INFORMATION MEMORANDUM
CP - Comboios de Portugal, E.P.E.
(incorporated with limited liability in Portugal)€500,000,000 4.17 PER CENT. GUARANTEED NOTES DUE
OCTOBER 2019
Guaranteed by the Portuguese Republic
The €500,000,000 4.17 per cent. Guaranteed Notes due October 2019 (the “Notes”) are issued by CP - Comboios de Portugal, E.P.E. (the “Issuer”) and guaranteed by the Portuguese Republic (the “Guarantor”) under the terms set forth in Law no. 112/97, of 16 September (“Law 112/97”).
The Issuer may, at its option, redeem all, but not some only, of the Notes at any time at their principal amount plus accrued interest, in the event of certain tax changes as described under Condition 5.2 of “Conditions of the Notes” herein. The Notes mature on 16 October 2019. Subject as provided below, interest payments on the Notes will be subject to withholding tax unless an exemption is applicable. Under Decree Law no. 193/2005, of 7 November 2005, certain exemptions exist relieving qualifying Noteholders from withholding tax. See "Taxation in Portugal and Eligibility for the Portuguese Debt Securities Tax Exemption Regime". See also Condition 6 of "Conditions of the Notes".
Application has been made for the Notes to be listed on the regulated market Eurolist by Euronext Lisbon (“Euronext”), the official quotation market ("Mercado de Cotações Oficiais") in Portugal. Euronext is a regulated market for the purpose of the Markets in Financial Instruments Directive (Directive 2004/39/EC). References in this Information Memorandum to the Notes being "listed" (and all related references) shall mean that the Notes have been admitted to trading on Euronext's regulated market and have been admitted to listing by Euronext.
The Notes will be rated A+ by Standard & Poor's Rating Services, a division of The McGraw-Hill Companies, Inc. (“Standard &
Poor’s”). A rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal
at any time by the assigning rating organisation.
This Information Memorandum does not constitute a prospectus for the purposes of Directive 2003/71/EC, nor for the purposes of the Portuguese Securities Code, which sets forth in article 111, no. 1, paragraph a) that a prospectus is not necessary for the issuance of securities guaranteed by a European Union Member State.
The Notes will be issued on 16 October 2009 (the “Closing Date”) and will be represented in dematerialised book-entry form (“escriturais”) and will be registered (“nominativas”) Notes in the denomination of € 50,000 each and will be held through the accounts of affiliate members of the Portuguese central securities depositary and the manager of the Portuguese settlement system,
Interbolsa–Sociedade Gestora de Sistemas de Liquidação e de Sistemas Centralizados de Valores Mobiliários, S.A. (“Interbolsa”),
as operator and manager of the "Central de Valores Mobiliários" (the “CVM”).
Notes traded on Euronext will be accepted for clearing through LCH.Clearnet, S.A., the clearing system operated at Interbolsa as well as through the clearing systems operated by Euroclear Bank S.A./N.V. (“Euroclear”) and Clearstream Banking, société anonyme (“Clearstream, Luxembourg”) and settled by Interbolsa's settlement system.
Sole Bookrunner and sole Lead Manager
The Issuer (the “Responsible Person”) accepts responsibility for the information contained in this Information Memorandum. To the best of the knowledge of the Responsible Person (having taken all reasonable care to ensure that such is the case) the information contained in this Information Memorandum is in accordance with the facts and does not omit anything likely to affect the import of such information.
The Lead Manager (as defined in “Subscription and Sale”) has not independently verified the information contained herein. Accordingly, no representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by the Lead Manager as to the accuracy or completeness of the information contained or incorporated in this Information Memorandum or any other information provided by the Responsible Person or the Guarantor in connection with the issue of the Notes. The Lead Manager does not accept liability in relation to the information contained in this Information Memorandum or any other information provided by the Responsible Person or the Guarantor in connection with the issue of the Notes.
No person is or has been authorised by the Issuer to give any information or to make any representation not contained in or not consistent with this Information Memorandum or any other information supplied in connection with the issue of the Notes and, if given or made, such information or representation must not be relied upon as having been authorised by the Responsible Person, the Guarantor or the Lead Manager.
Neither this Information Memorandum nor any other information supplied in connection with the issue of the Notes (a) is intended to provide the basis of any credit or other evaluation of the Issuer or the Guarantor or (b) should be considered as a recommendation by the Responsible Person or the Lead Manager that any recipient of this Information Memorandum or any other information supplied in connection with the issue of the Notes should purchase any Notes. Each investor contemplating purchasing any Notes should make its own independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of the Responsible Person and the Guarantor. Neither this Information Memorandum nor any other information supplied in connection with the issue of the Notes constitutes an offer or invitation by or on behalf of the Responsible Person or the Lead Manager to any person to subscribe for or to purchase any Notes in those jurisdictions where it is unlawful to do so.
Neither the delivery of this Information Memorandum nor the offering, sale or delivery of any Notes shall in any circumstances imply that the information contained herein concerning the Responsible Person is correct at any time subsequent to the date hereof or that any other information supplied in connection with the issue of the Notes is correct as of any time subsequent to the date indicated in the document containing the same. The Lead Manager expressly does not undertake to review the financial condition or affairs of the Responsible Person during the life of the Notes or to advise any investor in the Notes of any information coming to their attention. The Notes have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”). Subject to certain exceptions, Notes may not be offered, sold or delivered within the United States or to U.S. persons (see "Subscription and Sale").
TABLE OF CONTENTS
Form of the Notes, Clearing and Settlement, Exercise of Rights and
Listing………..………...5 Conditions of the Notes………...……….. 7 Form of
Guarantee…………...………..………...18 Use of Proceeds……...………..………...………..26 Description of the Issuer...………..………27 Taxation in Portugal and Eligibility for the Portuguese Debt Securities Tax
FORM OF THE NOTES, CLEARING AND SETTLEMENT, EXERCISE OF RIGHTS AND LISTING
Form of the Notes
The Notes will be represented in dematerialised book-entry form (“escriturais”) and will be registered (“nominativas”) Notes in the denomination of € 50,000 each and will be held through the accounts of affiliate members of the Portuguese central securities depositary and the manager of the Portuguese settlement system, Interbolsa Sociedade Gestora de Sistemas de
Liquidação e de Sistemas Centralizados de Valores Mobiliários, S.A. (“Interbolsa”), as
operator and manager of the “Central de Valores Mobiliários” (“CVM”).
Clearing and Settlement
The CVM is the centralised system (“sistema centralizado”) for the registration and control of securities in Portugal, in which all securities in book-entry form admitted to trading on a Portuguese regulated market must be registered (the “Book-Entry Registry” and each entry a “Book-Entry”). The CVM is composed of interconnected securities accounts, through which securities (and inherent rights) are created, held and transferred. This allows Interbolsa to control the amount of securities created, held and transferred. Issuers of securities, financial intermediaries which are Affiliate Members of Interbolsa (as defined below) and the Bank of Portugal, all operate in the CVM.
The CVM provides for all the procedures which allow the owners of securities to exercise their rights.
In relation to each issue of securities, CVM comprises inter alia, (i) the issue account, opened by the relevant issuer in the CVM and which reflects the full amount of securities issued; (ii) the individual accounts opened by each Affiliate Member of Interbolsa (as defined below) under the name of their respective customers where the securities are registered; and (iii) the control accounts opened by each Affiliate Member of Interbolsa, and which reflect, at all times, the aggregate nominal amount of securities held in the individual securities accounts opened under the name of the holders of securities by each of the Affiliate Members of Interbolsa.
