the relevant Iberclear Member) upon

registration in the relevant registry of each Iberclear Member and/or the

Iberclear itself, as applicable. Each Holder will be treated (except as

otherwise required by Spanish law) as the legitimate owner of the relevant

Notes for all purposes (whether or not it is overdue and regardless of any

notice of ownership, trust or any interest or annotation of, or the theft or loss

of, the Certificate issued in respect of it) and no person will be liable for so

treating the Holder.

- 81 -

8. Guarantees and Security

The Notes will be fully and unconditionally guaranteed, jointly and severally, by the

Subsidary Guarantors.

a) Subject to the remaining provisions of this Condition 8, the payment of all

sums expressed to be payable by the Issuer under the Notes issued within the

framework of the Programme will be unconditionally and irrevocably

guaranteed on a joint and several basis (solidariamente) by the Subsidiary

Guarantors.

The Guarantees by the Subsidiary Guarantors shall be granted and in full force

prior to the disbursement date of the first issuance of Notes to be made under

the Programme. The Guarantees shall be extended in order to expressly secure

not only the first issuance of Notes but also any further issuances of Notes

made under the Programme up to its maximum amount.

The Collateralisation Ratio must represent at any time at least a 95% (the

“Minimum Collateralisation Ratio”).

In case a Subsidiary Guarantor has negative EBITDA, the EBITDA of such

Subsidiary Guarantor shall be considered zero (0) for the purposes of the

calculation of the Minimum Collateralisation Ratio only.

b) If the Minimum Collateralisation Ratio is not met, the Issuer shall at its sole

discretion (i) appoint additional fully owned (directly or indirectly)

Subsidiaries to act as Subsidiary Guarantors or (ii) grant a pledge over the

shares of any non-fully owned Subsidiary of the Issuer in accordance with

Condition 8.3 below (Accession of additional Subsidiary Guarantors or Share

Pledge over Subsidiaries).

c) In these Conditions, any such guarantee given by a Subsidiary Guarantor is

referred to individually as a “Guarantee” and, together, as the “Guarantees”.

For the purpose of Conditions 8 and 9:

“Consolidated EBITDA” means the consolidated earnings before interest,

taxes, depreciation and amortization of the Group, according to the last audited

annual consolidated financial statements available. For clarification purposes the

Consolidated EBITDA of the Group shall include the EBITDA of the Issuer and

the EBITDA of its Subsidiaries (only in the percentage owned by the Issuer in

the Subsidiaries).

“Collateralisation Ratio” means the ratio of (x) the Guarantors EBITDA to (y)

the Consolidated EBITDA.

- 82 -

“EBITDA” means the earnings before interest, taxes, depreciation and

amortization of the Issuer or any Subsidiary, according to the last audited annual

financial statements available.

“Guarantors EBITDA” means the sum of (i) the EBITDA of the Issuer, (ii) the

Subsidiary Guarantors EBITDA and (iii) the EBITDA of those Subsidiaries in

which a Share Pledge over Subsidiaries has been granted.

“Subsidiary” means, with respect to any specified Person:

(1) any corporation, association or other business entity (other than a partnership,

joint venture or similar entity) (a) of which more than 50% of the total voting

power of shares of capital stock entitled (without regard to the occurrence of

any contingency) to vote in the election of directors, managers or trustees

thereof is at the time owned or controlled, directly or indirectly, by that Person

or one or more of the other Subsidiaries of that Person (or a combination

thereof); or (b) where that Person or one or more of the Subsidiaries of that

Person (or a combination thereof) have the right to appoint or remove a

majority of its board of directors or equivalent administration, management

or supervisory body; and

(2) any partnership, joint venture or similar entity (a) the sole general partner or

the managing general partner of which is such Person or a Subsidiary of such

Person or (b) the only general partners of which are that Person or one or

more Subsidiaries of that Person (or any combination thereof).

“Subsidiary Guarantors”, means Teknia Elorrio, S.L.U., Teknia Pedrola,

S.L.U., Teknia Barcelona, S.L.U., Teknia Bilbao XXI, S.L.U., Teknia Martos,

S.L.U., Teknia Azuqueca, S.L.U., Teknia Manresa, S.L.U., Teknia Epila, S.L.U.,

Teknia Montmelo, S.L.U., Teknia R&D, S.L., Teknia Brasil Ltda., Teknia

Rzeszów S.A., Teknia Kálisz, S.p. z o.o., Teknia Uherský Brod, a.s, and Teknia

Nashville, LLC, and any other fully owned (directly or indirectly) Subsidiary of

the Issuer that guarantees the Notes from time to time; provided, in each case,

that a Subsidiary Guarantor shall cease to be a Subsidiary Guarantor upon a

Release Event.

“Person” means any individual, corporation, partnership, joint venture,

association, joint-stock company, trust, unincorporated organization, limited

liability company, government or any agency or political subdivision thereof or

any other entity.

8.1. Subsidiary Guarantors

Without prejudice to universal liability of the Issuer, the Notes issued under the

Programme will be secured by an autonomous abstract and first demand guarantee

granted by the Subsidiary Guarantors.

The main features of each of the Subsidiary Guarantors are described below:

- 83 -

Teknia Elorrio, S.L.U. (Vat number: B48054225). Its Registered Office is in Barrio de

San Agustín, S/N Elorrio, (C.P.48230), Vizcaya, Spain.

Teknia Bilbao XXI, S.L.U. (Vat number: B48094288). Its Registered Office is in

Parque Empresarial Abra Industrial, Vial H, Parcela 1,2,3; (C.P.48500), Abanto y

Ciérvana, Spain.

Teknia Montmeló, S.L. (Vat number: B64857428). Its Registered Office is in Pol. Ind.

El Eixample C/ Comte de Montemolín, 39 Parets del Vallés, (C.P. 08150), Barcelona,

Spain.

Teknia Pedrola, S.L.U. (Vat Number: B50871110). Its Registered Office is in

Polígono Industrial el Pradillo C/ Aneto, 23 Pedrola, (C.P.50690), Zaragoza, Spain.

Teknia Martos, S.L.U. (Vat number: B23068091). Its Registered Office is in C/Bailen

53, (C.P.23600), Martos, Jaén, Spain.

Teknia Azuqueca, S.L.U. (Vat number: B19101948). Its Registered Office is in

Polígono Industrial Miralcampo, calle Aluminio 4, (C.P.19200), Azuqueca de Henares,

Guadalajara, Spain.

Teknia Barcelona, S.L.U. (Vat number: B08658379). Its Registered Office is in Pol.

Ind. El Eixample C/ Comte de Montemolín, 39 Parets del Vallés, (C.P. 08150),

Barcelona, Spain.

Teknia Epila S.L.U. (Vat number: B11511565). Its Registered Office is in Polígono

Industrial Valdemuel, Avda. Opel España S/N (C.P. 50.290) Épila, Zaragoza, Spain.

Teknia Manresa, S.L.U. (Vat number: B08575672). Its Registered Office is in

C/Esteve Terradas, nº39; Polígono Industrial Bufalvent, (C.P.08243) Manresa;

Barcelona, Spain.

Teknia R&D, S.L. (Vat number: B85841351). Its Registered Office is in Plaza

Marqués de Salamanca, 9, 7º Izda , 28006, Madrid, Spain.

Teknia Kálisz Sp. z.o.o. (Vat number: PL6181011972). Its Registered Office is in ul.

Złota 20ª (C.P.62-800) Kalisz, Poland.

Teknia Rzeszow, S.A. (Vat number: PL8130268113). Its Registered Office is in ul.

Przemyslowa 4, (C.P. 35-105) Rzeszow, Poland.

Teknia Uhersky Brod a.s (Vat number: CZ49971034). Its Registered Office is in

Rybarska, 2330 (C.P. 688 01) Uhersky Brod, Czech Republic.

Teknia Brasil Ltd. (Vat number: 61.147.518/0001-47). Its Registered Office is in Rua

Ioneji Matsubayashi, 1.221 - Bairro Itaquera - Sao Paulo - (CEP: 08260-050), Brasil.

Teknia Nashville, LLC (VAT number: 62-1873673. Its Registered Office is in 94

Belinda Parkway, Mt Juliet, 37122 Tennessee, USA.

- 84 -

8.2. Nature of the Guarantees

In accordance with the Guarantees, each guarantee shall constitute an autonomous

abstract and first demand guarantee (garantía abstracta a primer requerimiento),

and therefore shall not constitute a fianza¸ in accordance with article 1.822 of the

Spanish Civil law, and therefore the rights of order, excussion and division (orden,

excusión y división) shall not apply.

The Guarantees may be enforced by the Commissioner upon a default of the Notes

pursuant to Condition 16 (Events of Default). If the Guarantees become

enforceable, the Commissioner, prior favourable resolution of the Syndicate of

Noteholders, may at its discretion enforce any of them without further notice or

formality.

Noteholders may not, individually or collectively, take any direct action to enforce

any rights in their favour under the Guarantees. Noteholders may only act through

the Commissioner.

Notwithstanding the above, the Commissioner shall inform the Issuer about the

enforcement of any Guarantee to any Subsidiary Guarantor. The Commissioner

shall cancel any enforcement of the Guarantees once received all the amounts due

under each issue of Notes.

8.3. Accession of additional Subsidiary Guarantors or Share Pledge over

Subsidiaries

If the Subsidiary Guarantors at any time represent less than the Minimum

Collateralisation Ratio, the Issuer shall at its sole discretion within a ninety (90)

days period from the date in which the Minimum Collateralisation Ratio is not

met decide to (i) appoint additional fully owned (directly or indirectly)

Subsidiaries as Subsidiary Guarantors or (ii) grant a pledge over the shares (in the

relevant percentage held by the Issuer) of any non-fully owned Subsidiary (the

“Share Pledge over Subsidiaries”), in order to comply with such ratio.

In addition, even if the Minimum Collateralisation Ratio is met, the Issuer may

voluntary appoint additional Subsidiaries as Subsidiary Guarantor.

The Issuer shall procure the delivery to the Commissioner of any agreement

documenting the Guarantee or the Share Pledge over Subsidiaries mentioned

above in favour of the Noteholders.

If at any moment after the granting of the Share Pledge over Subsidiaries such

Subsidiary becomes a fully owned Subsidiary, the Commissioner undertakes to

promptly release such pledge and the Issuer shall cause such Subsidiary to become

a Subsidiary Guarantor following the procedure set forth in Condition 8.3 above,

provided that such accession is required to maintain the Minimum

Collateralisation Ratio.

- 85 -

8.4. Release of Subsidiary Guarantors

If a Release Event (as defined below) has occurred with respect to a Subsidiary

Guarantor and (i) neither an Event of Default has occurred or is underway at that

time, or would occur as a consequence of such Release Event, (ii) nor any

Covenants under Condition 9 are breached, (iii) nor would the relevant Minimum

Collateralisation Ratio be breached as a consequence of such Release Event (the

“Release Conditions”), then the relevant Subsidiary Guarantor may be released

from its obligations under its Guarantee.

A “Release Event” shall include:

1. The full and final payment of all sums payable by, and the performance of

all the obligations of, the Issuer under the applicable issue of Notes under

the Programme;

2. The designation of the Issuer of that Subsidiary Guarantor as non-

guarantor subsidiary (“Non-Guarantor Subsidiary”). The Issuer, may

designate any Subsidiary Guarantor as a Non-Guarantor Subsidiary if the

Release Conditions are fulfilled.

