1. The Rail Protocol in the run-up to the Diplomatic Conference Internationale Konferenz zur Verkehrsmittel- und Verkehrsinfrastrukturfinanzierung Universität Mannheim, 9. November 2006 Howard Rosen, Zug, Switzerland, Chairman Rail Working Group

2. Members of the Rail Working Group AAE Ahaus Alstatter Eisenbahn  The Alta Group  Angel Trains  Ansaldo Trasporti  Ashurst  Association of American Railroads  Aviation Advocacy  Bombardier Transportation  Bruckhaus Westrick Heller Löber  Community of European Railways  Costaferroviaria  debis Financial Engineering GmbH  English Welsh and Scottish Railway  Ermewa International  European Investment Bank  Ferroviaria  Firema  Freehill Hollingdale & Page  Freshfields  GE Capital  Global Capital Finance  Howard Rosen Solicitor  HSBC Rail  HSH Nordbank  KfW Kreditanstalt for Wiederaufbau  Lenz & Staehelin  McCarthy Tétrault  SNCB SG  Nauta Dutilh  NIB Capital Bank N.V.  Norton Rose  Intergovernmental Organisation for International Carriage by Rail (OTIF)  Stephenson Harwood  Theodore Goddard  Transnet  Trinity Industries  UIC International Union of Railways  Union of European Railway Industries (UNIFE)  Deutsche VerkehrsBank  White & Case  Wiersholm Mellbye & Bech

3. Introduction What we will not cover today: The reasons for the Convention The economic case and why it’s important for railways worldwide What the Convention’s key objectives are The Draft Rail Protocol and climate change

4. Introduction What we will cover: A little history and current position of the Rail Protocol What needs to be done before 12th February The key issues we have to address and possible answers

5. History to the Present The Rail Protocol History to the Present

6. Cape Town October/November 2001 295 participants from 58 States and 11 international organizations attended the Diplomatic Conference

7. Cape Town 16 th November 2001 Unidroit Convention On International Interests In Mobile Equipment, containing 62 Articles signed together with Aviation Protocol (a further 37 articles Convention and Protocol in force since 1 st March 2006

8. What the Treaty seeks to achieve An answer to the Basic Problem - How to finance with security an asset potentially continuously moving across borders? Limited security in asset financed due to –Local (conflict of) Property Law –Local Bankruptcy Law –Potential conflict of priorities

9. The Treaty provides a new protected type of security in relation to –Lessor’s (and lessee’s interest) under a lease –Vendor retaining title in equipment –Lender taking security in an asset financed under a loan Application of the Treaty

10. Mandated at Cape Town in the Final Act Three Government Experts’ meetings (last in 2003) Will be considered (and hopefully adopted) at Diplomatic Conference in Luxembourg commencing 12 th February 2007 Draft protocol carries many – but not all - of the concepts of the aviation protocol The Rail Protocol

11. Very limited existing title registration worldwide No worldwide international organisation (nearest OTIF) No nationality for rolling stock Many more manufacturers Lower unit cost, greater volume Limited operating leases Why the Differences?

12. Less uniformity in practice on identification Certain types of rolling stock constantly cross borders – contiguous implementation a greater issue State Railways’ club (UIC) and bank (Eurofima) Later in the private sector funding cycle – responding to a (perceived) future need? National treasures – and state funding Why the Differences?

13. All rolling stock is intended to be covered in the Protocol (regardless of use and “mission”) Regionally consistent adoption important Some conflict of interest between state and state owned operators Unified approach from manufacturers vital Consequential conclusions

14. The Challenges before February The Rail Protocol The Challenges before February

15. Lectures Seminars Website www.railworkinggroup.org EU/Government discussions Motivating the industry and the business case – and keeping costs down Getting the lawyers excited Identify the key issues Making people aware

16. Identifying assets Title Transfers Engines Insolvency Public Service Exemption Registry rules, costs and modalities Integration with other initiatives Legacy Identifying and researching open issues

17. Summary Some different problems to aviation sector, requiring different solutions The Rail Protocol will provide a new concept of security for asset backed financing in rolling stock – not just a new level of security It will create security not currently available in most jurisdictions

18. Summary Not all of Industry and Governments fully focused Issues to confront are difficult ones – genuine hard cases Registry operational costs are a key factor The goals are achievable but time is short

19. The Rail Protocol in the run-up to the Diplomatic Conference Internationale Konferenz zur Verkehrsmittel- und Verkehrsinfrastrukturfinanzierung Universität Mannheim, 9. November 200619 Howard Rosen, Zug, Switzerland, Chairman Rail Working Group