Each person shown in the records of an Affiliate Member of Interbolsa as having an interest in Notes shall be treated as the holder of the principal amount of the Notes recorded.
The expression “Affiliate Member of Interbolsa” means any authorised financial intermediary entitled to hold control accounts with Interbolsa under the name of Noteholders and includes any depository banks which have opened securities accounts in the name of Euroclear and Clearstream, Luxembourg, for the purposes of holding accounts on behalf of Euroclear and Clearstream, Luxembourg with Interbolsa.
Notes registered with Interbolsa will be attributed an International Securities Identification Number (“ISIN Code”) through Interbolsa's codification system and will be accepted for clearing through LCH.Clearnet, S.A., the clearing system operated at Interbolsa as well as through the clearing systems operated by Euroclear and Clearstream, Luxembourg and settled by Interbolsa's settlement system.
Exercise of Financial Rights
Payment of principal and interest in respect of the Notes will be subject to Portuguese laws and regulations, notably the regulations from time to time issued and applied by the Comissão
do Mercado de Valores Mobiliários (Portuguese Securities Market Commission, the “CMVM”)
and Interbolsa.
Interbolsa appointed by the Issuer to act as the paying agent in respect of the Notes (the “Portuguese Paying Agent”) responsible for the relevant payment, as well as advance notice if such Portuguese Paying Agent is removed or replaced.
Prior to any payment the appointed Portuguese Paying Agent shall provide Interbolsa with a statement of acceptance of its role of Portuguese Paying Agent.
Interbolsa must notify the Portuguese Paying Agent of the amounts to be settled, which will be determined by Interbolsa on the basis of the account balances of the accounts of the Affiliate Members of Interbolsa.
On the date on which any payment in respect of the Notes is to be made, the corresponding entries and counter-entries will be made, in accordance with Interbolsa customary procedures, in the accounts which the Portuguese Paying Agent uses for payments in respect of securities held through Interbolsa and in the accounts held by the Affiliate Members of Interbolsa.
Accordingly, payments of principal and interest in respect of the Notes will be (i) credited, according to the procedures and regulations of Interbolsa, by the Portuguese Paying Agent (acting on behalf of the Issuer or the Guarantor) in the payment current account which the Portuguese Paying Agent uses for payments in respect of securities held through Interbolsa, (ii) transferred, on the payment date, from the payment current account which the Portuguese Paying Agent uses for payments in respect of securities held through Interbolsa to the payment current accounts held according to the applicable procedures and regulations of Interbolsa by the relevant Affiliate Members of Interbolsa, and thereafter (iii) transferred by such Affiliate Members of Interbolsa from the respective above mentioned payment current accounts to the accounts of the Noteholders or of Euroclear or Clearstream, Luxembourg with said Affiliate Members of Interbolsa, as the case may be.
Listing
Application has been made for the Notes to be listed on the regulated market of Euronext Lisbon, Eurolist by Euronext Lisbon, the official quotation market (“Mercado de Cotações
CONDITIONS OF THE NOTES
The €500,000,000 4.17 per cent. Guaranteed Notes due October 2019 (the “Notes”, which expression shall in these Conditions, unless the context otherwise requires, include any further notes issued pursuant to Condition 11 and forming a single series with the Notes) of CP -Comboios de Portugal, E.P.E. (the “Issuer”) and unconditionally, in the exact terms and conditions of the Issuer’s obligations, and irrevocably guaranteed by the Portuguese Republic (the “Guarantor”) under the terms set forth in Law no. 112/97, of 16 September (“Law
112/97”) are issued on 16 October 2009 and subject to and with the benefit of a paying agency
agreement dated 13 October 2009 (such agreement as amended and/or supplemented and/or restated from time to time, the “Agency Agreement”) made between the Issuer, Deutsche Bank AG, London Branch as principal paying agent (the “Principal Paying Agent”) and Deutsche Bank (Portugal), S.A. as Portuguese paying agent (the “Portuguese Paying Agent” and together with the Principal Paying Agent, the “Paying Agents”).
The statements in these Conditions include summaries of, and are subject to, the detailed provisions of and definitions in the Agency Agreement. A copy of the Agency Agreement is available for inspection during normal business hours by the holders of the Notes at the specified office of the Issuer. The Noteholders are entitled to the benefit of, are bound by, and are deemed to have notice of, all the provisions of the Agency Agreement applicable to them. References in these Conditions to the Principal Paying Agent and to the Portuguese Paying Agent shall include any successor appointed under the Agency Agreement.
The payment of all amounts in respect of the Notes have been guaranteed by the Guarantor pursuant to a guarantee (the “Guarantee”) dated [ ] October 2009 and executed by the Guarantor, represented by the General Director of Treasury and Finance. The original Guarantee is held by the Portuguese Paying Agent on behalf of, and copies are available for inspection by, the Noteholders at its specified office.
1. FORM, DENOMINATION, TITLE ANDTRANSFER
1.1 Form and Denomination
The Notes will be represented in dematerialised book-entry form (“escriturais”) and will be registered (“nominativas”) Notes, in the denomination of € 50,000 each.
1.2 Title
Title to the Notes held through Interbolsa–Sociedade Gestora de Sistemas de Liquidação e
de Sistemas Centralizados de Valores Mobiliários, S.A. (“Interbolsa”) will be evidenced by
book-entries in accordance with the Portuguese Securities Code (“Código dos Valores
Mobiliários”) (the “Portuguese Securities Code”) and the regulations issued by, or otherwise
applicable to, Interbolsa. Each person shown in the book-entry records of an Affiliate Member of Interbolsa, as having an interest in the Notes shall be the holder of the Notes recorded (each a “Noteholder”).
Title to the Notes held through Interbolsa is subject to compliance with all applicable rules, restrictions and requirements of Interbolsa and Portuguese law.
One or more certificates in relation to the Notes (each, a “Certificate”) will be delivered by the relevant Affiliate Member of Interbolsa in respect of a registered holding of Notes upon the request by the relevant Noteholder and in accordance with that Affiliate Member of Interbolsa's procedures pursuant to article 78 of the Portuguese Securities Code.
1.3 Holder Absolute Owner
Each Noteholder shall be treated as the absolute owner for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any other interest therein which has not been registered in the respective individual account held with an Affiliate Member of Interbolsa) of any Note registered in the respective individual securities account held with Affiliate Members of Interbolsa.
The Issuer, the Guarantor, the Principal Paying Agent and the Portuguese Paying Agent may (to the fullest extent permitted by applicable laws) deem and treat the person or entity registered in individual securities account held with Affiliate Members of Interbolsa as the holder of any Note and the absolute owner for all purposes. Proof of such registration is made by means of a Certificate issued by the relevant Affiliate Member of Interbolsa pursuant to article 78 of the Portuguese Securities Code.
1.4 Transfer of Notes
No Noteholder will be able to transfer Notes, or any interest therein, except in accordance with Portuguese laws and regulations. Notes may only be transferred in accordance with the applicable procedures established by the Portuguese Securities Code and the regulations issued by the Comissão do Mercado de Valores Mobiliários (Portuguese Securities Market Commission, the “CMVM”) or Interbolsa, as the case may be, and the relevant Affiliate Members of Interbolsa through which the Notes are held.
