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AERNNOVA: A NEW PRODUCTION PLANT IN MEXICO FINANCED WITH FIEX FUNDING

• THE SPANISH DEVELOPMENT FINANCE INSTITUTION - COFIDES S.A. -, as fund manager for the Fund for Foreign Investment (FIEX), has extended a joint venture loan for 17,4 million dollars to the AERNNOVA GROUP. The project consists of building a new production plant in Mexico.

• THE AERNNOVA GROUP, headquartered in Alava and whose roots go back to 1986, has become a world reference point among TIER-1 suppliers in the aeronautical industry. The Group’s activity covers nearly the whole value chain (aeronautical structures, metallic components and engineering). The most relevant international manufacturers of helicopters and aircrafts - such as EMBRAER, Airbus, Boeing, EADS-CASA, Bombardier or Sikorsky – are included among AERNNOVA’s customers. In 2007, AERNNOVA opened two new production plants in Mexico, a metallic components manufacturing plant and a metallic components assembly plant. In order to provide funding for both projects, COFIDES, as fund manager for FIEX, extended a joint venture loan for more than 47 million dollars to the AERNNOVA Group in 2008.

• THE NEW AERNNOVA’S PROJECT IN MEXICO consists in building a third manufacturing plant, where components in composed materials (composite) will be produced. Composed materials are made from fibre, especially carbon fibre. Those materials are lighter than traditional ones. For that reason, they are becoming increasingly used by the aeronautical industry. With more than 19,000 m2, the new production plant will be located in Queretaro. The funding provided by FIEX represents 65% of the total investment of the project in fixed assets from 2009 to 2011.

The new plant will enable the Group to face the increased demand for composed material manufacturing. An increase in the demand is expected due to the agreements reached by the Group with Airbus regarding the Power 8 programme and the new model A-350.

• THE SOCIAL AND ENVIRONMENTAL BENEFITS generated by AERNNOVA’s projects in Mexico are numerous. The three projects are expected to create more than 750 direct jobs and training programs will be implemented for the employees. Consequently, AERNNOVA will be transferring technology and know-how to the Mexican production plants, which will develop an activity complementary to the AERNNOVA’s plants in Spain.

There are several reasons why AERNNOVA decided to establish the new plants in Mexico. First of all, owing to its geographical proximity to USA, Mexico has great potential for the aeronautical industry since some of the most relevant customers are established in USA. Secondly, Mexico has a competitive cost structure. Furthermore, the Mexican Government - in cooperation with the State Government in Queretaro - has implemented initiatives to foster the aeronautical sector.

Not only does COFIDES provide financial support for these projects but COFIDES also makes a very positive contribution to reach goals established by the Spanish Government to reinforce the Spanish economic and commercial relationships with foreign countries. First of all, Mexico, as a priority market for Spain, has been one of the countries chosen by the Secretary of State for Trade to implement an Integral Market Development Plan. This Plan consists of specific and strategic lines of action and envisages fostering activities in high-tech sectors, reinforcing the presence of Spanish companies in Mexico and supporting the investment in Mexico.

Last but not least, the Spanish Ministry of Industry, Tourism and Trade implemented the Strategic Plan for the Spanish Aeronautical Sector 2008-2016. This Plan includes objectives such as increasing the presence of the aeronautical industry in high value added activities and products. With the three production plants in Mexico, AERNNOVA consolidates its economic and industrial structure, which allows the company to accomplish the goals established by the Ministry concerning the incorporation of value added projects to the aeronautical industry.