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Communication on the arbitration award on the advances of the Panama Canal

•The arbitration award issued by the International Chamber of Commerce (ICC) of Miami refers to the down payments received by the consortium Grupo Unidos por el Canal (GUPC) for the implementation of the Third Set of Locks of the Panama Canal project

• GUPC respects the arbitration award issued regarding to the date of the down payments (june 2018), which does not affect the rest of the ongoing arbitration proceedings on the merits of the claims.

• These down payments from the Panama Canal Authority (ACP) to GUPC were received at the commencement of the works in 2009, for an amount of 547.96 million dollars in mobilization costs and installation of plants

• According to the contract and its addendum 108, GUPC requested at the ICC in January 2017 an arbitration to explicitly determine that the repayment of these down payments should be arranged in accordance with the awards of the technical arbitrations that must establish which party is responsible for the unforeseen costs that arose during the project. At the discretion of GUPC, this is the spirit of the agreement signed back in 2014, although the document set June 2018, as tentative date for such return, four years later, with the conviction of all parties then that this was a reasonable time frame for the resolutions.

• However, the reality is that, due to the complexity of the arbitrations, the processes shall take much longer than those four years that were originally planned. It should be noted that the Third Set of Locks of the Panama Canal has been operational since June 2016, generating profit for ACP and the State of Panama.

• Nevertheless, to meet the specific financial obligations that the award has established, Sacyr has signed a syndicated loan of 225 million euros for a period of five years with a two-year grace period, shall enable the return of the down payments that correspond to it as GUPC shareholder. This operation takes place independently of the development of Sacyr's business, which is very positive as reflected in the quarterly results and which shall not be impacted in any way by this cash outflow.

• This financial transaction has an equivalent effect to returning the down payments to the completion of the technical arbitration processes and has favorable economic conditions for Sacyr. In other words, that the company plans to amortize the loan granted as the final ruling of the various existing arbitrations take place without a higher cost due to this award.

• The arbitration award establishes that ACP has to pay 36 million dollars plus interest, due to the maintenance expenses unpaid "to date".