Ferrovia Novoeste S.A.

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Ferrovia Novoeste won an exclusive 30-year concession over the 1,621 km of track in the Western region of Brazil. In 1995, the Brazilian government decided to divide the national railway, RFFSA, into six exclusive regional systems and to offer a 30-year concession contract for each system. This is one of the six concessions which were between March 1996 and July 1997. Concessions were awarded on the basis of the highest bid above the government's minimum price. Concessionaires must pay an upfront lump sum, and a stream of pre-determined payments over the life of the concession. Unlike in Argentina, concessionaires have no control over initial employment decisions. The winning consortium for this concession, Novoeste consortium, comprised: Noel Group (20% - US), Brazil Rail Partners (20%), Western Rail Investors (20%), Chemical Latin America Equity (20%), Bankamerica International Investors (18%), and DK Partners (2%). The consortium paid R$ 63.4 million (US$ 61 million, approx.) for the concession. The line links Bauru (Sao Paulo) to Corumba (Mato Grosso do Sul). The main cargo is petroleum derivatives, soybean, steel products, manganese and soy bran. In 1998, the corporate control (100%) of Ferrovia Novoeste was transfered to a holding named Ferropasa. The shareholders of Ferrovia Novoeste acquired 9% of the shares of Ferropasa, while the remaining 91% was transfered to the shareholders of Ferronorte. In 2002, Ferropasa had its name changed to Brasil Ferrovias SA, a holding company controlling Ferrovia Novoeste, Ferronorte, and Ferroban. As of December 2002, Ferropasa's shareholders were Brazilian companies and pension funds: Previ (Caixa Previdencia dos Funcionarios do Banco do Brasil - 26.65%), Funcep (Fundacao dos Economiarios Federais - 22.31%), Constran S.A. (Construcoes e Comercio - 16%), Laif V Ltda (15.36%), BRP Ferronorte LLC (5.6%), Chase Capital Partners (5.98%), Banco Bradesco S.A. (3.56%) and others (5.69%). The investments undertaken by Ferrovia Novoeste year by year, were 1996 - US$ 1.2 million (R$ 1.2 million) 1997 - US$ 7.5 million (R$ 8.4 million) 1998 – US$ 6 million (R$ 7.3 million) 1999 – US$ 3.9 million (R$ 7.3 million) 2000 – US$ 3.6 million (R$ 7 million) 2001 – US$ 4.1 million (R$ 9.2 million) 2002 - US$ 3.1 million (R$ 9.1 million) 2003 - US$ 2.3 million (R$ 6.9 million)