Creditor Relations

Financing principles

Conservative financing structures constitute the central and basic idea of Vossloh's financing strategies. In the management of its capital structure, Vossloh focuses on the key data for companies with an investment grade rating. The financing of a group of companies generally takes place through Vossloh AG as a group holding company. High creditworthiness of contracting parties plays just as significant a role as our commitment to building and maintaining long-term relationships with our lending partners. Derivative financial instruments are exclusively used for hedging existing or foreseeable underlying transactions.

Financial position

The net financial debt in the Vossloh Group was significantly reduced from €218.6 million at the end of 2015 to €83.9 million was of December 31, 2016. The decrease was primarily attributable to the net cash inflow of €123.1 million from the capital increase in June 2016. The positive free cash flow of €25.2 million also contributed towards reducing net financial debt. Financial liabilities totaled €255.6 million as of December 31, 2016 and were therefore below the level of the balance sheet date of the previous year of €279.1 million. The total of cash and cash equivalents and short-term securities amounted to €171.7 million at the end of 2016 and was therefore substantially higher than in the prior year (€60.5 million). A significant portion of the high level of cash and cash equivalents was used for the acquisition of Rocla at the beginning of 2017.

Current financial liabilities of the Vossloh Group were at a very low level of €8.7 million at the end of 2016 and were therefore significantly lower than the corresponding prior-year level of €25.6 million. In 2015 Vossloh AG secured the medium-term financing of the Group with the concluding of a syndicated loan of €500 million. €200 million were available in the form of a bullet loan, €300 million in the form of a revolving credit line. Already in March 2017, Vossloh cancelled €100 million of the bullet loan by voluntary prepayment.

Breakdown of financial liabilities

€ million20162015*
Other long-term liabilities to banks246.9253.5
Noncurrent finance leases0.00.0
Non-current financial liabilities246.9253.5
Short-term liabilities to banks8.124.6
Interest payable0.61.0
Current notes payable0.00.0
Current finance leases0.00.0
Current financial liabilities8.725.6
Financial liabilities255.6279.1

* Prior-year figures presented for comparative purposes (see page 78 of the 2016 Annual Report).

For the reconciliation of the financial liabilities to the IAS 39 valuation categories, see pages 104 ff. of the 2016 Annual Report, “Additional information on financial instruments”.

In July 2017, Vossloh AG successfully issued a Schuldschein loan of €250 million in four tranches. The tranches of the Schuldschein loan with maturity terms of four and seven years bear partly fixed and partly floating interest rates and comprise volumes of €135 million for four years and €115 million for seven years. Thereby, a first milestone of the medium- and long-term Group refinancing was achieved. The cash inflow was used for repayment of the still remaining €100 million bullet loan and for partial reduction of the revolving credit line (see above). Under the revolving credit line then some €150 million were still available.

End of November 2017, Vossloh AG has signed a new syndicated loan with eight lending banks in the amount of €150 million and it thereby completely replaced the since 2015 existing syndicated loan with a term running until April 2018. The financing agreement has a term of five years until November 2022 and contains two extension options of one year each. These options can be exercised prior to the first and second anniversary of the agreement. Furthermore, the loan amount can be increased if required by up to further €150 million. The funds are available to the Company in the form of a revolving credit facility that can be flexibly utilized. The interest rate will be determined in the future on the achieved net leverage ratio; a specific indicator known as covenant. At the same time, a breach of the threshold defined in this covenant leads to an early right of cancellation on the part of the lending banks. The covenant is defined as the ratio of net financial debt to EBITDA. Compliance with the covenants will be reviewed semi-annually.

Financial debts are principally carried at amortized cost.