If a Subsidiary Guarantor is designated as a Non-Guarantor Subsidiary,

the aggregate fair market value of all outstanding investments owned by

the Issuer and its Subsidiary Guarantors in the Subsidiary Guarantor

designated as a Non-Guarantor Subsidiary will be deemed to be an

investment made as of the time of designation and will reduce the amount

available for related party transactions under Condition 9.3 (Related-

party Transactions), for investments under Condition 9.7. (Limitation on

Investments), and for transactions with Non-Guarantor Subsidiaries under

Condition 9.9 (Transactions with Subsidiaries). Therefore, that

designation will only be permitted if the related-party transaction, the

investment, or the transaction with such subsidiary would be permitted at

that time and if the Subsidiary Guarantor otherwise meets the definition of

a Non-Guarantor Subsidiary, and therefore shall only be possible if the

Indebtedness Ratio, is less than 3.50, each determined on a pro forma

consolidated basis, assuming for these purposes that such release has been

made on the first day of the applicable Testing Period.

Any designation of Subsidiary Guarantor of the Issuer as a Non-Guarantor

Subsidiary will be evidenced to the Commissioner by filing therewith a

certified copy of the Board of Directors of the Issuer giving effect to such

designation and a certificate certifying that such designation complies with

Condition 8.3 and all Release Conditions.

The Board of Directors of the Issuer may at any time designate (or

redesignate) any Non-Guarantor Subsidiary to be a Subsidiary Guarantor

of the Issuer, in accordance with Condition 8.2; provided that such

designation (or redesignation, as the case may be) is deemed to be an

- 86 -

incurrence of Indebtedness by such Subsidiary of the Issuer of any

outstanding Indebtedness of such Subsidiary, and such designation (or

redesignation) will only be permitted if (a) no Event of Default exists

following such designation (or redesignation).

3. As described under Condition 19 (Syndicate of Noteholders. Modification

and Waiver).

The Issuer shall promptly notify the Noteholders of the release of any Subsidiary

Guarantor pursuant to this Condition 8.4 (Release of Subsidiary Guarantors).

8.5. Limitations

If a Subsidiary of the Issuer who is required to be a Subsidiary Guarantor pursuant

to Condition 8 is prohibited or restricted by law from becoming a Subsidiary

Guarantor as confirmed by the opinion of independent legal advisers of

recognised standing, but such prohibition or restriction could be avoided by the

inclusion of limitations in the Guarantee to be given by it, such Subsidiary of the

Issuer shall become a Subsidiary Guarantor, provided that its Guarantee shall

incorporate and shall be subject to such limitations.

If, as a result of a change in law taking effect after the date on which a Subsidiary

becomes a Subsidiary Guarantor, the guarantee of any such Subsidiary Guarantor

becomes prohibited or restricted by law, but such prohibition or restriction could

be avoided by the inclusion of limitations in the relevant Guarantee, the Guarantee

of such Subsidiary Guarantor shall be deemed to incorporate the applicable

limitations as of the date such change in law comes into effect, and the Issuer shall

ensure that the Guarantee of such Subsidiary Guarantor is amended within 90 days

of the Issuer becoming aware of any such prohibition or restriction to reflect such

limitations.

In the circumstances described above, the limitations applicable to such Guarantee

shall be the minimum limitations required under relevant laws in order that the

prohibition or restriction is satisfied.

9. Covenants

The Notes to be issued under this Programme will contain the following

covenants, some of them to be determined in the relevant Final Conditions.

9.1. Negative Pledge

So long as any Note remains outstanding under this Programme, neither the Issuer

nor the Subsidiary Guarantors shall create or permit any Security Interest upon the

whole or any part of its present or future undertakings, assets or revenues

(including uncalled capital) to secure any Indebtedness or Guarantee of

Indebtedness without (i) at the same time, or prior thereto, securing the Notes

equally and rateably therewith, or (ii) providing such other security for the Notes

- 87 -

as may be approved by an extraordinary resolution of Noteholders, unless such

Security Interest is a Permitted Security Interest, to secure any Indebtedness or to

secure the guarantee of any such Indebtedness.

For the purposes of this Condition:

“Guarantee” means, in relation to any Indebtedness of any Person, any

obligation of another Person to pay such Indebtedness including (without

limitation):

(a) any obligation to purchase such Indebtedness;

(b) any obligation to lend money, to purchase or subscribe shares or other

securities or to purchase assets or services in order to provide funds

for the payment of such Indebtedness;

(c) any indemnity against the consequences of a default in the payment of

such Indebtedness; and

(d) any other agreement to be responsible for such Indebtedness.

“Indebtedness” means any indebtedness of any Person for money borrowed

or raised including (without limitation) any indebtedness for or in respect of:

(i) amounts raised by accept under any accepted credit facility; (ii) amounts

raised under any note purchase facility; and (iii) the amount of any liability

in respect of leases or hire purchase contracts which would, in accordance

with applicable law and generally accepted accounting principles, be treated

as finance or capital leases.

“Issue Date”, means for the purposes of the covenants, the first issue date of

Notes under this Programme.

“Permitted Security Interest” means:

a. any netting or set-off arrangement entered into by any member of

the Group in the ordinary course of its financing arrangements for

the purposes of netting debit and credit balances, or a transaction

over cash accounts securing cash pooling arrangements;

b. any Security Interest in existence on the Issue Date to the extent that

it secures Indebtedness outstanding on such date;

c. any Security Interest over or affecting any asset existing at the time

it was acquired by a member of the Group after the Issue Date;

d. any Security Interest over or affecting any asset of any company

existing at the time it becomes a member of the Group after the Issue

Date;

- 88 -

e. any Security Interest for tax being challenged diligently and in good

faith, taking into account applicable time and grace periods for any

such challenge;

f. any Security Interest created by or resulting from any litigation or

legal proceeding;

g. any Security Interest over any machinery or goods related to the

Permitted Business of the Group in the ordinary course of the Issuer

or the Subsidiary Guarantors’ business or operations up to a

maximum amount individually or in the aggregate of 10% of the

nominal value of the Notes at Issue Date; and

h. any Security Interest which replaces any other Security Interest

permitted under paragraphs (a) to (g) above inclusive and which

secures an amount not exceeding the maximum principal amount

secured by such permitted Security Interest,

provided that (i) the obligation secured by such Security Interest has

been incurred by any member of the Group and (ii) the total obligations

secured by all the Security Interest at any time do not represent more

than the total amount of Consolidated EBITDA on the last Calculation

Date.

“Security Interest” means any mortgage, charge, pledge, lien or other

security interest including, without limitation, anything analogous to any of

the foregoing under the laws of any jurisdiction.

9.2. Change of Control

If a Change of Control occurs, each Noteholder shall have the option to require

the Issuer to redeem or, at the Issuer's option, purchase (or procure the purchase

of) in whole or in part its Notes at a price equal to 101 percent of their principal

amount plus accrued and unpaid interest up to (but excluding) the date for such

redemption or purchase (the “Put Option”).

If a Change of Control occurs, then the Issuer shall, without undue delay, after

becoming aware thereof, give notice of the Change of Control (a “Put Event

Notice”) to the Noteholders in accordance with Condition 21 (Notices) specifying

the nature of the Change of Control.

To exercise the Put Option, a Noteholder must within the Put Period block such

Note(s) or instruct the Spanish Central Registry or its Iberclear Member to block

such Note(s) and deposit a duly signed and completed notice of exercise in the

then current form obtainable from the Paying Agent (a “Put Notice”) in which the

Noteholder must specify a bank account to which payment is to be made under

this Condition 9.2 at the specified office of the Paying Agent, during normal

- 89 -

business hours on any business day in the city of the specified office of the Paying

Agent.

The Issuer shall redeem or, at its option, purchase (or procure the purchase of),

the relevant Note(s) on the date (the “Put Date”) seven days after the expiration

of the Put Period unless such Notes are previously redeemed or purchased and

cancelled. A Put Notice, once issued, shall be irrevocable.

For the purpose of these Conditions:

“Change of Control” shall occur in respect of the Issuer if (i) one or more

persons, acting individually or in concert, acquire Control, directly or

indirectly, of the Issuer; (ii) the Controlling Shareholder acting together or, as

the case may be, in concert with any other Person or Persons, losses Control,

directly or indirectly, of the Issuer; (iii) the Issuer consolidates with or merges

into another person and where the Issuer is not the continuing entity; and (iv)

the sale, lease, conveyance or other disposition of all or substantially all of

the assets of the Issuer taken as a whole.

“Put Period” means the immediately succeeding 90 days period after the date

on which a Put Notice has been published in accordance with Condition 21.

“Control” has the meaning assigned to that term in Article 42(1) of the

Spanish Commercial Code.

“Controlling Shareholder” means Siuled, S.L.

9.3. Related-party Transactions

So long as any Note remains outstanding under the Programme, the Issuer will

not, and will not permit any Subsidiary Guarantor to (i) enter into any agreement

or transaction with any Related Party which is not under normal market conditions

and (ii) enter into agreements having their termination date prior to the maturity

date of the Notes.

Notwithstanding the above, the Issuer and the Subsidiary Guarantors will be

permitted to:

a) enter into any netting or set-off arrangement entered into by any member of

the Group in the ordinary course of its financing arrangements for the purposes

of netting debit and credit balances, or a transaction over cash accounts

securing cash pooling arrangements; and

b) engage in the sale and lease back of real estate assets, provided however that

(i) the proceeds obtained from this sale and lease back are not distributed as

dividends or any other Distribution as defined in Condition 9.6. and (ii) that

Condition 9.5. shall apply.

- 90 -


“Related Party” means (i) any of the shareholders, directors or officers of

the Issuer, all of them directly or through entities, and any entity over which

the Issuer exercises control, in accordance with the definitions contained in

this regard in article 42(1) of the Commercial Code (Código de Comercio),

or hold a direct or indirect interest equal to or greater than 25% of the share

capital of such entity, and (ii) any of the directors or officers of the

Subsidiaries, all of them directly or through entities, and any entity over

which the Subsidiary exercises control, in accordance with the definitions

contained in this regard in article 42(1) of the Commercial Code (Código de

Comercio), or hold a direct or indirect interest equal to or greater than 25%

of the share capital of such entity.

9.4. Limitation on Indebtedness

So long as any Note remains outstanding under the Programme, the Group (being

the “Group” the Issuer and its Subsidiaries) shall not, after the Issue Date, incur

any additional Indebtedness, if on the Calculation Date the Indebtedness Ratio

exceeds 3.50 to 1.00, determined on a pro forma consolidated basis, assuming for

these purposes that such additional Indebtedness had been incurred, and the net

proceeds thereof applied.

For purposes of determining compliance with any euro-denominated restriction

on the incurrence of Indebtedness, the Euro Equivalent of the principal amount of

Indebtedness denominated in another currency will be calculated based on the

most recently published annual financial statements to the extent shown therein or

otherwise, based on the relevant currency exchange rate in effect on the date such

Indebtedness was incurred, in the case of term Indebtedness, or first committed,

in the case of Indebtedness incurred under a revolving credit facility; provided

that, if and for so long as any such Indebtedness is subject to an agreement

intended to protect against fluctuations in currency exchange rates with respect to

the currency in which such Indebtedness is denominated covering principal and

interest on such Indebtedness, the amount of such Indebtedness, if denominated

other than in Euros, will be the amount of the principal payment required to be

made under such currency agreement and, otherwise, the Euro Equivalent of such

amount plus the Euro Equivalent of any premium which is at such time due and

payable but is not covered by such currency agreement.


“Calculation Date” means, for the purposes of calculating the Indebtedness

Ratio, the date on which the last audited annual consolidated financial

statements are available.