Title to the Notes passes upon registration of the transfer in each of the respective individual securities accounts of Affiliate Members of Interbolsa of the transferor and transferee.
2. STATUS OF THENOTES AND THEGUARANTEE
2.1 Status of Notes
The Notes are direct, unsubordinated, unconditional and unsecured obligations of the Issuer and rank and will rank pari passu, without any preference among themselves, with all other outstanding unsecured and unsubordinated obligations of the Issuer, present and future, save for such exceptions as may be provided by mandatory applicable law.
2.2 Status of the Guarantee
The Guarantor has unconditionally, in the exact terms and conditions of the Issuer’s obligations, and irrevocably guaranteed the due payment of all sums expressed to be payable by the Issuer under the Notes. Its obligations in that respect are contained in the Guarantee issued by the Guarantor substantially in the terms set forth in this Information Memorandum.
3. INTERESTACCRUAL
3.1 Interest Rate and Interest Payment Dates
The Notes bear annual interest on their principal amount from and including 16 October 2009 at the rate of 4.17 per cent. per annum (the “Interest Rate”). Interest will be payable in arrears on 16 October of each year or, if that is not a Business Day, the immediately succeeding Business Day unless it would as a result fall into the next calendar month, in which case it will be brought forward to the next preceding Business Day, from and including 16 October 2009 up to and excluding the Maturity Date (each an “Interest Payment Date”).
As used in these Terms and Conditions, “Interest Period” means the period from (and including) an Interest Payment Date (or the Closing Date) to (but excluding) the next (or first) Interest Payment Date.
Each Note will cease to bear interest from and excluding its due date for redemption unless payment of the principal in respect of the Note is improperly withheld or refused or unless default is otherwise made in respect of payment, in which event interest shall continue to accrue until the earlier of:
(a) the date on which all amounts due in respect of such Note have been paid; and (b) 7 (seven) days after the date on which the full amount of the moneys payable in
respect of such Notes has been received by the Principal Paying Agent and transferred to the Portuguese Paying Agent and notice to that effect has been given to the Noteholders in accordance with Condition 9.
Notwithstanding the above, upon the late payment by the Issuer of any amounts due in respect of the Notes, the Issuer shall pay interest on such overdue amounts at a rate per annum equal to the aggregate of the Interest Rate and 2 per cent.
3.3 Calculation of Broken Interest
When interest is required to be calculated in respect of a period of less than an Interest Period of a full year, such interest shall be calculated by applying the Interest Rate to the denomination of the Notes, multiplying such sum by the applicable Day Count Fraction, and rounding the resultant figure to the nearest sub-unit of euro, half of any such sub-unit being rounded upwards or otherwise in accordance with applicable market convention.
“Day Count Fraction” means, in respect of the calculation of an amount of interest in accordance with this Condition 4 “Actual/Actual (ICMA)” which:
(a) in the case the number of days in the relevant period from (and including) the most recent Interest Payment Date (or, if none, the Closing Date) to (but excluding) the relevant payment date (the “Accrual Period”) is equal to or shorter than the Determination Period during which the Accrual Period ends, the number of days in such Accrual Period divided by the product of (1) the number of days in such Determination Period and (2) the number of Determination Dates that would occur in one calendar year; or
(b) in case the Accrual Period is longer than the Determination Period during which the Accrual Period ends, the sum of:
1. the number of days in such Accrual Period falling in the Determination Period in which the Accrual Period begins divided by the product of (x) the number of days in such Determination Period and (y) the number of Determination Dates that would occur in one calendar year; and
2. the number of days in such Accrual Period falling in the next Determination Period divided by the product of (x) the number of days in such Determination Period and (y) the number of Determination Dates that would occur in one calendar year.
“Determination Period” means each period from (and including) the Determination Date (but excluding) the next Interest Payment Date.
“Determination Date” means the day on which interest is paid, i.e. 16 October of each year.
4. PAYMENTS
4.1 Payments in respect of Notes
Agent (acting on behalf of the Issuer or the Guarantor) in the payment current account which the Portuguese Paying Agent uses for payments in respect of securities held trough Interbolsa, (ii) transferred, on the payment date, from the payment current account which the Portuguese Paying Agent uses for payments in respect of securities held trough Interbolsa to the payment current accounts held according to the applicable procedures and regulations of Interbolsa by the relevant Affiliate Members of Interbolsa, and thereafter (iii) transferred by such Affiliate Members of Interbolsa from the respective above mentioned payment current accounts to the accounts of the Noteholders or of Euroclear or Clearstream, Luxembourg with said Affiliate Members of Interbolsa, as the case may be.
Under the procedures of Interbolsa’s real time settlement system, physical settlement takes place on the third Business Day after the trade and is provisional until financial settlement takes place at the Bank of Portugal on the Closing Date.
For the purpose of this Condition, a Business Day corresponds to any day in which CVM is operating.
4.2 Notification of non-payment
If the Issuer determines that it will not be able to pay the full amount of principal and/or interest in respect of the Notes on the relevant due date, the Issuer will, in accordance with Condition 9, forthwith give notice to the Noteholders, to the Paying Agents and to the Guarantor of its inability to make such payment.
4.3 Notification of late payment
If the Issuer or the Guarantor expects to pay the full amount in respect of the Notes at a date later than the date on which such payments are due, the Issuer, notwithstanding its obligations in respect of interest on overdue payments set forth in Condition 3.2, will, in accordance with Condition 9, give notice of such late payment to the Noteholders and to the Paying Agents.
4.4 Payments subject to Applicable Laws
Payments in respect of principal and interest on the Notes are subject in all cases to any tax or other laws and regulations applicable in the place of payment, but without prejudice to the provisions of Condition 6.
4.5 Payment Business Day
Noteholders shall not, except as provided in Condition 3, be entitled to any further interest or other payment for any delay in receiving the amount due as a result of the relevant due date not being a Payment Business Day.
Payment Business Day means a day which:
(a) is a business day in Lisbon; and
(b) is a TARGET 2 Settlement Day.
In this Condition, “TARGET 2 Settlement Day” means any day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (“TARGET 2”) System is open for the settlement of payments in Euro.
4.6 Paying Agents
Deutsche Bank, London Branch with head office at Winchester House, 1 Great Winchester Street, EC2N 2DB London, United Kingdom, was appointed as Principal Paying Agent in the terms of the Agency Agreement.
The Issuer reserves the right at any time to vary or terminate the appointment of the Principal Paying Agent and of the Portuguese Paying Agent and to appoint additional or other paying agents provided that:
(a) there will at all times be a Portuguese Paying Agent in Portugal capable of making payment in respect of the Notes as contemplated by these terms and conditions of the Notes, the Agency Agreement and applicable Portuguese laws and regulations; and
(b) the Issuer undertakes that it will at all times maintain Paying Agents in a Member State of the European Union that is not obliged to withhold or deduct tax pursuant to European Council Directive 2003/48/EC or any law implementing or complying with, or introduced in order to conform to, such Directive.
Notice of any termination or appointment and of any changes in specified offices will be given to the Noteholders promptly by the Issuer in accordance with Condition 9.
5. REDEMPTION ANDPURCHASE
5.1 Redemption at Maturity
Unless previously redeemed or purchased and cancelled as provided below, the Issuer will redeem the Notes at their principal amount on 16 October 2019 (the “Maturity Date”).
