Aleatica, S.A.B. de C.V. (“Aleatica” or the “Company”) (BMV: “ALEATIC”), hereby informs to the public investors that with this same date the Company issued a press release, which follows:
In line with its initiatives of transparency and corporate integrity, ALEATICA S.A.B. of C.V. announces the publication of key terms of the concession titles of the Circuito Exterior Mexiquense and the Viaducto Bicentenario. The published terms focus on the clauses applicable to contractual profitability. In the coming days, the company will publish the concession titles of both overall assets.
ALEATICA reiterates its support for any request that, respectful of the rights of third parties, increases the level of transparency in the operation of the industry. On November 15, the Congress of the State of Mexico exhorted the Government of that State to inform if it assumed an unconditional obligation of payment to ALEATICA, S.A.B. de C.V. and/ or its subsidiaries Concesionaria Mexiquense, S.A. de C.V. and Viaducto Bicentenario, S.A de C.V and if there is a guarantee of recovery of the investment and performance on the toll roads administered by both subsidiaries. In line with this request, the competent authorities have authorized ALEATICA to publish the overall concession titles.
This action reinforces our commitment to transparency and our intention to make public the terms of all our concessions in Mexico; concession announced on September 25 through the divulgation of a relevant event.
Terms of concession titles
The obligations assumed by the Government of the State of Mexico in relation to the aforementioned concessions are detailed in the concession titles and in the response dated December 3rd, 2018 issued by the Mexican Highway, Airports, Related and Auxiliary Services System (“SAASCAEM”) to the Congress of the State of Mexico.
Said response from SAASCAEM establishes the following clauses of the concession title related to the Circuito Exterior Mexiquense (“CEM”):
Clause three: The “CONCESSIONAIRE”, during the term of the Concession and, in accordance with the Financial Projections contained in Annex 4 of this Title, which served as the basis for granting the Concession and determining its term, is entitled to recover its total investment plus a fixed internal rate of return of 10% actual annual.
[…]
Clause thirty-eight: In the event that, for causes not attributable to it, the “CONCESSIONAIRE” proves that it has not recovered its investment plus the expected return, the “SECRETARIAT” shall grant the corresponding extension.
In the case of the previous paragraph, if the “SECRETARIAT” considers that it is not convenient to grant the corresponding extension, it will be able to get rid of the obligation foreseen in the previous paragraph by means of the “CONCESSIONAIRE’s” liquidation of the investment plus the agreed yield pending recovery.
In the same way, the SAASCAEM response refers to the following clauses of the concession title of the Viaducto Bicentenario:
TWENTY-FOUR. ABOUT THE RECOVERY OF THE INVESTMENT. The “CONCESSIONAIRE”, during the term of the Concession and according to the Feasibility studies that is part of the Economic Financial Plan contained in Annex 4 of this Title, has the right to recover its total investment, including a return on risk capital contributed to the construction of the “VIADUCTO”, with a fixed internal rate of return of an actual 7.0% (seven percent) annually.
At all times, the “CONCESSIONAIRE” may affect the collection rights that derive from this concession as a guarantee of payment for the financing or refinancing of the “VIADUCTO”, determining that the performance established shall be contracted under market conditions.
FORTY. In the event that, for causes not attributable to it, the “CONCESSIONAIRE” proves that it has not recovered its investment plus the expected return, the “SECRETARIAT” shall grant the corresponding extension.
In the case of the previous paragraph, if the “SECRETARIAT” considers that it is not convenient to grant the corresponding extension, it will be able to get rid of the obligation foreseen in the previous paragraph by means of the “CONCESSIONAIRE’s” liquidation of the investment plus the agreed yield pending recovery.
Response of the State of Mexico
The concession titles govern the rights and obligations of the concessionaires; and, in both cases, they explicitly mention the right of said concessionaires to recover the total investment plus a specific yield.
As the response of the SAASCAEM to the Congress of the State of Mexico explains:
“In addition to the foregoing and in relation to numeral 1 of the brief by means of which the Legislature requests information, it is to be noted that in accordance with the nature of the concession as has been described above, the obligations assumed by the Government of the State of Mexico, with respect to merit concessions, is established by the concession title itself, which results in the individualized legal rule that governs the exploitation of road assets, and defines the rights and obligations of the concessionaires and the State, same as in the relevant part refer (…)”
“According to the content of the Concession title, it is not warned in terms of what Mexican law states, the granting of a guarantee, which are regulated by express legal provisions among which are recognized personal (bond) and real (pledge, stock pledge, mortgage, and trusteeship of guarantee). (…) (emphasis added)”
“Likewise, it is reported that the exploitation of the road assets to which the concessionaires are entitled does not represent an obligation for the State’s Government to pay money, since the granting of the concession does not mean the assumption of public debt, but rather that the source of payment of the right of the concessionaires are the revenue from toll fees and not budgetary to public resources that constitute an obligation to pay (…). “(emphasis added)”
“In the same sense, as it is established previously, the Concession title as an express rule by which it is governed, clearly states the rights of the concessionaires; among which is the right to recover their total investment plus an internal rate of return, subject to the limit of the rate of return that may be obtained through the operation of the public service concession, that is, once this limit is reached, the concession will lose its validity and therefore, the asset will be part of the patrimony administered by the State. The Government estimates that the concessionaire will be able to recover its investment plus the agreed recognition in the legal term allowed by the rules that govern concessions in the State.”
Therefore, there is a contractual obligation to pay conditioned to the performance of the toll road during the term of the concession that allows the concessionaires to recover their investment plus the agreed yield. It should be noted that the contractual provisions that grant this right to concessionaires and the right to extend the term of the concession are not exclusive of concession titles that concessionaires have in the State of Mexico, but they are common a practice in the toll motorway industry.
In Mexico there are multiple concession projects that operate with clauses that grant a right to the concessionaire to recover their investment plus a yield, that is to say equal or similar to the ones we have. These concessions have been granted by different governments (including Mexico City) and during the administration of different political parties with the objectives of attracting investment and developing infrastructure without cost to the treasury, the creation of jobs and the contribution to economic growth.
End of press release—
About Aleatica, S.A.B. de C.V.
Aleatica, S.A.B. de C.V. is positioned as a relevant transport infrastructure operator in the industry within the metropolitan area of Mexico City, both for the number of concessions awarded and the miles of highways under management. Currently, Aleatica, S.A.B. de C.V. builds, manages, operates and maintains 7 toll roads and one airport. The highway and related infrastructure concessions are located in urban areas with high vehicular traffic in Mexico City, Mexico State and the State of Puebla, that are home to 27.22% of the nation’s population and in 2015 generated 29.23% of GDP and accounted for 34.39% of the total number of vehicles in Mexico (12.02 million (Mexico City 4.7 million, State of Mexico 5.9 million, and Puebla 1.4 million)). In the airport sector, Aleatica participates in the integral management of the second largest airport serving the Mexico City metropolitan area. For more information visit our webpage www.aleatica.com
