OREANDA-NEWS. Brunswick Rail Limited ("Brunswick Rail" or the "Group"), Russia's leading privately owned freight railcar operating lessor, announces its IFRS financial and operating results for the three months ended 31 March 2015.

Financial Highlights

·      Revenue before hedging with non-derivatives ("Gross Revenue") declined by 34.2% from US\$ 52.0m in 1Q 2014 to US\$ 34.2m in 1Q 2015

·      Adjusted EBITDA declined by 51.3% from US\$ 39.6m in 1Q 2014 to US\$ 19.3m in 1Q 2015

·      Adjusted EBITDA margin decreased to 56.3% in 1Q 2015 from 76.2% in 1Q 2014

·      Net loss in 1Q 2015 was US\$ 24.7m compared to net profit of US\$ 0.8m in 1Q 2014

·      Net cash from operating activities in 1Q 2015 was US\$ 18.4m compared to US\$ 35.5m in 1Q 2014

·      Capital expenditures in 1Q 2015 were US\$ 0.8m compared to US\$ 67.6m in 1Q 2014

Operational Highlights

·      The total fleet stood at 25,736 railcars as of 31 March 2015, including 208 railcars on financial lease

·      During 1Q 2015 operating lease receivables of one client were settled in-kind by delivery of 174 gondolas

·      A total of 409 railcars were transferred during the period from operating leases to the transportation business, which deployed 4,534 railcars as at 31 March 2015

·      The share of gondolas in the Group's portfolio remained stable at 58% in 1Q 2015

·      The fleet utilization rate remained at 100%

·      Average remaining lease tenor declined to 2.8 years (31 December 2014: 3 years); and average fleet age increased to 5.6 years (31 December 2014: 5.4 years), one of the youngest fleets in the market

The Group continues to face an extremely challenging market situation. Market spot rates for gondolas have dropped to their lowest levels, driven by intensifying competition and a shrinking cargo base. Brunswick Rail does not expect any significant improvements in the near term to market spot rates, which are below those earlier forecasted for the market.

Client payment discipline deteriorated toward the end of 2014, and has worsened through 2015 to date. In 1Q 2015, the Group created an additional provision of US\$ 4.4m for impairment of trade receivables. Delayed payments have become a rail industry norm in Russia. Brunswick Rail believes that the risk of client non-payment is growing. The Group continues to closely monitor receivables as well as clients' overall financial stability.

As announced in April 2015, the Group has initiated negotiations regarding amendments to its syndicated loan facility, including modifying its financial covenants to more sustainable levels and/or to obtain a waiver of potential financial covenant violations before such violations occur. These negotiations are continuing, and could ultimately be reliant on the Group raising additional capital from other sources. The Group does not yet know what the result of the negotiations will be.

The Group's present capital structure and debt maturity profile suffers from a significant currency mismatch and potentially from a mismatch between maturities and cash flows. Following the developments of the last year, Brunswick Rail has now become predominantly a RUR-revenue company, while the US\$ 600m Eurobonds issued in November 2012 (which comprise approximately 87% of the Group's borrowings and require a bullet repayment at their 2017 maturity), as well as certain other debt, are US\$ denominated.

About Brunswick Rail:

Brunswick Rail is a private railcar operating lessor providing freight railcars to large corporate clients in Russia. Established in 2004, Brunswick Rail currently owns a fleet of ca. 25.7 thousand railcars (as of 31 March 2015), which represents approximately 2% of the total Russian railcar fleet. For the three months ended 31 March 2015, the Group generated revenue of US\$ 34.2m and Adjusted EBITDA of US\$ 19.3m.