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Mitsui to participate in Passenger Railway Transportation Business in Brazil

Nov. 7, 2014


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Mitsui & Co., Ltd. ("Mitsui", Head Office: Tokyo, President & CEO: Masami Iijima), has signed agreements with Odebrecht TransPort S.A. ("Odebrecht TransPort") on November 6, 2014, Brazilian time, to establish a joint venture company ("J/V") to promote concession and public-private partnership ("PPP") projects concerning urban passenger railway transportation. After completion of necessary procedures like obtaining permission from Brazilian Fair Trade Commission, Mitsui, through a newly established special purpose company, will acquire 40% of the J/V shares by the end of December, 2014 by subscribing new shares of J/V amounting to approximately BRL 500 million (JPY 22.5 billion).

Odebrecht TransPort, a subsidiary of a Brazilian major conglomerate Odebrecht S.A, operates various transportation infrastructure including passenger railways, highways, airport and ports in Brazil.

Assets of the J/V are composed of suburban railway in Rio de Janeiro, which is under operation, subway line No.6 in São Paulo and light rail transit in Rio de Janeiro and Goiania, which are under development or construction. In addition, the development of new PPP projects in major Brazilian cities as well as investment will be made through this J/V.

Odebrecht TransPort's assets

Please scroll horizontally to look at table below.

  Suburban railway
in Rio de Janeiro
("SuperVia")
Subway line No. 6
in São Paulo
("SP6")
Light rail transit in Rio de Janeiro
("Rio LRT")
Light rail transit in Goiania
("Go LRT")
Scheme and Operation period Concession
1998-2048
PPP
2014-2039
PPP
2013-2038
PPP
2014-2050
starting operation Under operation 2020 2015 2017
Share of Odebrecht TransPort 60.0% 19.6% 24.9% 90.0%
System and length Suburban line
270km
Metro
15.3km
LRT
28km
LRT
14km
Stations 102 15 46 17
Trains 197 trains 23 trains - -
Capacity
(thousand passengers/day)
1,700 1,000 285 240
Total investment
(2014-2020)
BRL 1.5 billion BRL 12.2 billion BRL 1.5 billion BRL 1.7 billion

Mitsui has built up vast experience in export of rolling stock and railway system including signaling system as well as engineering, procurement, and construction (EPC) projects since the 1960s, and also has been operating freight car and locomotive leasing business in the United States, Europe, Brazil and Russia since the 1990's. Furthermore, in 2014, Mitsui participated in the general cargo rail transportation business in Brazil. As for concession/PPP business of passenger railways, Mitsui participated in São Paulo Subway line No. 4 PPP in 2007, which started commercial operation from 2011; however, this J/V is the first full-scale participation for Mitsui in this business field.

Through this J/V, Mitsui will contribute to the development of urban mobility infrastructure and a stable and safe passenger transportation system, which are urgent issues in Brazil and will enhance the value of the J/V by introducing technology and knowledge of Japanese passenger railway operators and manufacturers. In addition, Mitsui aims to participate in concession/PPP projects in other countries in the future by utilizing our past experience and the expertise to be accumulated in this J/V.

(Note) Concession and PPP
Definition of concession is a negotiated contract between a company and a government that gives the company the right to operate a specific business within the government's jurisdiction, subject to certain conditions. In Brazil, the Concession law was enacted in 1995. After that, concession schemes are utilized in many areas of public service like roadways, railways, airports etc., and the private sector operates such infrastructure.
Definition of PPP (Public Private Partnership) is the concept of risk sharing between the public and private sectors in a broad sense. In Brazil, PPP law was enacted in 2004 on top of the legal framework of Concession Law, which enables risk sharing between the public and private sectors including subsidies from the public sector, and PPP scheme is utilized to promote new projects in many public service areas.

Investment structure

Investment structure

Odebrecht TransPort

Company Name Odebrecht TransPort S.A.
Head office São Paulo, Brazil
Foundation 2008
Capital structure Odebrecht S.A. 59.39%
FI-FGTS(*) 30.00%
BNDESPar(**) 10.61%

(*) Investment fund managed by Caixa Economica Federal
(**) Investment arm in BNDES system

Main business Investment and operation of concession of transportation infrastructure area
Website

Odebrecht S.A.

Company Name Odebrecht S.A.
Head office Bahia, Brazil
Foundation 1944
Employees Approximately 175,000 persons (Consolidated)
Main business Holding company of Odebrecht Group
Website

Notice:
This announcement contains forward-looking statements. These forward-looking statements are based on Mitsui's current assumptions, expectations and beliefs in light of the information currently possessed by it and involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors may cause Mitsui's actual results, financial position or cash flows to be materially different from any future results, financial position or cash flows expressed or implied by these forward-looking statements. These risks, uncertainties and other factors referred to above include, but are not limited to, those contained in Mitsui's latest Annual Securities Report and Quarterly Securities Report, and Mitsui undertakes no obligation to publicly update or revise any forward-looking statements.
This announcement is published in order to publicly announce specific facts stated above, and does not constitute a solicitation of investments or any similar act inside or outside of Japan, regarding the shares, bonds or other securities issued by us.

Information

For inquiries on this matter, please contact

Mitsui & Co., Ltd.
Investor Relations Division
Telephone: +81-3-3285-7910
Facsimile: +81-3-3285-9821
infoTKADZ@mitsui.com
Mitsui & Co., Ltd.
Corporate Communications Division
Telephone: +81-3-3285-7618
Facsimile: +81-3-3285-9819