The combination of ALL and Rumo Logistics, still under negotiation, undergoes a capitalization. The volume is not yet defined. The funds from currently minority investments in Rumo, Gávea and Texas Pacific Group (TPG), are willing and able to put new money into the business. The entire project involves the qualification of the resulting company for investment of US$ 2 billion.
This operation, if implemented, should lead to the emergence of a firm with greater investment capacity. Yesterday, ALL shares strongly increased in the stock market, with a gain of 8.8%. The company ended the trading session valued at US$ 1,9.
Canadian fund CPP —Canada Pension Plan Investment Board— that was interested in investing resources in Cosan Group, owner of Rumo, for this operation since the previous attempt by entrepreneur Rubens Ometto to get in control of ALL, should be left out at this stage. Gávea and TPG should exercise their preference rights.
CPP was willing to invest R$ 419,8 million. However, the process of arrival of the Canadian Foundation would be long, which creates opportunity for the current Rumo minority shareholders, also interested in the business.
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The provision of such shareholders is directly related to a prior identification of the investment volume and terms required for ALL. The return of capital in this sector takes time.
Its definition would even undergo a sort of detailed quality audit of the current network of ALL. However, investors should remain as financial partners. There are times that the market indicates the need of a capitalization for ALL to meet the investment needs.
The issue was the focus of conversation of both Rubens Ometto and the president of BNDES, Luciano Coutinho, with President Dilma Rousseff, in meetings held on Wednesday. They had separate meetings at the Planalto. After learning of the negotiations, the president asked for more objective data the investment intentions for ALL. The concern is that the company does not become a bottleneck for the expansion project of the network of the country, especially the North-South section.
According to Valor, Coutinho sought during the meeting, to show Dilma the importance of overcoming the challenges of the São Paulo network, which has troubling urban stretches.
The president requested to Rubens Ometto to submit within 15 days more objective information about their willingness to invest. According to interlocutors, behind that it was the attempt to make sure that the arrival of Ometto must the situation at ALL.
ALL has a strategic plan designed with heavy long term investments – which may reach US$ 6,29 billion. The execution, however, would go through a discussion of the extension of the concession period of the networks held by the company, now controlled by entrepreneurs Wilson De Lara and Ricardo Arduini, along with BNDES and pension funds.
The resumption of talks between ALL and Rumo happened by the end of last year. However, there wasn’t yet a round of negotiations on the details of the operation.
After the frustration of the negotiation for Ometto to buy 5.6% of the company, equivalent to 49.1% of the control block, for US$ 377,8 million, the two companies launched a billion dollar legal dispute over a contract of carriage of sugar, closed in 2009. The dialogue on this issue opened the door to a new negotiation. Estáter took over the talks, for ALL, at the end of November.
Investor reacts well to the possible merger and actions of dealership rise
Stock investors reacted well to the possible merger between the railway dealership America Latina Logistics (ALL) and Rumo Logistics —subsidiary handling the sugar of Cosan Group. The news was anticipated to the early evening of Wednesday by Valor PRO, real-time information service of Valor. The price of ALL’s paper closed yesterday at US$ 2.85, which represents an increase of 8.80% against the previous day and the further advancement of Ibovespa in the same comparison.
Analyst Bruno Di Giacomo, from Fator Corretora, says that, although it is not yet possible to know what the final design of negotiation, an agreement could solve the problem of ALL, with the operating contract signed with Rumo, which currently impairs it. On ALL’s side, it would be a great way to resolve this dispute, he states. Other analysts argue that the resumption of negotiations can realign the interests of ALL and Cosan, although still mentioning the difficulty of predicting the final negotiation model.
The imbroglio mentioned by analysts is the sugar transport operating agreement signed between ALL and Rumo in 2009 —and which has currently become the ultimate weapon of Cosan to press a negotiation. Today, either ALL carries high volume demands for Rumo or pays heavy fines to the company. Last year, from May to September, US$ 81,8 million in fines and freight differences were charged.
With the action of breaking the contract on the part of ALL, the company had to deposit the amount in court, done in the form of surety bonds, and other months, starting in October.
The contract is so strong that discouraged interested others in bidding to enter the railroad, such as the major grain trading companies (their users). But the interest of those groups is seen as one of the factors which accelerated the settlement between ALL and Cosan.
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