“Euro Equivalent” means, with respect to any monetary amount in a

currency other than Euros, at any time of determination thereof, the amount

- 91 -

of Euros obtained by converting such currency other than Euros involved in

such computation into Euros at the spot rate for the purchase of Euros with

the applicable currency other than Euros as published in the Financial Times

in the “Currency Rates” section (or, if the Financial Times is no longer

published, or if such information is no longer available in the Financial Times,

such source as may be selected in good faith by the Issuer) on the date of such

determination.

“Indebtedness Ratio” means as of any Calculation Date, the ratio of (x) the

Net Financial Debt for the relevant Testing Period preceding such Calculation

Date of determination to (y) the Consolidated EBITDA accrued during the

relevant Testing Period. In the event that the Group incurs, assumes,

guarantees, repays, repurchases, redeems, or otherwise discharges any

Indebtedness subsequent to the commencement of the period for which the

calculation of the Indebtedness Ratio is made, then the Indebtedness Ratio

will be calculated giving pro forma effect (as determined in good faith by a

responsible accounting or financial officer of the Issuer) to such incurrence,

assumption, guarantee, repayment, repurchase, redemption or other discharge

of Indebtedness, and the use of the proceeds there from, as if the same had

occurred at the beginning of the applicable Testing Period.

“Net Financial Debt” means, at the relevant Calculation Date, the difference

between financial debt (bank borrowings, debt instruments and other

marketable securities, both long and short term) and cash and cash equivalents

(cash and bank deposits and other liquid investments with settlement in a term

no longer than T+3) according to the last consolidated audited annual

accounts available. For the purposes of calculating the consolidated Net

Financial Debt the following calculations shall be considered: (i) if the

financial debt of the Subsidiary is guaranteed by the Company, such financial

debt would be fully taken into account, while (ii) if the financial debt of the

Subsidiary is not guaranteed by the Company, only the financial debt of the

Subsidiary multiplied by the relevant stake of the Company in such

Subsidiary would be considered.

“Testing Period” means, with respect to any Calculation Date, the last

audited annual consolidated financial statements used for the calculation to

be made at such Calculation Date.

Irrespective of the Indebtedness Ratio the Issuer and the Subsidiary Guarantors

are permitted to incur or permit Indebtedness under cash pooling arrangements in

the ordinary course of business.

9.5. Limitation on sale of assets and mandatory tender offer for the Notes

The Issuer and the Subsidiary Guarantors will not undertake an Asset Sale unless

(i) such Asset Sale is made on an arm’s length basis, and (ii) at least, 75 percent

- 92 -

of the price is paid in Cash or Cash Equivalent on the date of execution of the

Asset Sale.

The Issuer undertakes to apply towards reinvestment in the Issuer’s or Subsidiary

Guarantor’s ordinary business any proceeds obtained from an Asset Sale within

the 365 days following the completion of such Asset Sale. Should the Issuer or

the applicable Subsidiary Guarantor not reinvest the net proceeds (that is,

deducting from such proceeds any taxes and expenses related to such Asset Sale)

from the Asset Sale within the aforesaid time period the proceeds not reinvested

shall be considered as “Excess Proceeds”. If, at any time during any given

financial year, the amount of Excess Proceeds arising from a single or a series of

Asset Sales is above EUR 15,000,000, the Issuer shall launch, within a three

month period from the date on which the Excess Proceeds exceed EUR

15,000,000, a tender offer targeting to all Noteholders for purchase on a pro rata

basis at a price equal to 101 percent of the principal amount plus interest accrued.

Notwithstanding the preceding, any single transaction or series of related

transactions that involves assets having a Fair Market Value of less than EUR

250,000, will not be deemed to be an Asset Sale.


“Asset Sale” means the sale, lease, conveyance or other disposition of any

assets by the Issuer or any of its Subsidiaries.

"Cash Equivalents" means:

(a) direct obligations (or certificates representing an interest in such

obligations) issued by, or unconditionally guaranteed by, the

government of a member state of the European Union (except Greece),

the United States of America, Switzerland, or Canada (including, in

each case, any agency or instrumentality thereof), as the case may be,

the payment of which is backed by the full faith and credit of the

relevant member state of the European Union or the United States of

America, Switzerland, or Canada, as the case may be, and which are not

callable or redeemable at the Issuer's option;

(b) overnight bank deposits, time deposit accounts, certificates of deposit,

bankers' acceptances and money market deposits (and similar

instruments) with maturities of 12 months or less from the date of

acquisition issued by a bank or trust company which is organised under,

or authorised to operate as a bank or trust company under, the laws of a

member state of the European Union (except Greece) or of the United

States of America or any state thereof, Switzerland or Canada; provided

that such bank or trust company has capital, surplus and undivided

profits aggregating in excess of EUR 500,000,000 (or the foreign

currency equivalent thereof as of the date of such investment) and

whose long-term debt is rated Baa2 or higher by Moody's Investors

- 93 -

Service, Inc. ("Moody's"), BBB or higher by Standard & Poor's Ratings

Group ("S&P"), BBB or higher by Fitch Ratings Limited ("Fitch"), or

BBB by DBRS Ratings Limited ("DBRS") (or the equivalent rating

category of another internationally recognised rating agency);

(c) repurchase obligations with a term of no greater than 30 days or such

shorter period until the immediately following the relevant interest

payment date or the Maturity Date, for underlying securities of the types

described in paragraphs (a) and (b) above entered into with any

financial institution meeting the qualifications specified in paragraph (b)

above;

(d) commercial paper having one of the two highest ratings obtainable from

Moody's, S&P, Fitch or DBRS, and, in each case, maturing within one

year of the date of acquisition; and

(e) holdings in money market funds at least 95 per cent. of the assets of

which constitute Cash Equivalents of the kinds described in paragraphs

(a) through (d) of this definition.

“Fair Market Value” means the value that would be paid by a willing buyer

to an unaffiliated willing seller in a transaction not involving distress or

necessity of either party, determined in good faith by the Issuer, which

determination shall be conclusive if evidenced by a board resolution.

“Maturity Date” means the date in which the Notes issued under the

Programme and with the longer maturity in time matures.

9.6. Limitation on Dividends

So long as any Note remains outstanding, the Issuer shall not pay, make or declare

any dividend or other Distribution (in kind or in cash) when the Indebtedness

Ratio for the previous financial year ended 31 December, exceeds 3.50 to 1.0.

In the event that the Indebtedness Ratio falls below 3.50 to 1.0, the Issuer shall be

entitled to pay a dividend or other Distribution not exceeding 40 percent of the

Ordinary Benefit but only in respect of such Testing Period and not in respect of

any earlier Testing Period, provided that, as a consequence of such Distribution,

the Indebtedness Ratio is still below 3.50 to 1.0.


“Distribution” means the payment by the Issuer of any dividend, the

redemption or repurchase of any of the Issuer’s shares, the repayment of any

Indebtedness granted by the Issuer to its shareholders, the Controlling

Shareholder or any of its Subsidiaries or otherwise subordinated or any other

cash distribution to the shareholders, Controlling Shareholder or any of its

Subsidiaries.

- 94 -

“Ordinary Benefit” means, with respect a Testing Period, the ordinary

benefit available for distribution (beneficio ordinario) of the Issuer, in

accordance with the audited annual individual financial statements of such

Testing Period; therefore, excluding any extraordinary benefit (beneficio

extraordinario) as declared in said audited annual individual financial

statements.

9.7. Limitation on Investments

The Issuer will, and will cause or permit any of its Subsidiaries to, directly or

indirectly, only make Investments in Permitted Business if at the time of any such

Investment:

(a) no Event of Default (as defined in Condition 16 (Events of Default)) has

occurred or is underway, and is continuing or would occur as a consequence

of such Investment; and

(b) the Indebtedness Ratio is less than 3.50, each determined on a pro forma

consolidated basis, assuming for these purposes that such Investment has

been made on the first day of the applicable Testing Period, provided that

irrespective of the Indebtedness Ratio, the Issuer and the Subsidiary

Guarantors are permitted to make investments in the Issuer or any of the

Subsidiary Guarantors.

In case any of the said Subsidiary Guarantors are designated as Non-

Guarantor Subsidiary in accordance with Condition 8.4. the release of such

Subsidiary Guarantor shall be subject to the fulfilment of the Release

Conditions, as detailed in such Condition 8.4.

For the purpose of this Condition:

“Investment” means with respect to any Person, all direct or indirect

investments by such Person in other Persons (including Subsidiaries) in the

forms of loans (including guarantees or other obligations), advances or capital

contributions (excluding commission, travel and similar advances to officers

and employees made in the ordinary course of business), purchases or other

acquisitions for consideration of Indebtedness, or securities, together with all

items that are or would be classified as investments on a balance sheet

prepared in accordance with Spanish GAAP.

“Permitted Business” means (a) any businesses, services or activities

engaged in by the Issuer or any of its Subsidiaries on the Issue Date (each a

“Permitted Activity”); and (b) any businesses, services and activities

engaged in by the Issuer or any of its Subsidiaries that are related,

complementary, incidental, ancillary or similar to any Permitted Activity or

are extensions or developments of any Permitted Activity.

- 95 -

9.8. Limitation on Structural Modifications

So long as any Note remains outstanding, the Issuer will not, and will not cause

or permit any Subsidiary to, pass a resolution for the winding-up (liquidación),

dissolution (disolución), reconstruction, amalgamation, reorganisation, merger or

consolidation with or into another Person (a “Structural Modification”), of the

Issuer or any Subsidiary, unless:

(a) such Structural Modification is constrained by law; or

(b) such Structural Modification does not actually involve or may eventually

involve a downgrade of the credit rating of the Issuer granted by any

registered and certified credit rating agency authorized by ESMA, and

(c) such Structural Modification does not actually involve a breach of the

Indebtedness Ratio.

This covenant will not apply to (i) any Structural Modification among Subsidiary

Guarantors, (ii) any Structural Modification among Subsidiary Guarantors and the

Issuer;(iii) among Subsidiaries and the Issuer, being the company subsiting the

Issuer, or (iv) to the transformation of the Issuer from a private limited company

(sociedad de responsabilidad limitada) into a public limited company (sociedad

anónima).

9.9. Transactions with Subsidiaries

The Issuer will not, and will not cause or permit any of its Subsidiary Guarantors

to, make any payment to or sell, lease, transfer or otherwise dispose of any of its

properties or assets to, or purchase any property or assets from, or enter into or

make or amend any transaction, contract, agreement, understanding, loan,

advance or guarantee with, or for the benefit of, any Subsidiary of the Issuer in

excess of EUR 2,000,000 (each, a “Subsidiary Transaction”), unless the

Subsidiary Transaction is (x) on terms that are no less favourable to the Issuer or

the relevant Subsidiary Guarantor than those that would have been obtained in a

comparable transaction by the Issuer or such Subsidiary Guarantor with an

unrelated Person and (y) otherwise in compliance with the requirements of

Spanish law.

