CVRD, CSN agree rail, port asset swap
Bnamericas Published: Thursday, April 17, 2003
Brazilian mining and logistics giant CVRD (NYSE: RIO) and Rio de Janeiro-based flat steelmaker CSN (NYSE: SID) have signed a letter of agreement to exchange stakes in two local rail companies and a port terminal, the companies said. The agreement consists of the acquisition by CVRD of CSN's 11.95% stake in rail concessionaire FCA; the sale of CVRD's 50% share in Sepetiba Tecon container terminal to CSN; and CVRD's sale of its 32.4% stake in railroad concessionaire CFN to both CSN and local equity fund Taquari. The entire transaction will result in CVRD paying out a total of 20mn reais (currently US$6.67mn). To exit CFN, the mining giant had to dole out 100mn reais because of the rail company's negative equity. CVRD also paid 1mn reais for CSN's stake in FCA but received 81mn reais for its share in the port terminal. The operation is subject to the approval of numerous regulators including antitrust body Cade and national land transport agency ANTT. "We hope that in 60 days, we have concluded this operation with a net payout of 30mn reais," Benjamin Steinbruch, CSN's president, said in a statement. For CVRD, the operation is important for its logistics division. "The transaction will accelerate investments in logistics corridors that cannot be carried out by loans but only by capitalization," Roger Agnelli, the president of Rio de Janeiro-based CVRD, said at a press conference. CVRD plans to invest 400mn reais in FCA over the next five years to expand its transport capacity by 44%. Last year, the rail concessionaire transported 8.6bn TKUs. Agnelli said that CVRD intends to be the majority shareholder of FCA and that its acquisition is part of the company's core business. With regard to CFN, CVRD said that the rail line is not a priority and that the mining company's exit will allow the new majority shareholders to outline an investment strategy involving 190mn reais. CSN, which will own 49% of the rail company, said it believes in the economic growth of the northeast region of Brazil where CFN operates. The transactions will result in CSN assuming 100% control of Tecon, which is "a fundamental part of our expansion plans," a company statement read. A CSN spokesperson told BNamericas that the company plans to spend some 20mn reais to increase the port's capacity. Both steelmaker and iron ore producer have signed long-term contracts allowing each one to use the other's infrastructure, Agnelli said. CVRD officials said that the equity swap concludes the shareholder cross-ownership between CVRD and CSN that resulted from the companies' privatization in the early 1990s. NATURAL MONOPOLY CVRD officials dismissed the possibility that antitrust officials would interfere in the operation. Assuming control of the FCA rail network and making needed investments is necessary for reducing 'Brazil Cost' or the higher cost of doing business in Brazil because of its underdeveloped infrastructure sector, Agnelli said. In the states of Minas Gerais, Rio de Janeiro and Espirito Santo, CVRD will become the dominate player of the three rail concessions: FCA, Minas-Vitoria and MRS. "Railroads are a natural monopoly," admitted Agnelli, who added that there are regulatory bodies for users to submit complaints. "Concentration is necessary to attract investment and create large companies. That is the reality of the global economy," the CVRD president said. In the case of CVRD, having control over FCA will allow the company to relieve the burden carried by the Vitoria-Minas rail line. The mining giant does not have an interest in becoming a majority shareholder in MRS, whose control is divided between other Brazilian steelmakers based on their use of the rail line. "We could even reduce our stake in MRS," Agnelli said.
Subscribe to the leading business intelligence platform in Latin America with different tools for Providers, Contractors, Operators, Government, Legal, Financial and Insurance industries.
News in: Infrastructure (Brazil)
Brasília subway operator launches tender for expansion works
The works entail an expansion of 2.3km and two new stations.
Brazil's Marquise to kick off US$200mn railway construction works
The infrastructure firm will build two sections of the Transnordestina rail project.
Subscribe to Latin America’s most trusted business intelligence platform.
Other projects in: Infrastructure (Brazil)
Get critical information about thousands of Infrastructure projects in Latin America: what stages they're in, capex, related companies, contacts and more.
- Project: Line 20 (Pink) of the São Paulo Metro
- Current stage:
- Updated:
4 weeks ago
- Project: Expansion and Modernization of Line 1 of the Federal District Metro - Samambaia Section
- Current stage:
- Updated:
4 weeks ago
- Project: Recovery, Reinforcement and Expansion of the Jornal A Tribuna Bridge (former Barreiros Bridge)
- Current stage:
- Updated:
4 weeks ago
- Project: Upgrade of route BR-392 Rio Grande-Pelotas section
- Current stage:
- Updated:
4 weeks ago
- Project: Xingó water supply channel, phase 1
- Current stage:
- Updated:
1 month ago
- Project: Pará Highway Subsystem: Sections PA-150, PA-475, PA-252, PA-151 and PA-483
- Current stage:
- Updated:
1 month ago
- Project: São Mateus Harbour Centre (CPSM)
- Current stage:
- Updated:
1 month ago
- Project: Baixada Santista light rail, Conselheiro Nébias - Valongo stretch
- Current stage:
- Updated:
1 month ago
- Project: Expansion of Line 1 of the Federal District Metro - Ceilândia Section
- Current stage:
- Updated:
1 month ago
- Project: Terminal ITG-02 in the Port of Itaguaí
- Current stage:
- Updated:
1 month ago
Other companies in: Infrastructure (Brazil)
Get critical information about thousands of Infrastructure companies in Latin America: their projects, contacts, shareholders, related news and more.
- Company: Netcon Americas
- Company: Quantum Participações S.A.  (Quantum)
-
The description included in this profile was taken directly from an official source and has not been modified or edited by the BNamericas’ researchers. However, it may have been...
- Company: Strata Engenharia Ltda.  (Strata Engenharia)
-
The description contained in this profile was taken directly from an official source and has not been edited or modified by BNamericas researchers, but may have been automatical...
- Company: Defensa Civil de Fortaleza
- Company: Sinopec International Petroleum do Brasil Ltda.  (Sinopec International Petroleum do Brasil)
-
The description contained in this profile was taken directly from an official source and has not been edited or modified by BNamericas researchers, but may have been automatical...
- Company: Paraná Ambiental Gestão Global de Resíduos  (Paraná Ambiental)
-
The description contained in this profile was taken directly from an official source and has not been edited or modified by BNamericas researchers, but may have been automatical...
- Company: Concremat Engenharia e Tecnologia S.A.  (Concremat)
-
Concremat Engenharia e Tecnologia S.A. (Concremat), founded in 1972 –although its origins go back to 1952– is Brazilian engineering company with headquarters in Rio de Janeiro a...