Divestment of Danish State Railways Component Workshops and a Maintenance and Supply Agreement with the Divested Company

Description

The Danish State Railways (DSB) intends to divest its currently in-house component workshops to secure a viable business model for continued operation and growth of these activities, and the continuous availability of the skill and expertise required to service the DSB specific rolling stock and uphold DSB’s security of supply. To secure this DSB has carried out a publicly announced, auction-like sales procedure for the shares in the divested company and prepared a Maintenance and Supply Agreement between DSB and the divested company for services to DSB’s current fleet of rolling stock for 5 years with conditional renewal options. As the divestment is the primary purpose of this transaction, the Maintenance and Supply Agreement is not subject to the procurement rules of the Utilities Directive. Lot 1: The Danish State Railways intends to divest its component workshops currently part of its subsidiary DSB Vedligehold A/S (collectively DSB) which are providing revisions and repair of rotables, delivery of certain spare parts, etc. for DSB’s current fleet of rolling stock (‘Component Workshops’). DSB has recently procured new trains, the last currently expected to be delivered in 2028. The contract for the new trains includes contracts for external service and maintenance of the new trains. Consequently, DSB is faced with a need to secure the supply of revision, repair and production of rotables, etc. for the continuedly decreasing number of current, ageing DSB specific rolling stock, which will be gradually phased out as the new trains are delivered. To secure a viable business model for continued operation and growth of these activities, and the continuous availability of the skill and expertise required to service the DSB specific rolling stock and thus uphold DSB’s security of supply, DSB will demerge the activities of the Component Workshops into an empty shelf-company (the Company) and – upon the completion of a publicly announced sales process – sell the Company to the buyer who offered the best price and long-term business prospects for the Company (‘Buyer’). The primary purpose of the transaction is the divestment of the Component Workshops. In order to fulfill this purpose, a Maintenance and Supply Agreement (‘MSA’) will be entered between the Company and DSB obliging the Company to supply to DSB refurbishment and repair of rotables, delivery of certain spare parts and completion of certain on-going refurbishment projects and damages repairs (‘MSA Deliverables’). The initial term of the MSA is five years with two subsequent and conditional renewal options of 30 months each and an additional renewal option that can be invoked by DSB in case of unforeseen events, allowing DSB to secure critical supply of MSA Deliverables for the remaining life time of its current rolling stock, and thereby ensuring that DSB will be able to fulfill its public service obligation to provide train services in Denmark. The MSA will only be signed after the standstill period and will be contingent upon the completion of the transaction. DSB has made a thorough legal assessment of the transaction and finds that the transaction is not objectively separable from the MSA as per: (i) the rules in directive 2014/25/EU (the Utilities Directive) concerning mixed contracts; and (ii) case law concerning mixed contracts from the Court of Justice of the European Union. The sale of the shares in the Company is not subject to the Utilities Directive and as the sale of the shares is the primary purpose of the transaction, the MSA is accordingly not subject to the procurement rules of the Utilities Directive. A summary of DSB’s assessment is outlined in section II.2.14. DSB has assessed that no other supplier currently on the market would be able to supply the MSA Deliverables to DSB without taking over the production facilities and the employees of the Component Workshops. Furthermore, due to technical interdependence between the different MSA Deliverables, the supply and revision of rotables and spare parts cannot be separated but must be assigned to one and the same supplier. Accordingly, in order to be able to uphold critical supply of the MSA Deliverables and complete (already) ongoing refurbishment projects and damages repairs, it is necessary for DSB that the divestment is accompanied by the entering of the MSA. Please see additional information in section VI.3. Please see additional information in section VI.3).