The following items will not be deemed to be Subsidiary Transactions and,

therefore, will not be subject to the provisions of the prior paragraph:

(a) any employment agreement, collective bargaining agreement, consultant or

employee benefit arrangements with any employee, consultant, officer or

director of the Issuer or any Subsidiary Guarantor, including under any share

option, share appreciation rights, share incentive or similar plans, entered into

in the ordinary course of business;

- 96 -

(b) payment of reasonable and customary fees and reimbursements of expenses

(pursuant to indemnity arrangements or otherwise) of officers, directors,

employees or consultants of the Issuer or of any of the Subsidiary Guarantors;

(c) loans or advances to employees for travel and relocation in the ordinary

course of business not to exceed EUR 1,000,000 in the aggregate at any one

time outstanding;

(d) transactions between or among the Issuer and/or the Subsidiary Guarantors

(including loans or advances);

(e) any issuance of Equity Interests of the Issuer to Subsidiary Guarantors of the

Issuer;

(f) any transaction between or among the Issuer and/or Subsidiary Guarantors

and any joint venture (a) pursuant to the terms of the respective joint venture

agreement or (b) in the ordinary course of business; and

(g) transactions with customers, clients, suppliers, purchasers or sellers of goods

or services or providers of employees or other labour, in each case in the

ordinary course of business and otherwise in compliance with the terms of

these Conditions that are fair to the Issuer or the Subsidiary Guarantors, in the

reasonable determination of the members of the Board of Directors of the

Issuer or the senior management thereof, or are on terms at least as favourable

as might reasonably have been obtained at such time from an unaffiliated

Person.

9.10. Information and Reports

So long as any Notes issued under this Programme are outstanding, the Issuer shall

provide the Commissioner (which information shall be available to Noteholders

at the specified office of the Commissioner):

(a) as soon as the same become available, but in any event within 120 days after

the end of each of its financial years, a copy of its audited consolidated

financial statements for that financial year, starting with the financial year

ending 31 December 2016;

(b) promptly after the occurrence of a material acquisition, disposition,

restructuring of the Issuer and its Subsidiaries taken as a whole or change in

auditors or any other material event of the Issuer and its Subsidiaries taken as

a whole, a copy of each notice provided to the MARF in accordance with

applicable regulation containing a description of such event.

For clarification purposes, the Commissioner assumes no responsibility for the

authenticity, accuracy or correctness of the information, reports or certifications

provided by the Issuer.

- 97 -

10. Interest

The Notes might be issued with fixed or variable interest rate, as determined in the

relevant Final Conditions (the “Interest Rate”). Interest Rate shall accrued from the

disbursement date of each issue until its maturity date and subject as provided in

Condition 12 (Payments).

Each Note will cease to bear interest when such Note is redeemed or repaid pursuant

to Condition 11 (Redemption and Purchase) or Condition 16 (Events of Default),

from the due date for redemption thereof unless, upon due presentation thereof,

payment of the principal amount of the Notes is improperly withheld or refused, in

which event interest will continue to accrue at such rate (both before and after

judgment) until whichever is the earlier of (i) the day on which all sums due in respect

of such Note up to that day are received by or on behalf of the relevant Holder, and

(ii) the 7 (seven) days after the Paying Agent has notified Noteholders of receipt of

all sums due in respect of all the Notes up to that seventh day (except to the extent

that there is failure in the subsequent payment to the relevant Holders under these

Conditions).

If interest is to be calculated in respect of a period which is equal to or shorter than

an Interest Period, it shall be calculated by applying the Interest Rate to the

Authorised Denomination, multiplying the product by the relevant Day Count

Fraction and rounding the resulting figure to the nearest cent (half a cent being

rounded upwards) where:

“Day Count Fraction” means in respect of any period the number of days in

the relevant period, from and including the date on which interest begins to

accrue up to but excluding the date on which it falls due, divided by the

number of days in the Regular Period in which the relevant period falls; and

“Regular Period” means each period from and including the issue date under

each issue of Notes or any interest payment date to (but excluding) the next

interest payment date.

Therefore, in accordance with the abovementioned, the interest of the Notes will be

specify in the Final Conditions. The interest payment dates of each issue of Notes,

which shall be monthly, quarterly, semiannually or annually, and if applicable, the

existence of any irregular periods will be set forth in the relevant Final Conditions.

If variable Interest Rate is specified in the relevant Final Conditions, the Interest Rate

shall be the sum of the EURIBOR plus the Margin specified in the Final Conditions.

In case the EURIBOR does not appear on the relevant page or if the relevant screen

page is unavailable, the Paying Agent will (i) request each of the Reference Banks to

provide a quotation of the EURIBOR on the Interest Determination Date to prime

banks in the Relevant Financial Centre interbank market in an amount that is

representative for a single transaction in that market at that time; and (ii) determine

the arithmetic mean of such quotations; and if fewer than two such quotations are

- 98 -

provided as requested, the Paying Agent will determine the arithmetic mean of the

rates (being the nearest to the EURIBOR, as determined by the Calculation Agent)

quoted by major banks in the principal financial centre of the specified currency,

selected by the Paying Agent, at approximately 11.00 a.m. on the first day of the

relevant Interest Period for loans in euros to leading European banks for a period

equal to the relevant Interest Period and in an amount that is representative for a

single transaction in that market at that time.

"EURIBOR" means, in respect of any specified period, the interest rate benchmark

known as the Euro zone interbank offered rate which is calculated and published by

a designated distributor (as at the date of the Programme, Thomson Reuters) in

accordance with the requirements from time to time of the European Banking

Federation based on estimated interbank borrowing rates for a number of designated

currencies and maturities which are provided, in respect of each such currency, by a

panel of contributor banks (details of historic EURIBOR rates can be obtained from

the designated distributor).

"Margin" has the meaning given in the relevant Final Conditions.

"Interest Determination Date" has the meaning given in the relevant Final

Conditions.

"Reference Banks" has the meaning given in the relevant Final Conditions or, if

none, four major banks selected by the Paying Agent in the market that is most

closely connected with the EURIBOR.

11. Redemption and Purchase

(a) Final Redemption: Unless previously purchased and cancelled or redeemed

as herein provided, the Notes will be redeemed at their principal amount on

the relevant maturity date or on the date specifically determined in the Final

Conditions of the particular issue, which shall range between 4 and 7 years.

The Notes may not be redeemed at the option of the Issuer other than in

accordance with this Condition 11.

(b) Redemption for tax reasons: The Notes may be redeemed at the option of the

Issuer in whole, but not in part, at any time, on giving no less than 30 and no

more than 60 days' notice to the Noteholders (which notice shall be

irrevocable) at their principal amount, together with interest accrued to the

date fixed for redemption, if, immediately before giving such notice, the

Issuer satisfies the Commissioner that:

(i) the Issuer has or will become obliged to pay additional amounts as

provided or referred to in Condition 15 (Taxation) as a result of

any change in, or amendment to, the laws or regulations of the

Kingdom of Spain or any political subdivision or any authority

thereof or therein having power to tax, or any change in the

application or official interpretation of such laws or regulations

- 99 -

(including a holding by a court of competent jurisdiction), which

change or amendment becomes effective on or after the Issue Date;

and

(ii) such obligation cannot be avoided by the Issuer taking reasonable

measures available to it;

provided, however, that no such notice of redemption shall be given earlier

than 90 days prior to the earliest date on which the Issuer would be obliged

to pay such additional amounts if a payment in respect of the Notes were then

due.

Prior to the publication of any notice of redemption pursuant to this

paragraph, the Issuer shall deliver to the Commissioner:

(A) a certificate signed by a representative of the Issuer stating that the

Issuer is entitled to effect such redemption and setting forth a

statement of facts showing that the conditions precedent to the right

of the Issuer so to redeem have occurred; and

(B) an opinion in form and substance satisfactory to the Commissioner

of independent legal advisers of recognised standing to the effect

that the Issuer has or will become obliged to pay such additional

amounts as a result of such change or amendment.

The Commissioner shall be entitled to accept such certificate and opinion as

sufficient evidence of the satisfaction of the circumstances set out in (i) and

(ii) above, in which event they shall be conclusive and binding on the

Noteholders.

Upon the expiry of any such notice as is referred to in this Condition 11 (b),

the Issuer shall be bound to redeem the Notes in accordance with this

Condition 11 (b).

(c) No other redemption: The Issuer shall not be entitled to redeem the Notes

otherwise than as provided in paragraphs 11.(a) (Final redemption) and (b)

(Redemption for tax reasons) of this Condition 11, except in accordance with

Condition 11 (d) below.

(d) Purchase: Subject to compliance with applicable laws and regulations, each

of the Issuer or any of its Subsidiaries, may at any time purchase Notes in the

following conditions:

(a) through a tender offer directed to all Noteholders at any price, or

(b) on the open market at any price.

Such Notes may be held, re-sold, or, at the option of the relevant purchaser,

cancelled and while held by or on behalf of the Issuer as treasury shares or

- 100 -

any such Subsidiary, shall not entitle the Holder to vote at any meetings of

the relevant Syndicate of Noteholders and shall not be deemed to be

outstanding for the purposes of calculating quorums at meetings of the

Syndicate of Noteholders or for the purposes of Condition 19 (Syndicate of

Noteholders).

(e) Cancellation: All Notes so redeemed shall be cancelled and may not be

reissued or resold. Notes purchased by the Issuer or any of its Subsidiaries

may, at the option of the relevant purchaser, be cancelled.

(f) Notice of Redemption: All Notes in respect of which any notice of redemption

is given under this Condition shall be redeemed on the date specified in such

notice in accordance with this Condition.

12. Payments

(a) Principal and Interest: Payments of principal and interest shall be made by

transfer to a euro account (or other account to which Euros may be credited

or transferred) of the relevant Noteholder maintained by or on behalf of it

with a bank that processes payments in a city in which banks have access to

the TARGET2 system, details of which appear in the records of Iberclear or,

as the case may be, the relevant Iberclear Member at the close of business on

the day immediately preceding the relevant interest payment date or the

maturity date, as applicable, on which the payment of interest or principal, as

the case may be, falls due. Noteholders must rely on the procedures of

Iberclear or, as the case may be, the relevant Iberclear Member to receive

payments in respect of the relevant Notes. Neither the Issuer nor the Paying

Agent will have any responsibility or liability for the records relating to

payments made in respect of the Notes.

(b) Payments subject to fiscal laws: All payments in respect of the Notes issued

under the Programme are subject in all cases to any applicable fiscal or other

laws, regulations and directives in the place of payment, but without prejudice

to the provisions of Condition 15 (Taxation). No commissions or expenses

shall be charged to the Noteholders in respect of such payments.

(c) Payments on business days: Where payment is to be made by transfer to a

euro account (or other account to which Euros may be credited or transferred),

payment instructions (for value on the due date, or, if the due date is not a

business day, for value on the next succeeding business day) will be initiated

on the due date for payment. A Holder of a Note shall not be entitled to any

interest or other payment in respect of any delay in payment resulting from

the due date for a payment not being a business day. In this paragraph

“business day” means a day (other than a Saturday or Sunday) which is a

TARGET Settlement Day.

(d) Interpretation: In these Conditions:

- 101 -

“TARGET2” means the Trans-European Automated Real-Time Gross

Settlement Express Transfer payment system which utilises a single shared

platform and which was launched on 19 November 2007; and

“TARGET Settlement Day” means any day on which TARGET2 is open

for the settlement of payments in Euros.

13. Placement of each issue under the Programme

Regarding the Notes to be traded on the MARF (Mercado Alterantivo de Renta Fija)

under this Information Memorandum, the Issuer has appointed Banco de Sabadell,

S.A. and Bankinter, S.A. (acting through Bankinter Securities S.V., S.A.) as

Placement Entities. During the term of the Information Memorandum, the Issuer

can freely appoint other placement entities of the respective Notes (jointly with any

other placement entities the “Placement Entities”); all of which will be stated, as

the case may be, in the Final Conditions of each issue.