5.2 Redemption for Taxation Reasons
If:
(a) as a result of any change in, or amendment to, the laws or regulations of a Relevant Jurisdiction (as defined in Condition 6), or any change in the application or official interpretation of the laws, regulations or administrative rulings of a Relevant Jurisdiction, which change or amendment becomes effective after the Closing Date, on the next Interest Payment Date the Issuer would be required to pay additional amounts as provided or referred to in Condition 6; and
(b) the requirement cannot be avoided by the Issuer taking reasonable measures available to it,
the Issuer may at its option, having given not less than 30 nor more than 60 days' notice to the Noteholders in accordance with Condition 9 (which notice shall be irrevocable), redeem all the Notes, but not some only, at any time at their principal amount together with interest accrued to but excluding the date of redemption, provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer would be required to pay such additional amounts, were a payment in respect of the Notes then due. Prior to the publication of any notice of redemption pursuant to this paragraph, the Issuer shall deliver to the Principal Paying Agent a certificate signed by two Directors of the Issuer stating that the requirement referred to in (a) above will apply on the next Interest Payment Date and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred and an opinion of independent legal advisers of recognised standing to the effect that the Issuer has or will become obliged to pay such additional amounts as a result of the change or amendment.
5.3 Purchases
The Issuer, any of its respective Subsidiaries or the Guarantor may at any time purchase Notes in any manner and at any price in accordance with Portuguese law. If purchases are made by tender, tenders must be available to all Noteholders alike.
Noteholders and shall not be deemed to be outstanding for the purposes of calculating quorums at meetings of the Noteholders or for the purposes of Condition 10.1 or the Agency Agreement.
In this Condition, “Subsidiary” means any entity in respect of which another entity (i) holds (directly or indirectly) the majority of the voting rights or (ii) has (directly or indirectly) the right to appoint or remove a majority of the board of directors or (iii) holds (directly or indirectly) the majority of the share capital.
5.4 Cancellations
All Notes which are (a) redeemed or (b) purchased by or on behalf of the Issuer, any of its Subsidiaries or the Guarantor shall forthwith be cancelled by Interbolsa, following receipt by Interbolsa of notice thereof by the Issuer, and accordingly said Notes may not be held, reissued or resold and shall not entitle the holder to vote at any meetings of the Noteholders and shall not be deemed to be outstanding for the purposes of calculating quorums at meetings of the Noteholders or for the purposes of Condition 10.1 or of the Agency Agreement.
5.5 Notices Final
Upon the redemption date specified in any notice as is referred to in Condition 5.2 above the Issuer shall be bound to redeem the Notes to which the notice refers in accordance with the terms of such notice and these Conditions.
6. TAXATION
6.1 Payment of Interest without withholding
All payments in respect of the Notes and the Guarantee by or on behalf of the Issuer or the Guarantor will be made without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature (“Taxes”) imposed or levied by or on behalf of a Relevant Jurisdiction, unless the withholding or deduction of such Taxes is required by law. In such event, the Issuer or, as the case may be, the Guarantor will pay such additional amounts as will result in the receipt by the relevant Noteholders of such amounts as would be received by them had no such withholding or deduction been required, except that no additional amounts shall be payable in relation to any payment in respect of any Note:
(a) to, or to a third party on behalf of, a Noteholder who is liable to the Taxes in respect of the Note by reason of having some connection with a Relevant Jurisdiction other than the mere holding of the Note; or
(b) where such withholding or deduction is imposed on a payment to an individual and is required to be made pursuant to European Council Directive 2003/48/EC or any other EC law or domestic law implementing the conclusions of ECOFIN Council meeting of 26-27 November 2000 on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such Directive; or
(c) to, or to a third party on behalf of, a Noteholder in respect of whom the information (which may include certificates) required in order to comply with Decree-Law 193/2005 of 7 November 2005, and any implementing legislation, is not received by no later than the second ICSD Business Day prior to the Relevant Date, or which does not comply with the formalities in order to benefit from tax treaty benefits, when applicable; or
(d) to, or to a third party on behalf of, a Noteholder resident for tax purposes in the Relevant Jurisdiction, or a resident in a tax haven jurisdiction as defined in Ministerial Order 150/2004, of 13 February 2004 (Portaria do Ministério das
Finanças e da Administração Pública n.150/2004) as amended from time to time,
exception of central banks and governmental agencies located in those blacklisted jurisdictions, or a non-resident legal entity held, directly or indirectly, in more than 20 per cent. by entities resident in the Portuguese Republic; or
(e) to, or to a third party on behalf of, (i) a Portuguese resident legal entity subject to Portuguese corporation tax (with the exception of entities that benefit from a waiver of Portuguese withholding tax or from Portuguese income tax exemptions), or (ii) a legal entity not resident in Portugal acting with respect to the holding of the Notes through a permanent establishment in Portugal.
6.2 Interpretation
In this Condition 6:
(a) “ICSD Business Day” means any day which is a TARGET 2 Settlement Day in
any year.
(b) “Relevant Date” means the date on which the payment first becomes due but, if
the full amount of the money payable has not been received by the Principal Paying Agent on or before the due date, it means the date on which, the full amount of the money having been so received, notice to that effect has been duly given to the Noteholders by the Issuer in accordance with Condition 9.
(c) “Relevant Jurisdiction” means the Portuguese Republic or any political
subdivision or any authority thereof or therein having power to tax or any other jurisdiction or any political subdivision or any authority thereof or therein having power to tax to which the Issuer or the Guarantor, as the case may be, becomes subject in respect of payments made by it of principal and interest on the Notes. (d) “Noteholder” means the effective beneficiary of the income attributable to the
relevant Note.
6.3 Additional Amounts
Any reference in these Conditions to any amounts in respect of the Notes shall be deemed also to refer to any additional amounts which may be payable under this Condition 6 or under any undertakings given in addition to, or in substitution of, this Condition 6.
See “Taxation In Portugal And Eligibility For The Portuguese Debt Securities Tax Exemption Regime” on page 37.
7. PRESCRIPTION
Notes will become void unless presented for payment within 20 years (in the case of principal) and five years (in the case of interest) from the Relevant Date in respect of the Notes subject to the provisions of Condition 4, in accordance with the applicable legal provisions of Portuguese laws.
