Financial update May 2010

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Financial update

May 2010

(2)

Rating update

Financial overview

Corporate reorganization

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Brisa rated Baa1 by Moody’s

Brisa’s long-term credit rating: from BBB Credit Watch Negative to BBB- with Stable Outlook

 Standard & Poor’s Rating Services announced that it has revised Brisa’s long-term credit rating from BBB Credit Watch Negative to BBB- with Stable Outlook

 This is the result of the recently revised economic prospects for GDP growth in Portugal and its impact in Brisa’s operational and financial performance

 The short-term credit rating was unchanged at A-3 with Stable Outlook

 The outlook on the debt ratings is positive, reflecting the rating upside that will result from Brisa´s reorganization

Press release

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Brisa standpoint

BBB- does not reflect the credit strength of Brisa

 S&P is justifying its decision on a prospective scenario that considers revised economic prospects for Portugal with weakening credit metrics in the future.

 S&P is not considering the proven ability and commitment of the company to maintain or even improve those credit metrics

 Brisa is being penalized in terms of liquidity assessment:

− S&P is applying more demanding criteria for liquidity risk evaluation without allowing Brisa time to adapt

− the outstanding amount of short-term debt is being negatively highlighted, without giving credit to the fact that access to long term funding has only been delayed because of the Corporate Reorganization process

− S&P gives no credit for either Brisa’s 1-year committed credit facilities or its Treasury shares

Credit metrics

Liquidity

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S&P has toughened its guidance for credit metrics

S&P guidance for FFO/Debt FFO/Debt 2009

EBITDA Int.

Coverage 2009

Current S&P rating Brisa (Aug 2008/Downgrade to BBB): “…expect

FFO/Debt to deteriorate in 2008 and 2009 but to recover to about 10% by 2010”

10.5%

3.31 BBB- Stable

Spanish peer

(Update May 2008/A- Neg Out): “…should maintain FFO/debt above 12%. We expect this ratio to improve to about 13% by

2010.”

11.6%

3.30 BBB+ Stable

Italian peer

(Update Sep 2008/A Stable): “We expect the company to achieve a financial profile commensurate with A rating, with FFO/Debt

of about 12%-13% minimum…”

10.7%

3.13 A- Stable

 The guidance now disclosed by S&P is: “…we could upgrade the current

ratings if BRISA's FFO-to-debt ratio were to reach and remain above 12%...”

S&P metrics for 2009: Peer comparison

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 Brisa has reacted to unforeseen adverse macroeconomic conditions by:

 Decreasing OPEX

 Paring back CAPEX

 Making no significant financial investments

 Seeking, where appropriate, to reduce the shareholding position in assets (e.g. Douro Litoral)

 Increasing level of committed and the amount of undrawn facilities, thus strengthening its liquidity position

 Credit metrics are above the thresholds previously made public by S&P as adequate for the BBB rating

 Brisa is pursuing the Corporate Reorganization

Brisa reaffirms its commitment to a strong BBB rating

Over time Brisa has expressed to S&P its commitment to maintain a strong BBB credit rating and has performed accordingly:

Conclusion

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Rating update

Financial overview

Corporate reorganization

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Very low cost of debt (3.5%) … with a 72% fixed rate component!

Corporate Debt / Main Concession

2009 i 2008 ⁱ

Brisa 3.50%

Bonds

Securitization

2 577 1 168 239 2 586

1 104 317

4.41%

Other 270 333

EIB 895 837

Cash 72 115

Net debt ^{2 514} ^{2 462}

1Q10 i

3.49%

2 551 1 181 239 297 834

115 2 436

 Adequate and diversified funding mix

 Weighted Average Cost of Debt (WACD) decreased significantly

 Net debt is below YE08 levels

€ millions

Debt structure

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Significant decrease of interest rate risk in 2009 Interest rate debt structure

1Q10

Corporate Debt / Main Concession

 During 2009, Brisa entered into floating-to-fixed Interest Rate Swaps, with a total notional of €440m, seizing the opportunity to hedge interest rate risk at historically low interest rate levels