14. Further issues

The Issuer may from time to time, without the consent of the Noteholders, create

and issue further notes having the same terms and conditions as the Notes issued

under any previous Final Conditions in all respects (except for the first payment of

interest) and also the same Syndicate of Noteholders and Commissioner so as to be

consolidated, and form a single series, with the relevant issue of Notes (as detailed

in the Final Conditions).

15. Taxation

All payments of principal and interest in respect of the Notes or the Guarantees by

or on behalf of the Issuer or the Subsidiary Guarantors, as applicable, shall be made

free and clear of, and without withholding or deduction for or on account of, any

present or future taxes, duties, assessments or governmental charges of whatever

nature imposed, levied, collected, withheld or assessed by or on behalf of the

Kingdom of Spain or any political subdivision thereof or any authority therein or

thereof having power to tax, unless the withholding or deduction of such taxes,

duties, assessments or governmental charges is required by law (being a “Gross-

Up Event”).

If a Gross-Up Event occurs, the Issuer (or the Subsidiary Guarantors, as the case

may be) shall pay such additional amounts (“Additional Amounts”) as may be

necessary to ensure that the net amount received by each Noteholder after such

withholding or deduction (including any withholding or deduction in respect of any

Additional Amounts) shall not be less than the amount the Noteholder would have

received if such Taxes had not been withheld or deducted, except that no such

Additional Amounts shall be payable in respect of:

(a) any Note presented for payment by or on behalf of a Holder who is liable

for such taxes, duties, assessments or governmental charges in respect of

- 102 -

such Note by reason of its having some connection with the Kingdom of

Spain other than the mere holding of the Note; or

(b) any Note presented for payment by or on behalf of a Holder who fails to

make any necessary claim or to comply with any certification,

identification or other requirements concerning the nationality, residence,

identity or connection with the taxing jurisdiction of such Holder, if such

claim or compliance is required by statute, treaty, regulation or

administrative practice of the taxing jurisdiction of the Issuer as a

condition to relief or exemption from such taxes; or

(c) any Note presented for payment by or on behalf of an individual resident

for tax purposes in the Kingdom of Spain if the Spanish tax authorities

determine that payments made to such individuals are not exempt from

Spanish withholding tax and require a withholding to be made; or

(d) any Note presented for payment by or on behalf of a Holder who is a

fiduciary, a partnership, a limited liability company or anything other than

the sole beneficial owner of that payment, to the extent to which that

payment would be required by the laws of Spain to be included in the

income, for tax purposes, of a beneficiary or settlor with respect to the

fiduciary, a member of that partnership, an interest holder in that limited

liability company or a beneficial owner who would not have been entitled

to any additional amounts had it been the holder; or

(e) any Note where such withholding or deduction is imposed on a payment

to an individual and is required to be made pursuant to European Council

Directive 2003/48/EC on the taxation of savings income or any law

implementing or complying with, or introduced in order to conform to, this

Directive; or

(f) any Note presented for payment by or on behalf of a Holder who would

have been able to avoid such withholding or deduction by presenting the

relevant Note to another paying agent in a member state of the European

Union; or

(g) any Note presented for payment more than 30 days after the Relevant Date

except to the extent that the Holder of such Note would have been entitled

to such additional amounts on presenting such Note for payment on the

last day of such period of 30 days; or

(h) any taxes that are imposed or withheld pursuant to Sections 1471 through

1474 of the Internal Revenue Code of 1986 (FATCA) (or any amended or

successive version of such sections that is substantively comparable and

not materially more onerous to comply with), any regulations promulgated

there under, any official interpretations thereof or any agreements entered

into in connection with the implementation thereof.

- 103 -

In these Conditions, "Relevant Date" means whichever is the later of (1) the date

on which the payment in question first becomes due, or (2) if the full amount

payable has not been received in a city in which banks have access to the

TARGET2 by the Agent on or prior to such due date, the date on which (the full

amount having been so received) notice to that effect has been given to the

Noteholders.

Any reference in these Conditions to principal or interest shall be deemed to

include any additional amounts in respect of principal or interest (as the case may

be) which may be payable under this Condition 15 or any undertaking given in

addition to or in substitution of this Condition 15.

16. Events of Default

If any of the following events occur or is ongoing:

(a) Non-payment: the Issuer fails to pay any amount of principal in respect of the

Notes within fourteen days of the due date for payment thereof or fails to pay

any amount of interest in respect of the Notes within twenty one days of the

due date for payment thereof; or

(b) Accession of Additional Subsidiary Guarantors: If no Additional Subsidiary

Guarantors subscribe a Guarantee within a period of 90 days from the breach

of the relevant Minimum Collateralisation Ratio in accordance with

Condition 8.3.

(c) Breach of other obligations: the Issuer or either of the Subsidiary Guarantors

defaults in the performance or observance of any of its other obligations under

or in respect of the Notes or the Guarantee and such default remains

unremedied for 30 days after written notice thereof to the Issuer and the

Subsidiary Guarantors; or

(d) Cross-default of Issuer or Subsidiary Guarantors:

(i) any Indebtedness of the Issuer or any of the Subsidiary Guarantors is

not paid when due (vencida, líquida y exigible) or (as the case may be)

within any originally applicable grace period;

(ii) any such Indebtedness becomes due and payable (vencida, líquida y

exigible) prior to its stated maturity otherwise than at the option of the

Issuer or any of the Subsidiary Guarantors (as the case may be) or

(provided that no event of default, howsoever described, has occurred)

any Person entitled to such Indebtedness;

provided that the aggregate amount of the Indebtedness, guarantees or

indemnities in respect of which one or more of the events mentioned above

in this paragraph (d) have occurred, individually or in the aggregate equals or

- 104 -

exceeds EUR 3,000,000 (or its equivalent in any other currency or currencies);

or

(e) Enforcement proceedings: a distress, attachment, execution, or other legal

process is levied, enforced or sued out, on or against all or a material part of

the property, assets or revenues of the Issuer or any of the Subsidiary

Guarantors and is not discharged or stayed within 90 days provided that

individually or in aggregate the amount of property, assets and/ or revenues

involved in any such distress, attachment, execution or legal process equals

or exceeds EUR 3,000,000; or

(f) Security enforced: a secured party takes possession, or a receiver, manager or

other similar officer is appointed to the whole or a substantial part of the

undertaking, assets and revenues of the Issuer or any of the Subsidiary

Guarantors in respect of an obligation the principal amount of which equals

or exceeds EUR 3,000,000; or

(g) Winding up, etc.: an order is made or an effective resolution is passed for the

winding up, liquidation or dissolution of the Issuer or any of the Subsidiary

Guarantors (otherwise than for the purposes of or pursuant to an

amalgamation, reorganization or restructuring whilst solvent, or as provided

in Condition 9.8 (Limitation on Structural Modification)); or

(h) Failure to take action, etc.: any action, condition or thing at any time required

to be taken, fulfilled or done in order to (i) enable the Issuer and the

Subsidiary Guarantors lawfully to enter into, exercise their respective rights

and perform and comply with their respective obligations under and in respect

of the Notes (ii) ensure that those obligations are legal, valid, binding and

enforceable and (iii) make the Notes admissible as evidence in the courts of

the Kingdom of Spain; or

(i) Unlawfulness: it is or will become unlawful for the Issuer or any of the

Subsidiary Guarantors to perform or comply with any of their obligations

under or in respect of the Notes or the Guarantee; or

(j) Guarantee not in force: the Guarantee of the Notes is not (or is claimed by

any of the Subsidiary Guarantors not to be) in full force and effect prior to the

disbursement date of the first issuance of Notes in the terms set forth in

Condition 8 (Guarantees and Security); or

(k) To be delisted: if the Notes cease to be listed on any multilateral trading

facility of the European Union,

then any Noteholder may, by notice in writing given to the Issuer by (i) the

Commissioner acting upon a resolution of the Syndicate of Noteholders, in respect

of all Notes, or (ii) unless there has been a resolution to the contrary by the

Syndicate of Noteholders, any Noteholder in respect of such Note, declared the

- 105 -

Notes immediately due and payable whereupon it shall become immediately due

and payable at its principal amount, together with accrued interest, without further

formality.

17. Prescription

Claims for principal and interest shall become void unless made within a period of

5 years (in the case of principal and interest) after the date on which the payment in

question first becomes due.

18. Paying Agent

The financial service of the debt in relation to each issue of Notes will be carried

out by Banco de Sabadell, S.A. (the “Paying Agent”). In acting under the relevant

agency agreement and in connection with the Notes, the Paying Agent acts solely

as agent of the Issuer, and does not assume any obligations or relationship of agency

or trust for or with any of the Noteholders.

The Issuer reserves the right at any time to vary or terminate the appointment of

any Paying Agent and to appoint a successor agent and additional or successor

agents provided, however, that the Issuer shall at all times maintain (a) an agent,

and (b) so long as the Notes are listed on a multilateral trading facility, secondary

market, there will at all times be an Paying Agent with a specified office in such

place as may be required by the rules and regulations of the relevant multilateral

trading facility or secondary market.

Notice of any change in the Paying Agent or in its specified offices shall promptly

be given to the Noteholders.

19. Syndicate of Noteholders, Modification and Waiver

Each issuance of Notes shall foresee the incorporation of a Syndicate of

Noteholders in accordance with the following terms:

(a) Syndicate of Noteholders: Noteholders shall meet in accordance with certain

regulations governing the Syndicate of Noteholders (the “Regulations”). The

Regulations contain the rules governing the Syndicate of Noteholders and the

rules governing its relationship with the Issuer.

Noteholders shall, by virtue of purchasing and/or holding Notes, be deemed

to have agreed to: (i) the appointment of the relevant Commissioner; and (ii)

become a member of the Syndicate of Noteholders.

The Commissioner appointed by the Syndicate of Noteholders of the first

issue will also act as Commissioner for any other future issues under the

Programme.

The Issuer may, with the consent of the Commissioner, but without the

consent of the Noteholders, amend these Conditions to correct a manifest or

- 106 -

proven error or to make amendments of a formal, minor or technical nature

or to comply with mandatory provisions of law.

In addition to the above, the Issuer and the Noteholders, the latter by means

of a resolution of the Syndicate of Noteholders, may agree to any

modification, whether material or not, of these Conditions and any waiver of

any breach or proposed breach of these Conditions.

For the purposes of these Conditions:

“Commissioner” means the comisario as this term is defined under

the Spanish Corporations Law (Ley de Sociedades de Capital) of the

Syndicate of Noteholders; and

“Syndicate of Noteholders” means the sindicato as this term is

described under the Spanish Corporations law (Ley de Sociedades de

Capital).

In accordance with article 425 of the Spanish Corporations law (Ley de

Sociedades de Capital), a general meeting of the Syndicate of Noteholders

shall be quorate upon first being convened provided that Noteholders holding

or representing two-thirds of the Notes outstanding attend. If the necessary

quorum is not achieved at the first meeting, a second general meeting may be

convened to meet one month after the first general meeting and shall be

quorate regardless of the number of Noteholders in attendance. A resolution

shall be passed by Holders holding an absolute majority of the Notes present

or duly represented at any properly constituted meeting.

(b) Notification to the Noteholders: Any modification, waiver or authorisation in

accordance with this Condition 19 shall be binding for the Noteholders and

shall be communicated by the Issuer to the Noteholders as soon as practicable

thereafter in accordance with Condition 21 (Notices).

(c) The template text of the Regulations of each Syndicate of Noteholders to be

incorporated under each relevant issue of Notes is as follows:

REGLAMENTO REGULATIONS

A continuación se recoge el Reglamento

del Sindicato de Bonistas de la Emisión

de bonos de Teknia, denominada “[]”

(la “Emisión”).