8. EVENTS OFDEFAULT
8.1 Events of Default
The holder of any Note may give notice to the Issuer that the Note is, and it shall accordingly forthwith become, immediately due and repayable at its principal amount, together with interest accrued to the date of repayment, if any of the following events (“Events of
Default”) shall have occurred and be continuing if:
(b) the Issuer fails to perform or observe any of its other obligations under these Conditions and (except in any case where the failure is incapable of remedy, when no continuation or notice as is hereinafter mentioned will be required) the failure continues for the period of 30 (thirty) days following the service by any Noteholder on the Issuer of notice requiring the same to be remedied; or
(c) (A) the Issuer ceases or announces an intention to cease to carry on the whole or a substantial part of its business, save for the purposes of reorganisation on terms approved in writing by an Extraordinary Resolution of the Noteholders, unless simultaneously with such event the Notes become the direct, unconditional and unsubordinated obligations (i) of the Portuguese Republic or (ii) of an “entidade
pública empresarial” (E.P.E.) created as the successor of the Issuer and having the
same legal, administrative, credit and financial status of the Issuer and, in each case, the Notes are otherwise on identical terms, including, in the case of an E.P.E., the Notes continuing to be unconditionally and irrevocably guaranteed by the Guarantor on the same terms as under the Guarantee, or (B) the Issuer stops or announces an intention to stop payment of, or is unable to, or admits inability to, pay, its debts (or any class of its debts) as they fall due or is deemed unable to pay its debts pursuant to or for the purposes of any applicable law; or
(d) any legal act (“acto normativo”) that has as its object or consequence the dissolution, winding up, liquidation or any other procedure having a similar nature or effect in respect of the Issuer enters into force or if the commencement of dissolution, winding up, liquidation proceedings or any other procedure having a similar nature or effect (including the obtaining of a moratorium) occurs unless simultaneously with such event the Notes become the direct, unconditional and unsubordinated obligations of (i) the Portuguese Republic or of (ii) an “entidade
pública empresarial” (E.P.E.) created as the successor of the Issuer and having the
same legal, administrative, credit and financial status of the Issuer and, in each case, the Notes are otherwise on identical terms, including, in the case of an E.P.E., the Notes continuing to be unconditionally and irrevocably guaranteed by the Guarantor on the same terms as under the Guarantee; or
(e) the Issuer makes a conveyance or assignment for the benefit of, or enters into any composition or other arrangement with, its creditors generally (or any class of its creditors) or if any meeting is convened to consider a proposal for an arrangement or composition with its creditors generally (or any class of its creditors); or
(f) it is or will become unlawful for the Issuer to perform or comply with any of its obligations under or in respect of the Notes or the Agency Agreement or any of such obligations are or become unenforceable or invalid; or
(g) any regulation, decree, consent, approval, licence or other authority necessary to enable the Issuer to perform its obligations under the Notes or the Agency Agreement or for the validity or enforceability thereof expires or is withheld, revoked or terminated or otherwise ceases to remain in full force and effect or is modified in a manner which adversely affects any rights or claims of any of the Noteholders; or
(i) the Issuer ceases to develop its core business of rendering transportation services of passengers and goods in railway lines as described in article 2 of its by-laws, save on terms approved or by an Extraordinary Resolution of the Noteholders, unless simultaneously with such event the Notes become the direct, unconditional and unsubordinated obligations of (i) the Portuguese Republic or (ii) an “entidade
pública empresarial” (E.P.E.) created as the successor of the Issuer and having the
same legal, administrative, credit and financial status of the Issuer and, in each case, the Notes are otherwise on identical terms, including, in the case of an E.P.E., the Notes continuing to be unconditionally and irrevocably guaranteed by the Guarantor on the same terms as under the Guarantee; or
(j) all or any substantial part of the undertaking, assets and revenues of the Issuer exceeding €10,000,000 in value is condemned, seized or otherwise appropriated by any person acting under the authority of any national, regional or local government and remains so for a period of 60 days; or
(k) any event occurs which, under the laws of the Portuguese Republic, has or may have an analogous effect to any of the events referred to in the subparagraphs (c) to (f) above and which might have a material and adverse effect on the ability of the Issuer to comply with its obligations under the Conditions of the Notes; or
(l) the Guarantee is not (or is claimed by the Guarantor not to be) in full force and effect.
For the purpose of this clause 8.1. it will not constitute an Event of Default the transfer by the Issuer to CP Carga – Logística e Transportes Ferroviários de Mercadorias, S.A. (which share capital is totally held by the Issuer) of the commodities transport activity as envisaged by article 10º of Decree-Law no. 137-A/2009, of 12 June (which approved the new legal regime applicable to the Issuer and its respective by-laws).
In these Conditions:
“Extraordinary Resolution” means a Resolution concerning a Reserved Matter. In these Conditions “Reserved Matter” means any proposal:
(i) to change any date fixed for payment of principal or interest in respect of the Notes, to reduce the amount of principal or interest due on any date in respect of the Notes or to alter the method of calculating the amount of any payment in respect of the Notes on redemption or maturity;
(ii) to change the currency in which amounts due in respect of the Notes are payable; (iii) for modification or abrogation of certain of the provisions of the Conditions of the
Notes;
(iv) for the acceleration of the obligations under the Notes; and (v) to amend this definition.
9. NOTICES
given on the date of such publication or, if published more than once or on different dates, on the first date on which publication is made, as provided above.
The Issuer shall also ensure that notices are duly published in a manner which complies with the rules and regulations of any stock exchange, or the relevant authority, on which the Notes are for the time being listed. Without prejudice to the preceding sentence, if the Notes cease to be listed on Euronext, all notices to the Noteholders will be valid if mailed to them at their respective addresses recorded in the respective register of Noteholders of the Affiliated Members of Interbolsa through which the Notes are held. Any notice shall be deemed to have been given on the date of publication or, if so published more than once or on different dates, on the date of the first publication, or, if applicable, on the day after being so mailed.
10. MEETINGS OFNOTEHOLDERS ANDMODIFICATION
10.1 Meetings of Noteholders
Meetings of the Noteholders to consider any matter affecting their interests, including the modification or abrogation of any of these Conditions by Extraordinary Resolution and the appointment or dismissal of a common representative are governed by the Portuguese Companies Code enacted by Decree Law no. 262/86, of 2 September 1986, as amended. Meetings may be convened by the common representative or by the chairman of the general meeting of shareholders of the Issuer, before the appointment of, or in case of refusal to convene the Meeting by, the common representative and shall be convened if requested by Noteholders holding not less than 5 per cent. in principal amount of the Notes for the time being outstanding. The date for the meeting will be no less than 30 (thirty) days following the publication of the relevant convening notice, if convened by publication on the Euronext bulletin, and not less than 21 (twenty one) days following the convening notice being given, if convened by registered mail as set forth in Condition 9. The quorum required for a meeting convened to pass a resolution other than an Extraordinary Resolution will be any person or persons holding or representing any of the Notes then outstanding, independent of the principal amount thereof; and an Extraordinary Resolution will require the attendance of a person or persons holding or representing at least 50 per cent. of the Notes then outstanding or, at any adjourned meeting, any person or persons holding or representing any of the Notes then outstanding, independent of the principal amount thereof.
The majority required to pass a resolution other than an Extraordinary Resolution is the majority of the votes cast at the relevant meeting; the majority required to pass an Extraordinary Resolution, including, without limitation, a resolution relating to the modification or abrogation of certain of the provisions of these Conditions, is at least 50 per cent. of the principal amount of the Notes then outstanding or, at any adjourned meeting, two-thirds of the votes cast at the relevant meeting. Resolutions passed at any meeting of the Noteholders will be binding on all Noteholders, whether or not they are present at the meeting or have voted against the approved resolutions.
10.2 Appointment, dismissal and substitution of the common representative
The Noteholders may appoint, dismiss and substitute the common representative by way of a Resolution passed for such purpose or, if no Resolution is passed, the Issuer or any Noteholder may request a court to appoint the common representative. Each of the Noteholders may also request a court to dismiss (for cause) the common representative.
10.3 Notification to the Noteholders
Any modification, abrogation, waiver or authorisation in accordance with this Condition 10 shall be binding on the Noteholders and shall be notified by the Issuer to the Noteholders promptly thereafter in accordance with Condition 9.
The Issuer is at liberty from time to time without the consent of the Noteholders to create and issue further notes or bonds but subject to confirmation that the Guarantee will apply to such further notes or bonds, and is increased by the corresponding amount either (a) ranking
pari passu in all respects (or in all respects save for the first payment of interest thereon) and so
that the same shall be consolidated and form a single series with the outstanding notes or bonds of any series (including the Notes) or (b) upon such terms as to ranking, interest, conversion, redemption and otherwise as the Issuer may determine at the time of the issue.
