Railcare

- For Railcare, part ownership in AC Finance AB is a strategic investment. Initially to ensure access to more environmentally friendly locomotives in a challenging market. In the longer term, our opportunities to obtain new assignments increase. There industry is transitioning towards a smaller climate footprint, while transport is expected to increase by 50 per cent by 2040. This means that access to locomotives with the right performance is necessary for the transition and for creating good business opportunities, says Mattias Remahl, President and CEO of Railcare Group AB.
 
Background 
AC Finance AB (“AC”) was formed in 2022 with the purpose of acquiring newly manufactured locomotives and subsequently leasing them to commercial operators, including Railcare. Nornan Invest AB (“Nornan”) is the selling majority shareholder in AC and also a lender to AC under the same loan agreement as Railcare. Nornan owns shares corresponding to 29.52 per cent of the capital and votes in Railcare Group AB and is thus the largest shareholder in Railcare.
 
Based on the above, the overall transaction, comprising of the acquisition agreement, the loan agreement and the lease agreement, is such a related party transaction that needs to be approved by the general meeting of Railcare. Notice to the Extraordinary General Meeting for approval of the transaction will be published shortly through a separate press release.
 
The Acquisition Agreement 
AC is a company established to acquire locomotives for the purpose of leasing them to commercial operators. Railcare has entered into an agreement to acquire 4,000 shares, corresponding to 40 per cent, in AC. The purchase price amounts to SEK 400,000. The existing shareholders in AC selling shares to Railcare are Nornan and Actinvest AB, which will hold shares in AC correspond to 30 per cent each after the acquisition.
 
The acquisition agreement is subject to, that Railcare holds an extraordinary general meeting, at which the shareholders of Railcare vote in favor of Railcare's acquisition of the shares in AC with the required majority, and that AC secures external financing for the acquisition of the locomotives. In connection with the share transfer, the sellers have provided customary guarantees regarding the shares.
 
- AC Finance has been proactive in investing in the brand new Effishunter locomotives, which have higher environmental performance and are equipped with the new ETCS on-board system. An important investment for the future, both for Railcare and for other players in the industry, says Mattias Remahl.

The Loan Agreement 
AC has invested in 14 newly manufactured locomotives of the Effishunter 1000 model, which will be delivered in 2024 and 2025. The investment amounts to approximately SEK 480,000,000. AC is financed by bank financing, equity and shareholder loans. The loans from Railcare to AC in accordance with the loan agreement are provided to meet AC's need for capital to finance the purchase of locomotives and to ensure that the required external bank financing can be obtained. Pursuant to the loan agreement, Railcare undertakes to contribute up to SEK 20,000,000. In total, the shareholders of AC undertake to contribute up to SEK 50,000,000 in shareholder loans on essentially the following terms.
 
· The shareholder loans are provided in relation to the shareholding of each shareholder in AC.
· AC has the right to call for a shareholder loan as the need for capital arise.
· The principal amount bears interest at a rate equal to AC's average interest cost on the loans to the financing bank from time to time.
· The parties annually agree on the repayments and the repayments shall be made quarterly no later than 30 days after the end of each calendar quarter unless the Lenders agree otherwise.
 
The lease agreement 
Railcare has previously, through a press release on 25 October 2023, announced that Railcare has been awarded additional agreements for standby locomotives with the Swedish Transport Administration (Sw: Trafikverket) for a period of five years and with a total order value of SEK 403,000,000.
 
Effishunter 1000, the locomotive model in which AC has invested, fulfils the requirements set by the Swedish Transport Administration in the agreements and Railcare has in connection with the transaction entered into an agreement to lease nine locomotives on essentially the following terms.
 
· The lease period is five years from the date of access to each locomotive, which means that the lease period is different for the different locomotives.
· At the end of the initial rental period, Railcare has the right to extend the agreement by 1+1 years. For time thereafter, the rental period shall be automatically extended by one year at a time.
· The rent is market-based, and Railcare bears the currency and interest rate risk.

Skelleftehamn, June 2024
Railcare Group AB
THE BOARD