The Regulations that follow correspond

to the Syndicate of Noteholders of the

Notes which compose the “[]” (the

“Issue”).

En caso de discrepancia la versión

española prevalecerá.

In the case of discrepancy, the Spanish

version shall prevail.

TÍTULO I TITLE I

- 107 -

CONSTITUCIÓN, DENOMINACIÓN,

OBJETO, DOMICILIO Y DURACIÓN

DEL SINDICATO DE BONISTAS.

INCORPORATION, NAME,

PURPOSE, ADDRESS AND

DURATION OF THE SYNDICATE OF

NOTEHOLDERS.

ARTÍCULO 1°. – CONSTITUCIÓN ARTICLE 1º. – INCORPORATION

Con sujeción a lo dispuesto en el

Capítulo IV del Real Decreto Legislativo

1/2010, de 2 de julio, por el que se

aprueba el texto refundido de la Ley de

Sociedades de Capital (la “Ley de

Sociedades de Capital”), una vez se

suscriban y desembolsen los Bonos,

quedará constituido un sindicato de los

titulares de los Bonos (los “Bonistas”)

que integran la “[]”.

In accordance with the provisions of

Chapter IV of the Spanish Royal

Legislative Decree 1/2010, of 2 July

2010, approving the Spanish Capital

Companies Act (“Real Decreto

Legislativo 1/2010, de 2 de julio, que

aprueba el texto refundido de la Ley de

Sociedades de Capital”) (the “Spanish

Capital Companies Act”), once the

Notes have been fully subscribed and

paid-up, a Syndicate of the owners of

the Notes (hereinafter, the

“Noteholders”) shall be constituted to

include the “ISSUE OF NOTES OF []”

.

Este Sindicato se regirá por el presente

Reglamento, por la Ley de Sociedades

de Capital, por las disposiciones de los

estatutos sociales de Teknia

Manufacturing Group, S.L.U. (el

“Emisor”) y demás disposiciones

legales vigentes que le sean aplicables.

This Syndicate shall be governed by

these Regulations, by the Spanish

Capital Companies Act, by the

applicable provisions of the articles of

association of Teknia Manufacturing

Group S.L. (the “Issuer”), and other

applicable legislation that may result

applicable.

ARTÍCULO 2°. – DENOMINACIÓN ARTICLE 2º. – NAME

El Sindicato se denominará

“SINDICATO DE BONISTAS DE LA

EMISIÓN DE BONOS SIMPLES DE []”

.

The Syndicate shall be named

“SYNDICATE OF NOTEHOLDERS

OF THE ISSUE OF NOTES OF []” .

ARTÍCULO 3°. – OBJETO ARTICLE 3º. – PURPOSE

El Sindicato tendrá por objeto la

representación y defensa de los legítimos

This Syndicate is formed for the purpose of

representing and protecting the lawful

- 108 -

intereses de los Bonistas frente a Teknia

Manufactoring Group, S.L.U., mediante el

ejercicio de los derechos que le reconocen

las leyes por las que se rigen y el presente

Reglamento, para ejercerlos y conservarlos

de forma colectiva, y bajo la representación

que se determina en las presentes normas.

interests of the Noteholders before Teknia

Manufacturing Group, S.L.U., by means of

exercising the rights granted by the

applicable laws and the present

Regulations, to exercise and preserve them

in a collective way and under the

representation determined by these

Regulations.

ARTÍCULO 4°. – DOMICILIO ARTICLE 4. – ADDRESS

El domicilio del Sindicato se fija en []. The address of the Noteholders

Syndicate shall be located at [].

La Asamblea General de Bonistas

podrá, sin embargo, reunirse, cuando se

considere oportuno, en otro lugar de la

ciudad de Madrid, expresándose así en

la convocatoria.

However, the Noteholders General

Meeting is also authorised to convene,

when considered appropriate, in any

other place in Madrid that is specified

in the meeting announcement.

ARTÍCULO 5°. – DURACIÓN ARTICLE 5º. – DURATION

El Sindicato estará en vigor hasta que

los Bonistas se hayan reintegrado de

cuantos derechos derivados de los

Bonos por principal, intereses o

cualquier otro concepto les

correspondan, o se hubiese procedido a

la amortización de la totalidad de los

Bonos de acuerdo con sus términos y

condiciones.

This Syndicate shall be in force until

the Noteholders have been reimbursed

for any rights deriving from the Notes

they may hold for the principal, interest

or any other concept, or until the

amortization of all the Notes takes

place according to the applicable terms

and conditions.

TÍTULO II TITLE II

RÉGIMEN DEL SINDICATO SYNDICATE’S REGIME

ARTÍCULO 6°. – ÓRGANOS DEL

SINDICATO

ARTICLE 6º. – SYNDICATE

MANAGEMENT BODIES

El gobierno del Sindicato

corresponderá:

(a) A la Asamblea General de Bonistas

(la “Asamblea General”).

The Management bodies of the

Syndicate are:

(a) The General Meeting of

Noteholders (the “General

Meeting”).

- 109 -

(b) Al Comisario de la Asamblea

General de Bonistas (el

“Comisario”).

(b) The Commissioner of the General

Meeting of Noteholders (the

“Commissioner”).

ARTÍCULO 7°. – NATURALEZA

JURÍDICA

ARTICLE 7º. – LEGAL NATURE

La Asamblea General, debidamente

convocada y constituida, es el órgano de

expresión de la voluntad de los Bonistas,

con sujeción al presente Reglamento, y

sus acuerdos vinculan a todos los

Bonistas en la forma establecida por las

Leyes.

The General Meeting, duly called and

constituted, is the body that expresses

the will of the Noteholders, subject to

the provisions of these Regulations,

and its resolutions are binding for all

Noteholders as established by Law.

ARTÍCULO 8°. – LEGITIMACIÓN

PARA CONVOCATORIA

ARTICLE 8º. – CONVENING

MEETINGS

La Asamblea General será convocada

por el Administrador o Administradores

del Emisor o por el Comisario, siempre

que cualquiera de ellos lo estime

conveniente.

The General Meeting shall be

convened by the Sole Director or

Directors of the Issuer or by the

Commissioner, whenever they may

deem it convenient.

Sin perjuicio de lo anterior, el Comisario

deberá convocarla cuando lo soliciten

por escrito de forma fehaciente, y

expresando el objeto de la convocatoria

y los puntos del orden del día, los

Bonistas que representen, por lo menos,

(i) la vigésima parte del importe total de

la Emisión que no esté amortizada o (ii)

el mínimo que legalmente se establezca.

En este caso, la Asamblea General

deberá convocarse para ser celebrada

dentro de los cuarenta y cinco (45) días

siguientes a aquél en que el Comisario

hubiere recibido la solicitud válida al

efecto.

Notwithstanding the above, the

Commissioner shall convene a General

Meeting when Noteholders holding at

least (i) one-twentieth of the entire non-

amortised amount of the Issue, or (ii)

the minimum established by law. In

such case, the General Meeting shall

be held within forty five (45) days

following the receipt by the

Commissioner of a valid written notice

for this purpose.

ARTÍCULO 9°. – FORMA DE

CONVOCATORIA

ARTICLE 9º. – PROCEDURE FOR

CONVENING MEETINGS

- 110 -

La convocatoria de la Asamblea

General se hará, por lo menos (i) quince

(15) días antes de la fecha fijada para su

celebración, o (ii) con el plazo mínimo

que legalmente se establezca mediante

(a) anuncio en la página web del Emisor

y hecho relevante en MARF, o (b)

anuncio que se publicará en el “Boletín

Oficial del Registro Mercantil” y, si se

estima conveniente, en uno o más

periódicos de mayor difusión nacional o

internacional o (c) notificación a los

Bonistas de conformidad con los

términos y condiciones de los Bonos.

The General Meeting shall be

announced at least (i) fifteen (15) days

before the date set for the meeting, or

(ii) within the term established by law

by (a) notice published in the webpage

of the Issuer and relevant fact in MARF,

or (b) notice published in the Official

Gazette of the Mercantile Registry and,

if appropriate, in one or more

newspapers of significant national or

international circulation, or (c) notice

to the Noteholders in accordance with

the terms and conditions of the Notes.

El plazo se computará a partir de la

fecha de la publicación del anuncio o de

la fecha en que hubiere sido remitido el

anuncio al último obligacionista, según

cual fuere la forma de la convocatoria.

No se computarán en el plazo ni el día

de la publicación del anuncio o de

remisión de la convocatoria ni el de la

celebración de la asamblea de

obligacionistas.

En todo caso, se expresará en el anuncio

el nombre de la sociedad y la

denominación del Sindicato, el lugar y

la fecha de reunión, tanto en primera

como en segunda convocatoria

debiendo mediar entre ambas, al menos,

24 horas, los asuntos que hayan de

tratarse y la forma de acreditar la

titularidad de los Bonos para tener

derecho de asistencia a la Asamblea

General.

The term shall count from the date on

which the notice is published or from

the date on which the notice is

communicated to the last Noteholder,

as applicable. The term shall not

include the day on which the notice is

published or communicated, nor the

day on which the General Meeting

takes place.

In any case, the notice shall contain the

name of the company and the

Syndicate, the place and date of the

meeting, at both first and second calls,

with at least a 24-hour period between

one call and the other, the matters to be

discussed and the way in which the

ownership of the Notes shall be

credited in order to have the right to

attend the General Meeting.

- 111 -

No obstante, la Asamblea General se

entenderá convocada y válidamente

constituida para tratar de cualquier

asunto de la competencia del Sindicato,

siempre que estén presente debidamente

representados los Bonistas titulares de

todos los Bonos en circulación y los

asistentes acepten por unanimidad la

celebración de la Asamblea y el orden

del día.

However, the General Meeting shall be

deemed validly constituted to transact

any business within the remit of the

Syndicate if Noteholders representing

all of the outstanding Notes are present

or duly represented, and provided that

they unanimously approve the holding

of such meeting and the agenda.

ARTÍCULO 10°. – DERECHO DE

ASISTENCIA

ARTICLE 10º. – RIGHT TO

ATTEND MEETINGS

Tendrán derecho de asistencia a la

Asamblea General los Bonistas que lo

sean, con cinco (5) días de antelación,

por lo menos, a aquél en que haya de

celebrarse la reunión.

Noteholders who have been so at least

five (5) days prior to the date on which

the meeting is scheduled, shall have the

right to attend the meeting.

El Administrador o Administradores del

Emisor, el Comisario y el Agente de

Pagos (Paying Agent) de la Emisión

tendrán derecho de asistencia a la

Asamblea General aunque no hubieren

sido convocados.

The Sole Director or the Directors of

the Issuer, the Commissioner, and the

Paying Agent under the Issue shall

have the right to attend the meeting

even if they have not been requested to

attend.


REPRESENTACIÓN

ARTICLE 11º. – RIGHT TO BE

REPRESENTED

Todo Bonista que tenga derecho de

asistencia a la Asamblea General podrá

hacerse representar por medio otro

obligacionista. Además, todo Bonista

con derecho a asistencia podrá, en su

caso de no poder delegar su

representación en otro bonista, hacerse

representar por el Comisario, aunque en

ningún caso podrá hacerse representar

por los administradores de la Sociedad,

aunque sean obligacionistas. La

All Noteholders having the right to

attend the meetings also have the right

to be represented by another

Noteholder. Furthermore, every

Noteholder may, in case it cannot

delegate its representation in another

noteholder, be represented by the

Commissioner, but under no

circumstances shall be represented by

the directors of the company, even if

they are Noteholders. Appointment of a

- 112 -

representación deberá conferirse por

escrito y con carácter especial para

cada Asamblea General.

proxy must be issued in writing for each

individual meeting.