12. GOVERNINGLAW ANDSUBMISSION TOJURISDICTION
12.1 Governing Law
The Notes, the Agency Agreement and the Guarantee, and any non-contractual obligations arising out of or in connection with them, are governed by, and will be construed in accordance with, Portuguese law.
12.2 Jurisdiction
The courts of Lisbon shall have jurisdiction to settle any proceedings arising out of or in connection with the Notes, the Agency Agreement and/or the Guarantee.
12.3 Sovereign Immunity
FORM OF GUARANTEE
GARANTIA
da República Portuguesa (o “Garante”) relativa aObrigações Garantidas com vencimento em Outubro de 2019 no valor de € 500,000,000
e com taxa de juro de 4,17% (as “Obrigações”)
emitidas por
CP Comboios de Portugal, E.P.E.
Artigo 1 Obrigações do Garante
1. Nos termos da Lei n.º 112/97 (“Lei 112/97”), de 16 de Setembro, a República Portuguesa, pela presente, garante incondicional, ou seja, nos exactos termos e condições da obrigação do devedor principal, e irrevogavelmente, a favor de qualquer detentor das Obrigações, seus sucessores e cessionários (os “Obrigacionistas”) o pagamento atempado dos montantes correspondentes ao capital e juros exigíveis à Emitente (as “Obrigações Garantidas”) ao abrigo dos Termos e Condições das Obrigações (as “Condições”) cuja minuta se encontra anexa à presente Garantia e dela faz parte integrante.
2. Os termos definidos nas Condições têm o mesmo significado quando utilizados nesta Garantia.
3. O objectivo da presente Garantia é assegurar o cumprimento das obrigações da Emitente previstas nas Condições e resultantes da emissão das Obrigações.
4. O Garante, pela presente renuncia incondicional, ou seja, nos exactos termos e condições da obrigação do devedor principal, e irrevogavelmente ao benefício de excussão prévia dos bens da Emitente, nos termos e para os efeitos do disposto no artigo 640.º alínea a) do Código Civil Português.
5. Pela presente, a República Portuguesa garante, a qualquer momento, que as
responsabilidades actuais e contingentes, assumidas nos termos da presente Garantia, constituem obrigações directas e não subordinadas do Garante concorrendo a pari passu com todas as outras responsabilidades, presentes ou futuras, directas e não subordinadas, do Garante à excepção daquelas que por lei beneficiem de preferência.
Artigo 2 Execução da Garantia
1. O Garante terá a faculdade de substituir a Emitente no pagamento das Obrigações Garantidas, nas datas devidas, sempre que a Emitente reconheça não estar habilitada a satisfazer os encargos com o capital e juros das Obrigações Garantidas nas datas fixadas contratualmente, evitando o vencimento antecipado da totalidade das obrigações assumidas pela Emitente em relação às Obrigações emitidas.
2. A Garantia será accionada por qualquer Obrigacionista ou um seu representante sempre que a Emitente incumprir o pagamento, total ou parcial, de qualquer Obrigação Garantida, nas datas devidas. O Garante pela presente assegura que efectuará todos os pagamentos respeitantes às Obrigações Garantidas à primeira notificação de qualquer Obrigacionista ou de um seu representante e após confirmação junto da Emitente de que o montante reclamado ao Garante é equivalente ao montante que a Emitente não pagou em tempo devido.
confirmação do montante reclamado nos termos do número anterior, no prazo de 5 (cinco) Dias Úteis supra referido.
4. O Garante só poderá ser chamado a executar a Garantia à primeira notificação feita por qualquer Obrigacionista ou um seu representante e será apenas responsável pelos juros de mora que decorram a partir da data da primeira notificação ao Garante realizada por correio registado, fax, correio electrónico ou qualquer outro meio permitido pela lei portuguesa. 5. Todos os pagamentos a efectuar pelo Garante nos termos desta Garantia serão realizados
sem qualquer compensação e sem dedução de quaisquer impostos, taxas, retenções ou outros encargos, presentes ou futuros, seja qual for a sua natureza, a não ser que o Garante esteja obrigado por lei a efectuar essas deduções. Se tal for necessário, e nos exactos termos e condições do exigido ao Emitente nas Condições, o Garante pagará os referidos montantes, respeitantes a capital, juros ou outros montantes adicionais, de forma a que os montantes líquidos remanescentes após dedução de tais impostos, taxas, retenções ou outros encargos sejam equivalentes aos montantes que seriam pagos se não houvesse necessidade de efectuar tais deduções.
Artigo 3
Alterações dos Termos e Condições das Obrigações
Qualquer alteração às Condições será submetida à aprovação prévia do Garante. O Garante só poderá recusar a sua aprovação no caso das alterações serem passíveis de afectar as suas responsabilidades no âmbito desta Garantia.
Artigo 4
Representações e Garantias
1. As obrigações emergentes desta Garantia não serão afectadas por qualquer alteração da forma legal da Emitente ou da propriedade do seu capital.
2. O Garante assegura aos Obrigacionistas que (i) a emissão da Garantia foi devidamente aprovada e autorizada, de acordo com a Lei n.º 112/97, de 16 de Setembro bem como de quaisquer outras leis e regulamentos aplicáveis; (ii) a Garantia foi devidamente assinada; e (iii) o cumprimento das suas obrigações, no âmbito da Garantia, é válido, legal e exigível nos termos da Lei n.º 112/97, de 16 de Setembro bem como de quaisquer outras leis e regulamentos aplicáveis.
Artigo 5 Regime Jurídico
1. Os direitos e deveres emergentes desta Garantia são exclusivamente regidos pelas leis Portuguesas. O local de cumprimento das obrigações do Garante é Lisboa e o Garante elege o Tribunal da Comarca de Lisboa como o tribunal competente em caso de litígio.
2. Ao abrigo e na medida do permitido pela Lei portuguesa, o Garante declara que não dispõe de qualquer prorrogativa ou direito especial, de natureza processual ou patrimonial, face às demais partes interessadas na emissão das Obrigações Garantidas, passível de ser invocado em Tribunal.
Duração da Garantia
1. A Garantia entra em vigor na data da sua assinatura e expira 30 (trinta) Dias Úteis (conforme abaixo definido), após a última Data de Pagamento de Juros (Interest Payment
Date) e Data de Reembolso (Reimbursement Date) estipulada nas Condições das
Obrigações, sem prejuízo da subsistência da obrigação de pagamento das Obrigações Garantidas que entretanto tiverem sido accionadas antes dessa data.
2. Sem prejuízo do disposto no parágrafo 1 acima, caso os Titulares das Obrigações, uma vez expirada a Garantia, sejam obrigados a devolver as quantias recebidos a título de pagamento dos seus créditos, em resultado de processo de insolvência ou de qualquer processo judicial, a Garantia entrará novamente em vigor e voltará a ser plenamente válida e eficaz.
Dia Útil significará um dia em que os Bancos estejam abertos ao público em Lisboa.
A Garantia está redigida em duas versões, uma na língua Portuguesa e outra na língua Inglesa. Em caso de conflito entre as duas versões, a versão portuguesa prevalecerá.
A Garantia está feita em seis exemplares de cada versão, cada um deles valendo como um original, destinando-se um deles ao Garante, um para cada Lead Manager e outro à Emitente.