YE08

Fixed 46%

Floating 47%

Inflation linked w/ cap 4%

Euribor w/ cap 3%

Fixed 72%

Floating 28%

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Liquidity 1Q10

5 relationship banks Total Used Available

Cash and cash equivalents 115

Treasury stock 147

Committed EIB loan 200 150 50

Committed CPs 400 93 307

Uncommitted CPs 600 177 423

Other ST bank lines 335 - 335

EMTN Programme 2 000 1 100 900

5 relationship banks

 More than €600m in cash, treasury stock and undrawn committed bank lines

 Conservative approach to liquidity

6 relationship banks

Corporate Debt / Main Concession

Strong increase in liquidity position during 2009 and 2010

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Fully funded concessions

Other Concessions

Debt structure 1Q10

Fixed 85%

Floating 15%

 Debt is non-recourse to Brisa

 Consolidated project finance debt decreased with the reduction of the stake in Douro

Concessions Consolidated

Debt WACD Cash

Brisal 525 5.87% €19m

Atlântico (50%) 189 4.02% €29m

NWP 244 5.47% €14m

Project Finance 958 5.50% €62m

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 Net debt decreased more than 12%

 Net debt / EBITDA ratio returned to pre YE07 levels

Consolidated overview

Improvement in consolidated key ratios

1Q09 1Q10 Change

Consolidated Net Debt 3 795 3 332 -12.2%

Main Concession 2 605 2 436 -6.5%

Other Concessions 1 190 896 -24.7%

Gearing 293% 287% -6 p.p.

Debt Average Maturity 6.6 6.1 -0.5yrs

Net Debt / EBITDA 7.7x 7.0x -0.7x

Change in consolidation scope of Douro had a positive

impact in key credit ratios

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Rating update

Financial overview

Corporate reorganization

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Corporate reorganization

Main financial objectives

 Separate holding and developing activities from the Main Concession business

 Achieving greater ratings stability – solid investment grade credit ratings will be sought for Brisa Concession on stand-alone basis through the ring fencing from the rest of the group

 Favors financial flexibility and dynamic portfolio management approach

 Alternative sources of funding through active portfolio management

Greater efficiency and flexibility

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Holding

Brisal

506 Atlântico

160 NWP

230 Total

debt 3 332 Brisa

Concession 2 436

Corporate Reorganization Current debt distribution 1Q10

(Million Euro)

 Most of project finance non-recourse debt is consolidated by the agencies for rating analysis purposes

 Brisa concession cash flow presents a very low risk, given that it is mature and stable

 Brisa concession’s debt and cash flow are not ring-fenced

Current structure has become sub-optimal

Corporate reorganization

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Holding No debt

Brisa concession

2 436

Brisal

506 Atlântico

160 NWP

230 Bonds + EIB +

Bank Debt

Corporate Reorganization Future debt distribution 1Q10

(Million Euro)

 The Hold Co. will continue to be the public traded company

 Each asset will be accountable only for its own debt

 Debt rating will be assigned directly to the Brisa concession

 Increases financial flexibility and allows dynamic portfolio management approach

Brisa concession will be ring-fenced

Corporate reorganization

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Concluding remarks

Current portfolio – streamlined

 New concessions and recent portfolio adjustments reflect stated policies

Main Concession – generating cash

 Generating positive free cash flow

 Low capex requirements

 Very comfortable liquidity headroom

 Low interest rate risk and low cost of debt

New projects – only to be considered after the Reorganization

 Low equity needs and fully financed through non-recourse project finance

 Continued selectiveness

BBB- does not reflect credit metrics and asset quality

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Concluding remarks

Downgrade – impacts

 Some of the EIB facilities require a minimum BBB rating. In the current situation Brisa would have to provide bank guarantees for those EIB loans. Brisa will negotiate a waiver with the EIB, to last until the reorganization is completed

 No additional impacts in all other credit facilities

 Downgrade applies to the current corporate structure

 In the future the ring-fenced Brisa concession will be the only rated entity

Other credit rating agencies – impacts

 Brisa continues to maintain Baa1 from Moody’s

Reorganization will strengthen Brisa’s financial position

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Concluding remarks

Reorganization is well underway

Completed Ongoing

Grantor’s consent

Negotiation with the EIB Creation of Brisa O&M

Ratings assessment Bridge financing

Drafting of Documentation

Due diligence process Completed Ongoing

Grantor’s consent

Negotiation with the EIB Creation of Brisa O&M

Ratings assessment Bridge financing

Drafting of Documentation Due diligence process

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Financial update May 2010