ARTÍCULO 12°. –ADOPCIÓN DE

ACUERDOS

ARTICLE 12º. – APPROVAL OF

RESOLUTIONS

La Asamblea General adoptará los

acuerdos por mayoría absoluta de los

votos emitidos.

Por excepción, las modificaciones del

plazo o de las condiciones del reembolso

del valor nominal de los Bonos

requerirán el voto favorable de las dos

terceras partes de las Bonos en

circulación. Si no se lograse esa

mayoría, podrá ser nuevamente

convocada la Asamblea General, de

acuerdo con lo establecido en la Ley de

Sociedades de Capital.

The General Meeting shall approve the

resolutions by an absolute majority of

the votes issued.

As an exception, the amendment of the

term or the reimbursement of the

nominal value of the Notes shall be

approved by two-thirds of the

outstanding Notes. If such majority is

not obtained, an additional General

Meeting can be conveyed in

accordance with the terms of the

Spanish Capital Companies Act.


VOTO

En las reuniones de la Asamblea

General se conferirá derecho a un voto

por cada importe nominal de Bonos

igual a 100.000 euros, o el valor

nominal no amortizado presente o

representado. En todo caso, si así se

previera en la correspondiente

convocatoria de la Asamblea de

Bonistas, el voto podrá ejercitarse a

través de medios de comunicación a

distancia, incluyendo la

correspondencia postal o por medios

telemáticos siempre que (a) se garantice

debidamente la identidad del Bonista

que ejerce el derecho de voto y (b) éste

quede registrado en algún tipo de

soporte.

ARTICLE 13º. – VOTING RIGHTS

At General Meetings, one vote shall be

conferred to each nominal amount of

Notes equivalent to EUR 100,000, or to

the outstanding nominal value present

or represented. In any case, if indicated

in the announcement of the General

Meeting of Noteholders, the vote may

be conducted by means of remote

communication, including ordinary

post or telematic means, as long as (a)

the identity of the Noteholder

exercising this voting right is duly

verified, and (b) it is recorded by some

means of support.

- 113 -

ARTÍCULO 14º. - PRESIDENCIA DE

LA ASAMBLEA GENERAL

ARTICLE 14º. - CHAIRMAN OF

THE GENERAL MEETING

La Asamblea General estará presidida

por el Comisario, o la persona que éste

designe legalmente quien dirigirá los

debates, dará por terminadas las

discusiones cuando lo estime

conveniente y dispondrá que los asuntos

sean sometidos a votación. No obstante,

si el Comisario, por causas ajenas a su

voluntad, no pudiera asistir a la

Asamblea General, ésta podrá designar

a la persona encargada de la

presidencia. Asimismo, los asistentes

podrán designar, en su caso, a una

persona que actuará como secretario de

la Asamblea.

The Commissioner, or the person

legally appointed by it, shall serve as

chairman of the General Meeting and

shall chair the discussions. He/she

shall have the right to bring the

discussions to an end when considered

appropriate and shall arrange for

matters to be put to the vote.

Notwithstanding, if the Commissioner,

for reasons not attributable to it, is not

able to attend the General Meeting, the

General Meeting may designate the

person that should act as chairman

Furthermore, given the case, the

attendants shall appoint a person to act

as secretary of the General Meeting.

ARTÍCULO 15°. – LISTA DE

ASISTENCIA

ARTICLE 15º. – ATTENDANCE

LIST

El Comisario formará, antes de entrar a

discutir el orden del día, la lista de los

asistentes, expresando el carácter y

representación de cada uno y el saldo

vivo de los Bonos propios o ajenos con

que concurren.

Before addressing the agenda items,

the Commissioner shall prepare the

attendance list, stating the nature and

representation of each of the

Noteholders present and the

outstanding amount under the Notes

both directly owned and/or represented

at the meeting.

ARTÍCULO 16°. – FACULTADES DE

LA ASAMBLEA GENERAL

ARTICLE 16º. – POWER OF THE

GENERAL MEETING

La Asamblea General podrá acordar lo

necesario para la mejor defensa de los

legítimos intereses de los mismos frente

al Emisor; modificar, de acuerdo con el

Emisor, los términos y condiciones de

los Bonos, pudiendo ser dichas

The General Meeting may pass

resolutions necessary to i) defend the

lawful interests of Noteholders before

the Issuer; ii) modify, in accordance

with the Issuer, the terms and

conditions of the Notes, being those

- 114 -

modificaciones esenciales o no

esenciales; destituir o nombrar

Comisario; ejercer, cuando proceda, las

acciones judiciales correspondientes y

aprobar los gastos ocasionados por la

defensa de los intereses de los Bonistas.

Asimismo, la Asamblea General,

actuando a través del Comisario,

quedará facultada para iniciar la

ejecución de las garantías que se

otorguen a favor de los Bonos (las

“Garantías”), de acuerdo con los

términos y condiciones de los Bonos y de

dichas Garantías.

modifications essential or non-

essential; iii) dismiss or appoint the

Commissioner; iv) exercise, when

appropriate, the corresponding legal

claims and to approve the expenses

incurred in the defence of the

Noteholders’ interests. Additionally,

the General Meeting, represented by

the Commissioner, shall initiate the

enforcement of the guarantees granted

in favour of the Notes (the

“Guarantees”), in accordance with the

terms and conditions of the Notes and

of such Guarantees.

ARTÍCULO 17°. – IMPUGNACIÓN

DE LOS ACUERDOS

ARTICLE 17º. – CHALLENGE OF

RESOLUTIONS

Los acuerdos de la Asamblea General

podrán ser impugnados por los Bonistas

conforme a lo dispuesto en la Ley de

Sociedades de Capital para la

impugnación de acuerdos sociales.

The resolutions of the General Meeting

may be challenged by the Noteholders

in accordance with provisions of the

Spanish Capital Companies Act

regarding the challenge of corporate

resolutions.

ARTÍCULO 18°. – ACTAS ARTICLE 18º. – MINUTES

El acta de la sesión podrá ser aprobada

por la propia Asamblea General, acto

seguido de haberse celebrado ésta, o, en

su defecto, y dentro del plazo de quince

(15) días, por el Comisario y al menos

un Bonista designado al efecto por la

Asamblea General.

The minutes of the meeting shall be

approved by the General Meeting, after

the meeting has been held or,

alternatively, within a period of fifteen

(15) days by the Commissioner and at

least one Noteholder appointed for

such purpose by the General Meeting.

ARTÍCULO 19°.–

CERTIFICACIONES

ARTICLE 19º. – CERTIFICATES

- 115 -

Las certificaciones de las actas de los

acuerdos de la Asamblea General serán

expedidas por el Comisario.

The certificates of the minutes of the

resolutions of the General Meeting

shall be issued by the Commissioner.

ARTÍCULO 20°. – EJERCICIO

INDIVIDUAL DE ACCIONES

ARTICLE 20º. – INDIVIDUAL

EXERCISE OF CLAIMS

Los Bonistas sólo podrán ejercitar

individualmente las acciones judiciales

o extrajudiciales que corresponda

cuando no contradigan los acuerdos

adoptados previamente por el Sindicato,

dentro de su competencia, y sean

compatibles con las facultades que al

mismo se hubiesen conferido.

De acuerdo con lo anterior y de la

misma forma, los Bonistas sólo podrán

ejercitar acciones individuales de

ejecución de las Garantías, cuando no

contradigan los acuerdos adoptados

previamente por el Sindicato, dentro de

su competencia, y de acuerdo con el

artículo 429 de la Ley de Sociedades de

Capital, y sean compatibles con los

términos y condiciones de la

correspondiente Garantía.

The Noteholders will only be entitled to

individually exercise judicial or extra

judicial claims if such claims do not

contradict the resolutions previously

adopted by the Syndicate, within its

powers, and if compatible with the

faculties conferred upon the Syndicate.

In accordance with the above, the

Noteholders shall only exercise

individual claims for the enforcement

of the Guarantees when such claims do

not contravene the resolutions

previously passed by the Syndicate,

within its competence, and according

to article 429of the Spanish Capital

Companies Act, and as long as they are

compatible with the terms and

conditions of the corresponding

Guarantee.

TITULO III TITLE III

DEL COMISARIO THE COMMISSIONER

ARTÍCULO 21°. – NATURALEZA

JURÍDICA DEL COMISARIO

ARTICLE 21º. – NATURE OF THE

COMMISSIONER

Incumbe al Comisario ostentar la

representación legal del Sindicato y

actuar de órgano de relación entre éste

y el Emisor, de acuerdo con lo

establecido en la ley.

The Commissioner shall bear the legal

representation of the Syndicate and

shall serve as provided on the Law as

the liaison between the Syndicate and

the Issuer.

- 116 -

ARTÍCULO 22°. – NOMBRAMIENTO

Y DURACIÓN DEL CARGO

ARTICLE 22º. – APPOINTMENT

AND DURATION OF THE OFFICE

El Emisor designa a Bondholders, S.L.

como Comisario, sin perjuicio de que la

Asamblea General pueda destituir al

Comisario designado y nombrar a otra

persona si lo considera oportuno. La

retribución del Comisario será fijada

por el Emisor.

Notwithstanding the appointment of

Bondholders, S.L. as Commissioner by

the Issuer, the General Meeting shall

remove the appointed Commissioner

and appoint other person if it deems

necessary. The remuneration of the

Commissioner shall be established by

the Issuer.

ARTÍCULO 23°. – FACULTADES ARTICLE 23º. – POWERS

Serán facultades del Comisario: The Commissioner shall have the

following powers:

1º Tutelar los intereses comunes de los

Bonistas.

1º To protect the common interest of the

Noteholders.

2° Convocar y presidir, en su caso, las

Asambleas Generales.

2º. To convene and act as chairman of

the General Meeting, if applicable.

3° Informar a la Sociedad Emisora de

los acuerdos del Sindicato.

3º. To inform the Issuer of the

resolutions passed by the Syndicate.

4° Vigilar el pago de los intereses y del

principal.

4º. To control the payment of the

principal and the interest.

5° Llevar a cabo todas las actuaciones

que estén previstas realice o pueda

llevar a cabo el Comisario de acuerdo

con los términos y condiciones de los

Bonos.

5º. To carry out all those actions

provided for under the terms and

conditions of the Notes or which may

be carried out by the Commissioner.

6° Ejecutar los acuerdos de la Asamblea

General.

6º. To implement the resolutions of the

General Meeting.

7° Ejercitar las acciones que

correspondan contra el Emisor, los

administradores o liquidadores y contra

los Garantes de la Emisión.

7º. To exercise claims against the

Issuer, the directors or liquidators, and

the Subsidiary Guarantors of the Issue.

8° Aceptar, en nombre y representación

de los Bonistas, cualesquiera garantías,

8º. To accept, on behalf of the

Noteholders, any guarantees, including

- 117 -

incluyendo garantías reales, otorgadas

a favor de los mismos y firmar

cualesquiera otros documentos públicos

o privados relacionados con dichas

garantías quesea necesarios para su

buen fin.

9º En general, las que le confiere la Ley

y el presente Reglamento.

any security, granted in their favour

and sign any other documents, public

or private, related to such guarantees

that may be necessary.

9.º In general, the powers granted to

the position by Law and the present

Regulations.