Lisboa, [ ] de 2009
O DIRECTOR-GERAL DO TESOURO E FINANÇAS
Carlos Durães da Conceição
[O representante autorizado do Garante de acordo com o disposto nos n.ºs 1 e 2 do artigo 17º da
Lei 112/ 97].
Morada para comunicações:
Rua da Alfândega, 5-1º 1149 – 008 Lisboa Portugal
GUARANTEE
of the
Portuguese Republic
(the "Guarantor") relating to
€ 500.000.000 4.17 per cent. Guaranteed Notes due October 2019 (the “Notes”)
Issued by
CP Comboios de Portugal, E.P.E.
Article 1
Obligations of the Guarantor
1. In accordance with Law n.º 112/97, of 16 September (“Law 112/97”), the Portuguese
Republic hereby unconditionally, in the exact terms and conditions of the Issuer’s obligations, and irrevocably guarantees to any holder of the Notes and any of its successors and assignees (the “Noteholders”) the due payment of the amounts corresponding to the principal and interest payable by the Issuer (the “Guaranteed Obligations”) pursuant to the Terms and Conditions of the Notes (the “Conditions”) which draft is attached to this Guarantee and form part hereof.
2. Terms defined in the Conditions of the Notes shall have the same meaning herein.
3. The purpose of this Guarantee is to ensure the compliance of the obligations of the Issuer
set out in the Conditions arising in connection with the issue of the Notes.
4. The Guarantor hereby unconditionally, in the exact terms and conditions of the Issuer’s
obligations, and irrevocably renounces to the right to request the prior seizure of the assets of the Issuer (benefício da excussão prévia), under and for the purposes of article 640, section a) of the Portuguese Civil Code.
5. Under this Guarantee, the Portuguese Republic ensures at any time that the present and
future responsibilities, assumed under this Guarantee, will constitute direct and unsubordinated obligations of the Guarantor which rank pari passu with all other present or future direct and unsubordinated obligations of the Guarantor, save for such obligations as may be preferred by mandatory provisions of law.
Article 2 Calling of the Guarantee
1. The Guarantor will have the possibility to take the place of the Issuer and to make such
payments in respect of the Guaranteed Obligations on the due dates, every time the Issuer recognizes it will be unable to satisfy the payment of capital and interest due under the Guaranteed Obligations in the due dates in order to avoid the full outstanding amounts in respect of the Notes to be declared immediately due and payable.
2. The Guarantee will be called by any Noteholder or its representative whenever the Issuer fails, in whole or in part, to pay any Guaranteed Obligation on its due date. The Guarantor hereby warrants that it will make payments in respect of the Guaranteed Obligations upon the first notification of any Noteholder or its representative and after confirmation with the Issuer that the claimed amounts correspond to the amounts unpaid by the Issuer on the due dates.
3. Without prejudice to the liability of the Guarantor for default interest under paragraph 4 of this clause, the verification/ confirmation by the Guarantor that the amounts claimed by any Noteholder or its representative correspond to the amounts which the Issuer failed to make on the due date under the Conditions shall take place within no more than 5 (five) Business Days (as defined below) after the first notification in respect thereof. For the avoidance of doubt, whenever the Issuer fails, in whole or in part, to pay any Guaranteed Obligation on its due date, the Guarantor shall remain liable under the Guarantee even if the Issuer does not provide confirmation of the claimed amounts within the said 5 (five) Business Days.
4. The Guarantor may only be called to perform the Guarantee upon first notification of any
from the date of the first notification served by registered mail, fax or e-mail or any other means permitted under Portuguese law.
5. All payments to be made by the Guarantor under this Guarantee shall be made without set off or counterclaim and without deduction for or on account of any present or future taxes, duties, withholdings or other charges of whatsoever nature unless the Guarantor is required by law to make such deduction. If so required, and in the exact terms of the Issuer’s obligations under the Conditions, the Guarantor shall pay such amounts as may be necessary in respect of principal, interest, additional amounts or otherwise in order that the net amounts remaining after such deduction of such taxes, duties, withholding or other charges shall equal the respective amounts which would have been payable if no such deductions had been required to be made.
Article 3
Modifications of the Terms and Conditions of the Notes
Any modification to the Conditions of the Notes, shall be submitted to prior approval of the Guarantor. The Guarantor can only refuse to give its consent if such modifications are likely to affect its responsibilities under this Guarantee.
Article 4
Warranties and Representations
1. The obligations arising from this Guarantee will not be affected by any change of the legal
form of the Issuer or of its ownership.
2. The Guarantor warrants to the Noteholders that (i) the issue of the Guarantee has been duly
approved and authorized in accordance with the provisions of Law n.º 112/97, of 16 September as well as any other applicable laws and regulations; (ii) the Guarantee has been duly executed; and (iii) the performance by the Guarantor of its obligations under the Guarantee is valid, legal and enforceable in accordance with the terms of Law no. 112/97, of 16 September, as well as any other applicable laws and regulations.
Article 5 Governing Law
1. The rights and duties arising from this Guarantee shall be exclusively governed by the laws
of the Portuguese Republic. Place of performance for the obligations of the Guarantor shall be Lisbon and the Guarantor elects the court of Lisbon (“Tribunal da Comarca de Lisboa”) as the competent court in case of litigation.
2. To the extent permitted by Portuguese law, the Guarantor declares that it is not entitled to any
special entitlement or right, whether of judicial or patrimonial nature, towards the remaining parts involved in the Guaranteed Obligations and which is able to be claimed before the courts.
Article 6 Term of the Guarantee
in the Conditions of the Notes, without prejudice to the maintenance of the obligation to pay the Guaranteed Obligations which enforcement has been triggered before that date.
2. Irrespective of paragraph 1 above, should the Holders of the Notes, once the Guarantee has expired, be obliged to return the amounts received as payment of its credits, as a result of an insolvency or any other judicial procedure, the Guarantee will immediately recover its effectiveness and full force.
Business Day shall mean a day on which banks are open for business in Lisbon.
The Guarantee is written in two versions, one in the Portuguese language and the other in the English language. In the event of a conflict between the two versions, the Portuguese version shall prevail.
The Guarantee is executed in six samples of each version, each one with the validity of an original copy, one being for the Guarantor, another for each “Lead Manager” and one for the Issuer.
Lisbon, [ ] 2009
THE GENERAL DIRECTOR OF THE TREASURY AND FINANCE
Carlos Durães da Conceição
[The authorised representative of the Guarantor in accordance with the provisions of Law nº. 112/97 of 16th September, 1997 – Articles 17(1) and (2)]
Address for notices:
Rua da Alfândega, 5-1º 1149 – 008 Lisboa Portugal
USE OF PROCEEDS
DESCRIPTION OF THE ISSUER
Introduction
CP – Comboios de Portugal, E.P.E. (formerly Caminhos de Ferro Portugueses, E.P.) (“CP” or the “Issuer”) was incorporated for an unlimited duration as a public company by Decree-Law no. 109/77, of 25 March, 1977, which was recently replaced by Decree-Law no. 137-A/2009, of 12 June, 2009 (“DL 137-A/2009”) and transformed CP in a state-owned public law corporation (“entidade pública empresarial” or “E.P.E.”). Its registered office is at Calçada do Duque, no. 20, 1249-109 Lisbon, Portugal.
CP enjoys separate legal personality and administrative, financial and asset ownership autonomy and is subject to the supervision of the Ministry of Finance and of Public Administration as well as of the Ministry of Public Works, Transport and Communications. The supervisory powers of those entities encompass powers to authorise and approve activities and investment plans, budgets and financial statements, application of income and utilisation of reserves, subsidies, compensatory indemnities and tariffs and prices policies to be applied by CP.
