- More financial leeway thanks to strengthened balance sheet structure
- Significant oversubscription of the hybrid note, interest rate at the lower end of the marketing range
- Linkage to ESG criteria underlines Vossloh's "green" claim
Vossloh AG is taking an innovative approach of financing and was one of the first companies in Germany to place an ESG-oriented hybrid note. The company had completed its focusing on rail infrastructure in May last year and presented its strategy for the coming years in December. Now Vossloh has gained the financial flexibility to further drive the booming topic of “green mobility” and turn its ambitious growth targets into reality.
The issuance of the hybrid note with a total nominal amount of €150 million was significantly oversubscribed. Due to the high demand, the interest rate for the next five years was fixed at 4.0 percent at the lower end of the marketing range. The proceeds from the hybrid note are recognized in equity in accordance with the relevant IFRS accounting standards. The note has a perpetual term and can be called and redeemed by the Company for the first time after five years. The redemption amount of the hybrid note is linked to the sustainability performance of Vossloh, which is measured via independent sustainability ratings. For this purpose, the ISS ESG and MSCI ESG Research ratings are used, which are among the leading providers of sustainability ratings internationally.
Vossloh AG intends to use the strengthened balance sheet following the issuance and the resulting greater financial flexibility to expand its current portfolio of products and services, to strengthen its position in certain growth markets, and for targeted innovations. One focus in this context will be on the digital recording of the condition of the rail track and, building on this, on the increased offering of tailored maintenance solutions. Initially, the proceeds from the hybrid note will be used to refinance promissory notes due for repayment in July and for partial repayment of the syndicated loan.
Dr. Thomas Triska, CFO of Vossloh AG: “Vossloh is excellently positioned for the future. The high demand for our notes demonstrates the confidence of a broad investor base in our company. The equity recognition of the hybrid note leads to a significant strengthening of our balance sheet structure and noticeably increases our financial leeway in the implementation of our strategy." Oliver Schuster, CEO of Vossloh AG added: "Rail as a mode of transport is becoming enormously important, especially against the backdrop of achieving ambitious climate protection targets. At the same time, digitalization creates considerable potential, particularly in connection with condition-based and, in the future, predictive maintenance. By placing this note, we have laid the foundations not only to benefit from the trends in our industry, but also to play a major role in shaping them ourselves."
The placement was accompanied by Jefferies and M.M. Warburg as joint lead banks and joint bookrunners. M.M. Warburg also acts as paying agent during the term of the transaction.