20. Notices

(a) Notice to Noteholders: So long as the Notes are admitted (incorporadas) on

the MARF, notices to the Noteholders will be published in the Boletín de

Cotización de MARF (the Official Bulletin of MARF). Any such notice will

be deemed to have been given on the date of the first publication. In addition,

so long as the Notes are represented by book-entries in Iberclear, all notices

to Noteholders shall be made through Iberclear for transmission to their

respective accountholders.

(b) Notice of a General Meeting of the Syndicate of Noteholders: Notice of a

general meeting of the Syndicate of Noteholders must be given in accordance

with the Regulations.

(c) Notice to Commissioner: Copies of any notice given to any Noteholders will

be also given to the Commissioner of the Syndicate of Noteholders.

21. Governing Law and Jurisdiction

(a) Governing law: The Notes, the Guarantees and any non-contractual

obligations arising from or in connection with the Notes and the Guarantees

are governed by Spanish law.

(b) Spanish courts: The courts and tribunals of the city of Madrid have exclusive

jurisdiction to settle any disputes (a “Dispute”) arising from or in connection

with the Notes (including a dispute regarding any non-contractual obligation

arising from or in connection with the Notes).

(c) Appropriate forum: The Issuer agrees that the courts of the city of Madrid are

the most appropriate and convenient courts to settle any Dispute and,

accordingly, that it will not argue to the contrary.

- 118 -

IX. ADMISSION OF THE SECURITIES

1. Request for admission of the securities to the Alternative Fixed Income Market.

Deadline for admission to trading

Admission (incorporación) will be requested for the securities to be issued under

the Programme described in this Information Memorandum on the Multilateral

Trading System known as the Alternative Fixed Income Market (Mercado

Alternativo de Renta Fija or “MARF”). Said listing will take place within thirty

(30) days of the Closing Date and always during the validity period of the

Programme.

The MARF adopts the legal structure of a multilateral trading facility (MTF), under

the terms provided for in Articles 317 et seq. of the Securities Market Law,

constituting an alternative, unofficial, market for the trading of fixed-income

securities.

The Teknia Group has requested admission (incorporación) of this Programme to

the MARF for the following reasons: i) to diversify sources of external financing

through access to capital markets, ii) to raise funds to strengthen the financial ability

to obtain financing at longer maturities, iii) to benefit from the flexibility of

requirements concerning official markets with lower costs, and (iv) to provide the

Issue with liquidity through a multilateral trading system.

This Information Memorandum includes the information required in MARF

Circular 1/2015 of 30 September on the admission and exclusion of securities on

the Alternative Fixed Income Market and the procedures for the admission and

exclusion of securities on the MARF under its regulations and other regulations.

Neither the MARF Governing Body, the National Securities Market Commission

(CNMV), nor the Placement Entities have approved, verified, or tested the contents

of the Information Memorandum, the financial statements of the Issuer, the rating

report, or the risk of the issuance required under Circular 1/2015. The intervention

of the MARF Governing Body does not signify a statement, acknowledgement or

confirmation about the completeness, understanding and consistency of the

information included in the documentation contributed by the Issuer.

It is recommended that the investor fully and carefully read the Information

Memorandum presented prior to making any investment decision.

The Issuer expressly states that it knows and is aware of the requirements and

conditions necessary for the admission and exclusion of securities on the MARF

under current legislation, and the requirements of its governing bodies, and it

expressly agrees to comply therewith.

The Issuer expressly states that it has met the requirements for the registration and

settlement of transactions in Iberclear. Operation settlements will be made through

Iberclear.

- 119 -

2. Cost of all legal, financial, and audit services and other costs to the Issuer

regarding the registration of the Programme

Registration of the Programme on the MARF costs amount to an approximate total

of EUR 55.000.

X. THIRD PARTY INFORMATION, STATEMENT BY EXPERTS AND

DECLARATIONS OF INTEREST

No statement or report attributed to a person as an expert is included in the

Information Memorandum. No statement or report attributed to a third party is

included in the Information Memorandum.

XI. REFERENCES

The Teknia Group declares that the following documents (or copies thereof) can be

inspected, if necessary, during the valid period of the Information Memorandum:

(a) The Bylaws of the Issuer are available at the Mercantile Registry of Bizkaia,

Basque Country (Spain).

(b) All reports, letters, and other documents, historical financial information,

valuations and statements prepared by any expert at the Issuer's request,

which are included or referred to in the Information Memorandum.

(c) The historical financial information of the Issuer for each of the two financial

years preceding the publication of the Information Memorandum are

available at the Mercantile Registry of Bizkaia, Basque Country (Spain).

As the person responsible for the Information Memorandum

__________________________________________

Signed: Mr. Javier Lázpita Sarriugarte

as representative of Teknia Manufacturing Group, S.L.U.

ANNEX 1

2016 CONSOLIDATED AUDITED ANNUAL ACCOUNTS

ANNEX 2

2015 CONSOLIDATED AUDITED ANNUAL ACCOUNTS

ANNEX 3

2016 INDIVIDUAL AUDITED ANNUAL ACCOUNTS OF TEKNIA ELORRIO,

S.L.U., TEKNIA PEDROLA, S.L.U., TEKNIA BARCELONA, S.L.U., TEKNIA

BILBAO XXI, S.L.U., TEKNIA MARTOS, S.L.U., TEKNIA AZUQUECA, S.L.U.,

TEKNIA MANRESA, S.L.U., TEKNIA EPILA, S.L.U., TEKNIA BRASIL LTDA.,

TEKNIA RZESZÓW S.A., TEKNIA KÁLISZ, S.P. Z O.O., TEKNIA

NASHVILLE, LLC, AND TEKNIA UHERSKÝ BROD, A.S., AND 2016

INDIVIDUAL NON-AUDITED ANNUAL ACCOUNTS OF TEKNIA

MONTMELO, S.L.U. AND TEKNIA R&D, S.L.

ANNEX 4

FINAL CONDITIONS

[DENOMINATION OF THE ISSUE]

[TOTAL VOLUME OF THE ISSUE]

Issued under the Information Memorandum (“Documento Base Informativo de

Incorporación”) registered with MARF on [●].

These Final Conditions (the “Final Conditions”) are complemented with the Documento

Base Informativo de Incorporación registered with the Alternative Fixed-Income Market

(“MARF”) on [●] and available on the webpage of MARF

(http://www.bmerf.es/esp/aspx/Portadas/HomeMARF.aspx), and should be read in any

case jointly with such document. In case of discrepancy between the Documento Base

Informativo de Incorporación and the Final Conditions, the latter will prevail.

These Final Conditions include the information required by Annex 1-C of Circular 1/2015

of MARF.

The securities described in these Final Conditions are issued by Teknia Manufacturing

Group, S.L.U., with registered office at Barrio San Agustín, s/n, Elorrio (Vizcaya) (the

“Issuer”).

The Notes issued under these Final Conditions are within the maximum nominal amount

of the Programme (EUR XXXXXX).

Mr. [●], in the name and on behalf of the Issuer, acting as [●], is responsible for the entire

contents of this Final Conditions.

1. DESCRIPTION, CLASS AND CHARACTERISTICS OF THE NOTES

ISSUED

A. MAIN CHARACTERISTICS

1. Nature and denomination of the Notes:

• Denomination of the issue: [●]

• ISIN code: [●]

• [If the issue is fungible with another previous issue, state so here]

2. Currency of the issue: Euro (€)

3. Nominal and effective amount of the issue:

• Number of Notes: [●]

• Nominal Amount: [●]

• Effective Amount: [●]

4. Nominal and effective amount of the Notes:

• Unitary nominal amount: 100,000

• Effective amount: [●]

• Issue Price: [●]%

• Number of Notes:

5. Issue Date: [●]

6. Disbursement Date: [●]

7. Interest rate: [Fixed / Variable]

8. Term

9. Maturity Date: [●]

10. Options of early amortization:

• For the Issuer: [yes / no]

• For the investor: [yes / no]

11. Admission to listing of the securities: [MARF / other markets to be stated here]

12. Representation of the securities: [account entries managed by Sociedad de Gestión

de los Sistemas de Registro, Compensación y Liquidación de Valores, S.A.U.

(IBERCLEAR), located at Plaza de la Lealtad nº 1, Madrid/ Others]

B. INTEREST RATE AND AMORTIZATION

13. Fixed / Variable interest rate: [●]% / EURIBOR + [●]%

• Date of commencement of accrual of interest: [●]

• Interest payment dates: [●]

• Irregular period / amount: [●]

• Base Calculation: [●]

• Day Count Fraction: [Actual/Actual ICMA basis unadjusted standard /

Actual/360 ICMA]

• Additional Information if EURIBOR is not available: [●]

• Interest Determination Date: [●] (only in case of Variable Interest Rate)

• Relevant Financial Centre: [●] (only in case of Variable Interest Rate)

14. Amortization of the notes:

• Maturity Date: [●]

• Amortization Price: [●]

• Early amortization by the Issuer: [Yes]

C. OPERATIONAL INFORMATION

15. Placement Entity / Entities: [●]

16. Paying Agent: [●]

17. Relevant Calendar: [●]

D. ADDITIONAL INFORMATION

18. Representation of the noteholders: [●]

19. Rating of the Issuer: [●]

20. Rating of the Notes: [●]

21. Placement Method: [●]

2. ISSUE AGREEMENTS OF THE SECURITIES AND ON THE

CONSTITUTION OF THE SYNDICATE OF NOTEHOLDERS

Pursuant to the Documento Base Informativo de Incorporación under which this issue of

notes is made and according to the rules and Regulations established therein in relation

to the constitution of the Syndicate of Noteholders, for this issue of notes a Syndicate of

Noteholders has been constituted, called “[●]”.

[●] and through the signing of these Final Conditions, accepts his appointment as

Commissioner of the Syndicate of Noteholders, having the powers attributed to him in

the Regulations included in the Documento Base Informativo de Incorporación.

3. AGREEMENTS ON ISSUANCES AND ADMISSION TO TRADING

The admission to trading will be requested of the notes described in these “Final

Conditions” on [MARF / other markets to be stated here] and their listing is ensured

within a period of less than one month as form the date of disbursement and within the

validity period of the Programme.

These Final Conditions include the information necessary for the admission to listing of

the securities on the market[s] mentioned above.

Settlement will take place through Sociedad de Gestión de los Sistemas de Registro,

Compensación y Liquidación de Valores, S.A.U., (IBERCLEAR)/ other depositaries to

be stated here.

Signing on behalf of the Issuer; Mr. [NAME AND SURNAMES], acting as [POSITION],

by virtue of the [TYPE OF EMPOWERMENT AND DATE THIS WAS GRANTED]

and in the name and on behalf of the Issuer, with address at [●].

ISSUER

Teknia Manufacturing Group, S.L.U.

Barrio de San Agustín s/n

Nelorrio 48

Bizkaia

PAYING AGENT

BANCO DE SABADELL, S.A.

ARRANGERS AND PLACEMENT ENTITIES

BANCO DE SABADELL, S.A. and BANKINTER, S.A.

REGISTERED ADVISOR

PKF Attest Servicios Empresariales, S.L.

Calle Orense 81

28020 Madrid

INDEPENDENT AUDITORS

Moore Stephens AMS, S.L.

LEGAL ADVISORS OF THE ISSUER

Cuatrecasas Gonçalves Pereira

Almagro 9,

28010 Madrid

LEGAL ADVISOR OF THE ARRANGERS

J&A Garrigues, S.L.P.

Hermosilla 3,

28001 Madrid

teknia manufacturing group, s.l.u. 1 - teknia manufacturing group, s.l.u. (incorporated in spain in...

Documents