Creditor Relations

Financing strategy
A conservative finance structure is the leitmotiv of Vossloh’s financing strategy. In this context, an upscale credit standing is just as important as are our endeavors to establish and maintain longstanding creditor relations. Vossloh as a group is as a rule centrally funded through Vossloh AG as group parent.

Over the past years, Vossloh has considerably downscaled its debt level and thus created a sturdy and solid launching pad for the envisaged organic and external growth. If and when so required, derivative financial instruments are additionally deployed within the present financing scope.

Financial debts
Financial debts break down as follows:

€ million	2007	2006
US private placement	163.1	182.1
Other long-term debts to banks	18.1	3.9
Long-term capital leases	1.5	0.9
Note loans	0.0	5.0
Noncurrent financial debts	182.7	191.9
Short-term debts to banks	38.2	32.3
Note loans	5.0	5.0
Short-term capital leases	0.9	0.6
Interest payable	0.6	0.7
Current financial debts	44.7	38.6
Total financial debts	227.4	230.5

Financial debts are carried at amortized cost. The US private placement is the underlying in a fair value hedge against currency risks inherent in the principal and as such stated at fair value. Under a US private placement agreement, debt of a total $240.0 million was raised in 2004 from the capital market, comprising one loan each of $140 million and $100 million; they both have a bullet maturity, their remaining terms being 6.5 and 8.5 years, respectively. Since payment of principal and interest has entirely be hedged by euro-denominated swaps, Vossloh has ensured that both loans carry interest at fixed euro rates of 5.325 and 5.455 percent, respectively. The €163.1 million debt disclosed as of December 31, 2007, corresponds to the dollar debt translated at the year-end rate. Including the currency hedge shown at €40.8 million within sundry liabilities, the hedged repayment sum totals €203.9 million.