The main corporate purpose of CP is the rendering of services of national and international passenger and freight transportation. In addition, CP may undertake activities ancillary to its main corporate purpose and, subject to Portuguese Government approval, it may incorporate subsidiaries and acquire interests in existing corporate entities.
CP’s by-laws were recently replaced by DL 137-A/2009 which approved the new legal regime applicable to CP. This Decree-Law endeavours to render effectiveness to the regime established in Decree-Law no. 558/99, of 17 December, 1999, as republished by Decree-Law no. 300/2007, of 23 August, 2007 and amended from time to time (“DL 558/99”) which intended to submit such entities, as far as possible, to the law generally applicable to private companies.
Pursuant to DL 137-A/2009 CP may, subject to the previous consent of the supervisory entities, sub-concede the operation of the public railway service through the launch of procurement procedures, along with the temporarily assignment of its establishment, including rolling stock and fixed assets required for the operation. CP remains the sole entity entitled to the concession of the Portuguese passenger railway transportation, except as concerns the concession of approximately 20.7 kilometres granted to FERTAGUS, SA for the transport of passengers (“eixo norte-sul”).
The DL 137-A/2009 further foresees the possibility of autonomization of certain areas of activity of CP. In this context, it was incorporated a new private company – CP Carga – Logística e Transportes Ferroviários de Mercadorias, S.A., which initial share capital is wholly held by CP and which corporate purpose is the operation of freight transportation on railway. As a Portuguese State-owned company, CP is not subject to the general regime applicable to private companies in respect of winding-up and liquidation, as well as to the regime pertaining to company’s recovery procedures, since under DL 558/99 E.P.E. may only be subject to such proceedings if so determined by a special Decree-Law. Accordingly, rules relating to winding-up, liquidation or company’s recovery procedures will only apply to the extent defined in the relevant decree-law.
Ownership and Capital Structure
The capital of CP is composed of financial allocations and other appropriations from the Portuguese State and other public entities.
Business
Evolution of the rail sector framework
Restructuring processes for railway transportation systems undertaken in various countries have shown that no single strategy satisfactorily addresses the core problems affecting the rail sector, such as loss of competitive edge, increased indebtedness and costs for the relevant State. Accordingly, there was the need for a multifaceted approach aimed at economic rationalisation of the railway system, fitted to the particular circumstances of each country, in terms of market characteristics, social goals and budgetary constraints.
To overcome the above mentioned problems, a strategy was put in place to revitalise the railways in Europe aiming to promote market opening, improve performance of rail freight, create incentives for product innovation and service quality and encourage the development of a sustainable, well integrated and efficient rail system.
Rail legislation in the early nineties introduced a certain degree of market opening and impelled the railways to focus more on competitiveness. Since then, the European Commission has put forward additional initiatives such as the first and second railway package.
The first railway package (“First Railway Package”) contained in Directive no. 2001/12/EC, of 26 February, 2001 (“Directive 2001/12/EC”), Directive no. 2001/13/EC, of 26 February 2001 (“Directive 2001/13/EC”) and Directive no. 2001/14/EC, of 26 February, 2001 (“Directive
2001/14/EC”) was intended to:
open the international rail freight market;
create a common framework for the development of European railways;
clarify the formal relationship between the State and the infrastructure manager and between the infrastructure manager and railway operators;
establish the conditions that freight operators must meet in order to be granted a licence to operate services on the European rail network; and
introduce a defined policy for capacity allocation and infrastructure charging.
The Directives 2001/12/EC, 2001/13/EC and 2001/14/EC were transposed to the Portuguese law through Decree-Law no. 270/2003, of 28 October, 2003 (“DL 270/2003”), which has been the crucial element of the present regulatory framework for the railway sector, on one hand by implementing an innovative legal and economical framework for the promotion of the railway development, through the opening to new operators, namely on the freight transportation and by submitting all players to the national and European competition rules and on the other hand by improving the railway sector initiated in 1997 with the separation of the infrastructure management and the operation which resulted in the creation of REFER - Rede Ferroviária Nacional, E.P., which have been transformed in an E.P.E. by Decree-Law no. 141/2008, of 22 July, 2008, and is now designated as REFER – Rede Ferroviária Nacional, E.P.E. (“REFER”). At the outset of the crucial phase of the restructuring process in 1997, economic rationalisation of the railway transportation system had as its starting point the phasing out of monolithic companies, with the split of infrastructure management and transportation service activities. Notwithstanding, such split cannot be considered as an end itself. It must be associated with a new philosophy of State intervention in the sector, allowing for some degree of subsidies granted to the infrastructure network, the use of which is paid for by transportation operators who enter into public service agreements with the State including for financial compensation to fund shortfalls between the costs of an efficient service and the revenues prescribed by the State or, as an alternative, liberalisation of prices and direct subsidies for eligible passengers.
amended Directive 91/440/CEE, of 29 July, 1991) (“Directive 2004/51/EC”), among other things, opened up both national and international freight services on the entire European network from 1 January 2007, laid down a procedure for granting the safety certificates which every railway company must obtain before it can run trains on the European network and harmonises safety levels across Europe.
The Directives 2004/49/EC and 2004/51/EC were transposed by Decree-Law no. 231/2007, of 14 of June, 2007 which envisaged the completion of the regulatory framework and proceeded with the efforts for the achievement of the integrated European railway network.
The scope and depth of issues affecting the Portuguese railway system centre around CP which, despite recent advances in the restructuring of the rail sector, had not, until recently, shown signs of being an economically and financially balanced system. This is a goal in itself and is only achievable through the balance of its component organisations and the definition, stabilisation and discipline of relations as between them and, more importantly, as between each one of these organisations and the Portuguese State.
Cultural and management changes required by the new organisation of the railway system are mainly focused on the market, aiming at delivering quality services capable of satisfying customer needs. However, the success of the implementation of this strategy is subject to, inter
alia, the removal of constraints on the company’s activity in at least one of two ways, either
modification of the pricing system or contracting of the company’s service, with a strict approach to relations with the State ensuring an efficient system of compensation for the company for performing the regulated activity.
In effect, the State may impose on CP restrictive conditions in the name of public interest. lt may, for example, impose a tariff’s policy insufficient to cover total operating costs, force the company to provide transport services on terms different from commercially prevalent market conditions or maintain surplus employees or resort to credit caused by delays in the payment of compensation or capital allocations to which the company is entitled.
Whenever justified by the public interest, the State may, in return for its undertaking to make compensatory payments albeit subject to deferral, require CP to endure conditions, pricing included, which may affect the rationality of its economic and financial management.
Given the significance of accumulated historical deficits and unpaid but due financial compensations, the first implementation phase of this restructuring was effected through the transfer to REFER of part of CP’s assets and liabilities and infrastructure operation, whereupon two significant issues arose:
• Financial recovery; and
• Creation of conditions of operating efficiency and economic and financial sustainability of the entities in the new system.
The transfer of certain CP activities and assets to REFER, which was completed in the year 2000, was the beginning of the process of financial recovery. Financial recovery was also achieved through an increase of the CP statutory capital subscribed by the Government in 1997 and 1998.
In the future, CP expects that financial support from the Portuguese State will continue through: • the allocation of new sums of capital;
• the approval of a new tariff policy; and
