Nuevo Central Argentino (NCA) S.A.

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Nuevo Central Argentino (NCA) took over the management of the 4210km General Mitre freight railway under a 30-year concession on December 23, 1992. The vertically integrated company took over freight marketing, train operations, equipment and track maintenance and rehabilitation. The concession contract gives the company an exclusive right to the rail infrastructure. The Argentinian government started restructuring the rail sector in the fall of 1990, and decided to concession the six freight lines first. Companies bid for the concessions under a two stage bidding process, and awards were made on the basis of 10 differently-weighted criteria. Contracts were awarded for 30 years with an optional 10 year extension. At the end of 1997, private companies operated and managed five of the six freight lines. NCA was awarded the concession for the Mitre line on March 17, 1992 and took over in December. NCA comprises three Argentinian companies and the IFC, headed by Aceitera General Deheza (45%). The other partners are Asociacion de Cooperativas Argentinas and Banco Frances del Rio de la Plata. The first two members of the consortium are also major freight customers. The Argentinean government holds a 16% share and NCA employees 4%. The operators/associates are Montana Rail Link and Anacostia Pacific. NCA pays an annual fee of US$ 3 million for the lease (in order to calculate the real value of the lease fee, a discount rate of 13.37% was used; this government has used this rate in other infrastructure sectors). NCA will invest approximately US$ 316 million during the first 15 years. The IFC has a US$ 3 million equity investment, representing 15% of NCA's common shares. In fiscal year 1993, the IFC also provided a US$ 10 million direct loan and a US$ 15 million syndicated loan. By the end of 1996 NCA was making a profit of about US$1.1 million on the line. None