01/04/2018 Senior Secured Notes
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Supplemental Disclosure in relation to the offering of senior secured notes April 2018 TABLE OF CONTENTS TABLE OF CONTENTS .............................................................................................................................................. ii USE OF TERMS AND CONVENTIONS ................................................................................................................... iii FORWARD-LOOKING STATEMENTS ..................................................................................................................... v PRESENTATION OF FINANCIAL AND OTHER DATA ...................................................................................... vii EXCHANGE RATE AND CURRENCY INFORMATION ......................................................................................... x RISK FACTORS............................................................................................................................................................ 1 SELECTED FINANCIAL AND OTHER INFORMATION ...................................................................................... 19 RECENT DEVELOPMENTS ..................................................................................................................................... 23 OPERATING AND FINANCIAL REVIEW AND PROSPECTS .............................................................................. 24 BUSINESS .................................................................................................................................................................. 50 MANAGEMENT......................................................................................................................................................... 88 SHAREHOLDERS AND CERTAIN TRANSACTIONS ........................................................................................... 93 DESCRIPTION OF INDEBTEDNESS ....................................................................................................................... 95 GLOSSARY OF TECHNICAL TERMS .................................................................................................................. 103 USE OF TERMS AND CONVENTIONS Unless otherwise specified or the context requires otherwise in this ad hoc disclsoure: • references to “2023 Indenture” are to the indenture governing the 2023 notes and dated May 11, 2016; • references to “2023 notes” are to the €500.0 million aggregate principal amount of 3.50% senior secured notes due 2023 issued by Gestamp Funding Luxembourg S.A. pursuant to the 2023 Indenture; • references to “Acek” are to our majority shareholder Acek, Desarrollo y Gestión Industrial, S.L. (formerly named Corporación Gestamp, S.L.); • references to “ArcelorMittal Group” are to ArcelorMittal S.A. and its subsidiaries, a previous shareholder of Gestamp (until February 2016), that also has a relationship with the Grupo Acek through its 35% equity ownership of Gonvarri. The relationship is primarily related to the purchase of steel; • references to “Asia” are to China, India, South Korea, Japan, Thailand and Taiwan; • references to “Bank of America loan” are to the facility agreement, dated March 21, 2012, entered into by, amongst others, the Company and Bank of America, N.A., Sucursal en España, for a maximum amount of €60.0 million. This loan has been fully repaid; • references to “CAGR” are to compound annual growth rate; • references to “Eastern Europe” are to Russia, Poland, Hungary, Slovakia, the Czech Republic and Turkey; • references to “EIB Loan” are to the financing agreement entered into by the Company and the European Investment Bank on June 15, 2016 for an amount of €160.0 million; • references to “E.U.” are to the European Union; • references to “EUR,” “Euro(s),” “Euro(s),” and “€” are to the currency of those countries in the European Union that form part of the common currency of the Euro; • references to “Existing Debt Facilities” are to 2016 MARF Commercial Paper Program, the EIB Loan and our other interest bearing loans and borrowings (See “Description of Indebtedness—Existing Debt Facilities”); • references to “GBP”, “pound(s)” and “£” are to the currency of the United Kingdom; • references to “Gestamp”, “Gestamp Automoción”, “we”, “us” and “our” are to Gestamp Automoción, S.A. together with its consolidated subsidiaries; • references to “Gonvarri” are to Holding Gonvarri, S.L., together with its consolidated subsidiaries, an industrial group controlled by Acek that has two main activities: (i) steel services, through the subgroup headed by Gonvarri Corporación Financiera, S.L. and (ii) manufacturing of metal components for renewable energy plants, through the subgroup headed by GRI Renewable Industries, S.L.; • references to “Grupo Acek” are to Acek together with its subsidiaries; • references to “IFRS” are to the International Financial Reporting Standards promulgated by the International Accounting Standards Board and as adopted by the European Union; • references to “North America” are to the United States and Mexico; • references to “Senior Facilities” are to the senior term facilities and the revolving credit facility made available under the Senior Facilities Agreement; • references to “Senior Facilities Agreement” are to the senior facilities agreement dated April 19, 2013 as amended through the date hereof, entered into between, among others, Gestamp Automoción as the company and original borrower, Gestamp Funding Luxembourg, S.A. as original borrower, various subsidiaries of Gestamp Automoción as original guarantors, the original lenders listed therein, and Deutsche Bank AG, London Branch as agent and as security agent; • references to “South America” or “Mercosur” are to Brazil and Argentina; • references to “U.K.” are to the United Kingdom; • references to “US”, “U.S.” and “United States” are to the United States of America; • references to “U.S.$”, “Dollar(s)” and “$” are to the currency of the United States of America; and • references to “Western Europe” are to Spain, Portugal, France, the United Kingdom, Germany, Sweden, Belgium and Luxembourg. Please also refer to page 103 for a “Glossary of Technical Terms” used in this ad hoc disclosure. FORWARD-LOOKING STATEMENTS This ad hoc disclosure includes forward-looking statements. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes”, “estimates”, “anticipates”, “expects”, “intends”, “may”, “will” or “should” or, in each case, their negative, or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this ad hoc disclosure including, without limitation, in the sections captioned “Risk Factors”, “Business”, and “Operating and Financial Review and Prospects”, and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this ad hoc disclosure. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this ad hoc disclosure, those results or developments may not be indicative of results or developments in subsequent periods. Important factors that could cause those differences include, but are not limited to: • our international operations, including in relation to compliance with anti-corruption laws, regulations and economic sanctions programs; • the loss of customers and/or the inability to realize revenues; • volatility in raw material and energy prices; • risks associated with our joint ventures, certain of which we do not control; • risks associated with investment in markets in which we expect growth; • difficulties in connection with program launches and integration and consolidation; • our inability to offset price concessions or additional costs; • the costs in relation to construction, maintenance and closing of plants, including mechanical failures, equipment shutdowns and interruptions to the supply of utilities; • risks on the conduct of our business as a result of a failure to comply with restrictive covenants under our credit facilities; • risks associated with foreign exchange fluctuations; • risks associated with the adequacy of our hedging arrangements; • risks associated with the capital expenditure needs of our on-going operations; • risks associated with tax liability in the jurisdictions in which we operate; • the inability for us or our customers or suppliers to obtain and maintain sufficient capital financing; • disruptions to the automotive supply chain; • increased or more pronounced cyclicality in the automobile industry; • risks related to a shift away from technologies in which we invest; • increased competition and/or shifts in demand for certain vehicles and products;