Ferrovia Sul Atlantico S.A.

Active

Prospective

In December 1996, Ferrovia Sul Atlantico won a 30-year concession for the rehabilitation and operation of the Malha Sul railway line linking the southern Brazilian states of Parana, Santa Catarina and Rio Grande do Sul. 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 awarded between March 1996 and July 1997. Concessions were awarded on the basis of the highest bid above the government's minimum price. Concessionaires paid 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, Sul Atlantico consortium, comprised: Ralph Partners (45%), Judori (18%), Brazil Private Equity Fund (13%), Varbra (7%), RailTex International of the US (6%), and Interferrea (7%), among others. The consortium paid R$216.6 million (US$211.3 million) for the concession. The consortium was expected to invest US$ 8.3 billion in the network during the concession, with US$ 276 million planned for during the first 5 years. IFC's approved investment in FSA consists of a quasi-equity investment of US$10 million, an IFC loan of US$ 35 million, and US$ 45 million in loans from participants. However, as of 2002, the funds had not been committed. In 1999, the project sponsors created the company America Latina Logistica (ALL), which became the shareholder of Ferrovia Sul Atlantico. Ferrovia Sul Atlantico, in its turn, had its name changed to America Latina Logistica do Brasil (ALL Brasil). In that same year, America Latina Logistica acquired controlling interests in the Argentinean railroad operators Ferrocarril Mesopotamico and BAP. This acquisition gave America Latina Logistica the control of the cargo railways network connecting Sao Paulo (Brazil), Buenos Aires (Argentina) and Santiago (Chile). In November 2000, the company reached an agreement with the state-owned railway company AFE from Uruguay that will allow America Latina Logistica to operate an express transport line from Sao Paulo to Montevideo. As of December 2003, the controlling shareholder of the project company, ALL, comprised Emerging Markets Capital Investments (11.9%), Judori (10%), Delara Brasil (8.6%), Brazil Private Equity Fund (6.8%), Ralph Partners (5.1%), Latin Freight Company (5%), RailTex International of the US (3.15%), among others (49.28%). The investments undertaken by Ferrovia Sul Atlantico S.A., year by year were: 1997 – US$ 60 million (R$ 67 million) 1998 – US$ 33.3 million (R$ 40.2 million) 1999 – US$ 52.2 million (R$ 94.3 million) 2000 – US$ 43.8 million (R$ 85.3 million) 2001 - US$ 64.3 million (R$ 143 million ) 2002 – US$ 22.9 million (R$ 81 million) 2003 - US$ 29.4 million (R$ 88.4 million)

Transport

World Bank Group

Project

Mass Transit, Rail, Government