Talgo will hold its meeting on December 12 to give the green light to the entry of new shareholders
Talgo has called extraordinary shareholders meeting for next December 12 and 13in first and second call, respectively, to complete the entry into its capital of the Basque consortium led by Sidenor and also participated by the Basque Government and the BBK and Vital banking foundations. The train manufacturer has informed the National Securities Market Commission (CNMV) this Wednesday that the meeting, which is scheduled to be held on first call, that is, on December 12, will take place at 1:00 p.m. at Paseo Tren Largo, 2, in Las Matas (Madrid). The board will vote on the conditions agreed upon to complete the purchase operation from Pegaso of 29.76% of Talgo by the Basque consortium led by Sidenor and participated by the Basque Government and the BBK and Vital banking foundations.
Specifically, the board will submit an increase in share capital to shareholders’ approvalthrough monetary contributions excluding the pre-emptive subscription right and without provision for incomplete subscription, for a nominal amount of 3.18 million euros, through the issuance and putting into circulation of 10,588,235 new ordinary shares of 0.301 euros of nominal value each, with an issue premium of 3.949 euros per share. Admission to trading of the new shares issued will also be requested. Likewise, Talgo shareholders will vote on an issue of 300 bonds convertible into ordinary shares of the Company for an aggregate nominal amount of 30 million euros, excluding pre-emptive subscription rights, as well as a capital increase related to the issue.
Reduction in the number of directors
The approval of the Talgo group’s financing operation will also be submitted to the board, consisting of the formalization by Talgo Patents of a syndicated financing contract for up to 770 million euros -structured in a tranche of up to 650 million with a partial guarantee from Cesce and a revolving tranche of up to 120 million- and a line of guarantees of up to 500 million euros with a partial guarantee from Cesce within the framework of the entry into the capital of the Basque consortium headed by Sidenor, together with the capital increase and the issuance of convertible bonds subscribed by the SEPI and by the Basque group of investors.
Likewise, another item on the agenda of the meeting will be the approval of the reduction in the number of members of the board of directors, which will be set at eight. Last week, the Basque consortium led by Sidenor and also participated by the Basque Government and the BBK and Vital banking foundations signed an agreement with Pegaso and other minority shareholders to buy their 29.76% in Talgo for an amount of 156.7 million euros. The final offer is 4.25 euros per share, compared to the initial 4.15 euros (about four million more), although the preliminary agreement at the beginning of the year pointed to certain variables that could increase the consideration up to 185 million euros.
Finally, these variables determine that Buyers will have to pay sellers an additional amount, but only if they decide to sell their shares above 4.25 euros to a third party during the two years following the closing of the operation, which will have to occur before January 31, 2026. Specifically, they will pay 100% of the part that exceeds 4.25 euros up to 5 euros, and 50% from 5 euros per share. In this way, sellers limit the possible future profits that buyers could obtain if the share price rises.
This represents a big change compared to the preliminary agreement, which pointed to a variable amount depending on the fulfillment of certain milestones in the company’s business plan during the years 2027 and 2028, something that is not referenced now. Sidenor (through Clerbil), the Basque Government (with the company Finkatze Kapitala Finkatuz) and BBK will each buy 8.5% of Talgo’s capital for 45 million euros, while Vital will take over 4.2% for 22.4 million euros. During the period until January 31 The other agreed conditions will have to be metsuch as the injection of 75 million euros by the State – through SEPI, of the Ministry of Finance -, distributed in 45 million through a capital increase and 30 million through a loan convertible into shares.
The Basque consortium will also have to subscribe to other convertible bonds of 75 million euros, under the same conditions as the SEPI, while Talgo’s financial entities must approve a new debt structure integrated into two tranches: financing of 650 million with a maturity of 6 years and a working capital line of 120 million with a maturity of three years, with automatic extension for two more years. Likewise, the company, certain financial entities and the Spanish Export Credit Insurance Company (Cesce) will sign certain financing agreements and hedging instruments common in this type of operations. Of the total stake for sale, Pegaso (made up of the British investment fund Trilantic) will sell 27.3% of Talgo and the other minority shareholders the remaining percentage up to 29.7%.
