Creditor Relations

Financing principles
A conservative finance structure is the leitmotiv of Vossloh’s financing strategy. For controlling its equity structure, Vossloh deploys indicators of investment-graded corporations for its decision-making scope. As a rule, the Vossloh Group is centrally funded through Vossloh AG as group parent. In this context, an upscale counterparty credit standing is just as important as are our endeavors to establish and maintain longstanding creditor relations. Financial derivatives are solely contracted to hedge existing or forecasted transactions.

Financial position
The Vossloh Group’s net financial debt as of December 31, 2009, amounted to €70.2 million. At year-end 2009, financial debts of €227.5 million contrasted with cash and cash equivalents (including short-term securities) of €157.3 million. The net leverage (ratio of net financial debt to equity) as of December 31, 2009, was 14.3 percent.

Financial debts
Financial debts break down as follows:

€ million	2009	2008
US private placement	167.8	171.7
Long-term debts to banks	0.1	1.5
Noncurrent financial debts	167.9	173.2
Short-term debts to banks	59.3	39.3
Interest payable	0.3	0.3
Current financial debts	59.6	39.6
Total financial debts	227.5	212.8

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, mid-2014 and mid-2016, respectively. Since payment of principal and interest has entirely been 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 €167.8 million debt disclosed as of December 31, 2009, corresponds to the dollar debt translated at the year-end rate. Including the currency hedge shown at €36.1 million within other liabilities, the hedged repayment sum totals €203.9 million.

In connection with the US private placement, Vossloh has inter alia covenanted that, if and when defined long-term indicators cross above or below agreed thresholds, the interest rate is stepped up or the loan principal may fall due. Vossloh has complied with all such covenants at each balance sheet date. In addition, similar covenants have been signed by two US subsidiaries in the context of bank credit facilities, however, only one of which had been utilized at €4.6 million as of year-end 2009. Any violation of the covenants will entitle the bank to take recourse to inventories and/or receivables of the infringing subsidiary. All these covenants have been complied throughout, too.