Ferrovial N.V. (FER) Earnings Call Transcript & Summary

Welcome to the global investor call for debt holders of Ferrovial in the description of the reverse merger we will be proposing to the AGM. Please be aware of the disclaimer at the beginning of the presentation that is attached to this call. Starting with the rationale of the transaction. This is a corporate reorganization to align our structure with the international profile of the company. Ferrovial today is an international corporation with most of its business outside Spain. More than 80% of the revenues in 2022 were generated outside of Spain, and more than 90% of Ferrovial's equity value is international. Growth opportunities are expected to come from international markets, in particular the U.S. And international institutional shareholders represent 93% of Ferrovial's institutional investor base. [ And second, a stable ] listing in the Netherlands, in this transaction, enhances the internationalization of Ferrovial while maintaining its Spanish roots: dual listing in the Netherlands and Spain. And Netherlands is the country of choice for companies with a strong presence both in Europe and the U.S. With a AAA rating, it has a stable legal framework. The transaction is expected to facilitate future listing of ordinary shares application in the U.S. Applying for listing in the U.S. is a natural step for Ferrovial. It's in line with its current business and future opportunities. The U.S. and Canada combined are one of the largest transportation infrastructure markets worldwide. The U.S. and Canada present the highest growth potential for the company. There is a scarcity of public companies with U.S. assets with inflation exposure, duration and growth, in particular in the roads and airports business. A full U.S. listing is expected to further enhance Ferrovial's brand awareness in the U.S. and allow it to access a broader pool of capital. This corporate reorganization is not expected to affect the operational activity, employment or investment plans in Spain or in other countries where it currently operates. Moving to the next slide, we have the transaction description. This is a reverse merger of Ferrovial, S.A., the current parent of the group, into Ferrovial International SE, European society, seeking a dual listing in the Netherlands and Spain. And also we plan to apply for subsequent listing in the U.S. The reverse merger of Ferrovial, S.A. into Ferrovial International SE, a Dutch and European society that already holds 86% of the company assets. Ferrovial International will become the holdco of the group. This is an exchange ratio of 1:1. There is no dilution. Corporate domicile will change from Spain to the Netherlands. We plan to do a listing in the Netherlands and Spain with this transaction and subsequently apply for listing in the United States at a later stage. There's no expected impact on business and strategy, as I mentioned in the prior slide, in either the investment plans and organization or day-to-day operations. Spain is expected to remain a key source for developing talent. Transaction is subject to shareholders' approval. Shareholders voting against the transaction in the AGM can exercise a separation right. The completion of the merger is conditional to total separation rights exercised not exceeding EUR 500 million as well as reasonable assurance of dual listing in the Netherlands and Spain. Corporate governance should be in line with current governance, save for changes driven by local statutory law or market practice, but no changes in voting rights contemplated, no change in the Board. Moving to the next slide, continuing with the transaction description, I mean, we can see several things that will remain as they are today, right, no expected change in the shareholder remuneration policy. If the separation rights are exercised, the repurchased shares could be used for shareholder remuneration. Continued irrevocable commitment to investment-grade rating: If the merger goes ahead, the outstanding EUR 500 million hybrid bond is expected to be repurchased. A replacement would be sought in the future when market conditions stabilize and more favorable financing terms are achievable compared to the current conditions, no other refinancing need expected beyond the eventual separation rights. The expected timetable is, well, the announcement was produced on the 28th of February with the Board of Directors' approval. The AGM and merger completion should happen between the second quarter and the third quarter of 2023. And then we should apply for listing in the U.S. post merger completion. A Capital Markets Day post-bidding for the SR 400 in Atlanta and the planned U.S. listing is expected. Explaining the different implications for the hybrid. I mean basically the merger effectiveness is expected to occur after the first reset date. Remember that the first reset date is on the 14th of May 2023, so I mean, since merger effectiveness is expected to occur after that date, the hybrid [ bond ] will reset at the first reset date. The security package post merger. Post merger, the consolidated assets and liabilities will remain unchanged. The security package provided by and the equity value of the post-merger holding company and the new guarantor will remain unchanged. Post-merger effectiveness. Ferrovial remains committed to maintaining the investment-grade rating. All senior debt issuance will remain outstanding. The hybrid bonds will be repurchased at par through a buyback program due to the particular terms and conditions of the hybrid notes. The repurchase will be funded with cash until a replacement will be sought in the future when market conditions stabilize. If the merger doesn't go through, reset and replacement in the future when market conditions stabilize and are competitive is our goal, okay? So thanks for hearing to this call. And do -- you have the IR team at your disposal if you have further inquiries. Thank you. Goodbye.