Castilla Finance DAC: Lock-Up Agreement

Dublin 2 (pta025/11.10.2023/15:33 UTC+2)

NOTICE TO THE HOLDERS OF THE EUR 240,000,000 SENIOR NOTES DUE 2024 (ISIN: XS1382379409) AND EUR 32,727,273 MEZZANINE NOTES DUE 2024 (ISIN: XS2110110090) (TOGETHER THE "NOTES") ISSUED BY CASTILLA FINANCE DAC (THE "ISSUER")

We refer to the Terms and Conditions of the Notes and adopt the definitions set out therein.

Announcement of Transaction

The holders of over 75% of the Senior Notes and 100% of the Mezzanine Notes (together, the "Participating Noteholders") have signed a Lock-Up Agreement (the "Lock-Up Agreement") with the Issuer that commits the parties to seek to implement certain amendments to the Notes Documentation (the "Transaction").

In accordance with the Lock-Up Agreement, the principal terms of the Transaction include (among other things):

1. Revised amortisation schedule: a revised amortisation schedule will apply, with the following amounts to be repaid in the following months: October 2023: EUR 20 million

January 2024: EUR 25 million

April 2024: EUR 25 million

October 2024: EUR 67.5 million

April 2025: EUR 67.5 million

October 2025: EUR 67.7 million

2. Coupon reprice: a coupon reprice for the Senior Notes, increasing in April 2024 from actual 2.65% fixed to floating EURIBOR 6m + 1.75% with a reset period every 6 months until maturity.

3. Restructuring Fee: payment of a restructuring fee of EUR 1,500,000 in aggregate to holders of the Senior Notes and EUR 204,545 in aggregate to holders of the Mezzanine Notes, in each case pro rata to their holdings. For the avoidance of doubt, the fee will be available to all Noteholders, including those who are not party to the Lock-Up Agreement . The fee will be payable in four equal instalments, starting in October 2023.

4. Changes to servicing: the Gedesco Services Spain, S.A.U. will be replaced as Servicer by Toro Finance, S.L.U. As a result, servicing will be brought "in-house" to the Seller entity. In addition, Hipoges Iberia S.L will be appointed as Back-Up Servicer with an ongoing monitoring role.

5. Servicer incentive fees: payment of incentive fees to the Servicer totalling up to EUR 12 million, conditional on the revised amortisation schedule being achieved. Additional incentive fees in amounts to be agreed will also apply to earlier repayment.

6. Origination: the Seller will be subject to limits on origination of Receivables from entities not in the Issuer's Portfolio as at the date of the Transaction. The initial limit will be EUR 45 million, and a formula will set the limit on an ongoing basis. A list of "Ineligible Debtors" will also be agreed.

The parties to the Lock-Up Agreement are now working on long form documentation implementing the Transaction, which is expected to include other terms to be agreed (including in relation to certain intercreditor matters).

Subject to the Participating Noteholders receiving all internal approvals for the Transaction, the Issuer currently expects the Transaction to complete in October 2023, and expects to make a further announcement when the Transaction is completed.

The Lock-Up Agreement will terminate when the Transaction is completed, and in certain other circumstances specified in the Lock-Up Agreement. The Issuer would also expect to make a further announcement if the Lock-Up Agreement were terminated.

Temporary Waivers

To provide a stable platform while the Transaction is being documented and implemented, the Participating Noteholders have agreed to grant temporary waivers of Termination Events that may have occurred prior to the date of the Lock-Up Agreement (the "Temporary Waivers"). In this regard, the Issuer notes that it engaged an independent financial advisor to undertake an audit (the "Audit") pursuant to Clause 9.1(G) of the Servicing Agreement. The Issuer is considering the Audit with its advisers and the extent of any disclosure that it may need to make. However, the Issuer notes that the Temporary Waivers include (though are not limited to) a waiver of any Termination Event identified in the Audit.

The Temporary Waivers will expire when the Lock-Up Agreement is terminated (whether upon completion of the Transaction or otherwise).

Contact details

For queries relating to the above please contact: ireland@wilmingtontrust.com

This Notice is issued by: Castilla Finance Designated Activity Company on 11 October 2023

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