(a) The Company
ALL - América Latina Logística S.A. (the “Company” or “Parent Company”) was established on September 30, 1997 and started its operating activities in April 1999, when the shareholders of former Ferrovia Sul-Atlântica S.A. (currently ALL-América Latina Logística do Brasil S.A., ALL Brasil) contributed all of the shares of ALL Brasil in exchange for all of the Company’s shares.

The Company’s mair corporate objectives are:

• to hold stock ownership in other companies, ventures and consortia, the purpose of which is related to transportation services, including rail transportation;
• to perform activities relating to transportation services, such as logistics, intermodal transportation, port operations, movement and storage of goods, operation and administration of storage warehouses and general warehouses;
• to acquire, lease or lend locomotives, wagons and other rail equipment to third parties;
• to perform other activities within the Company’s structure;
• multimodal transportation operator.

Considering the appreciation potential of its assets and with a view to providing its investors and the market with full business transparency, on May 31, 2004 ALL joined the Special Corporate Governance Practices - Level 2 implemented by the São Paulo Stock Exchange (BOVESPA), where its shares are traded. ALL is the first land freight transportation Company to join this special corporate governance level, undertaking to fully comply with the related requirements.

According to the commitments taken by parent company ALL - América Latina Logística do Brasil S.A. with the BNDES, the Company should adapt its Bylaws to the rules of the Novo Mercado (New Market) of BOVESPA by February 1, 2004. Management requested and obtained from BNDES on March 7, 2006, the extension of this deadline for February 1, 2008, therefore, eliminating all the penalties determined (early maturity of the debt and execution of guarantees).

The Company operates rail transportation in Southern Brazil through ALL Brasil, and in the Central-West region and State of São Paulo through the concessionaires, indirect subsidiaries, Ferroban, Ferronorte and Novoeste, of Brasil Ferrovias and Novoeste Brasil, recently acquired by the Company, as mentioned in Note 12. It operates in Argentina through its subsidiary ALL - América Latina Logística – Argentina S.A. (ALL Argentina), holding company of ALL - América Latina Logística - Central S.A. (ALL Central) and ALL - América Latina Logística - Mesopotámica S.A.
(ALL Mesopotámica), and also provides road transportation services in Brazil through ALL - América Latina Logística Intermodal S.A. (ALL Intermodal).

ALL Brasil holds the right to operate part of the Brazilian rail network (Malha Ferroviária Sul - Southern Rail Network), with a total length of 6,586 km, by February 2027, a period that may be renewed by the granting authorities for an additional 30 years, covering the States of Paraná, Santa Catarina and Rio Grande do Sul. The Company also has an agreement to operate, on an exclusive basis, 874 km of rail lines in the State of São Paulo.

Brasil Ferrovias is a publicly-held company and holding of the cargo rail transportation industry, the predominating activity of which being the direct control of the concessionaires Ferronorte S.A. Ferrovias Norte Brasil (Ferronorte) and Ferroban – Ferrovias Bandeirantes S.A. (Ferroban), the indirect control of Portofer Transportes Ferroviários Ltda. (Portofer), and shared control of Terminal XXXIX de Santos S.A. (Terminal XXXIX).

Ferroban has the right to operate part of the Brazilian rail network, with an approximate length of 4,186 km by December 2028, a period that may be renewed by the granting authorities for an additional 30 years, covering the entire State of São Paulo.

Ferronorte is a logistics Company which links the North and Central-West regions to the South and Southeast regions of Brazil and to Port of Santos. It is the only railroad in the Country recently built with private capital. Its concession agreement was executed on May 19, 1989, between the Federal Government and Ferronorte, by which the concession for the development of a cargo rail system was granted to Ferronorte, comprising the construction, operation, exploration and preservation of the road between Cuiabá (State of Mato Grosso) and Uberlândia, Santa Fé do Sul, Porto Velho and Santarém, for a 90-year period, which may be extended for another 90 years. There are no payment obligations at any amount while the agreement is valid.

The first segment of Ferronorte was inaugurated in 1999, with a length of 421 km, connecting Aparecida do Taboado (State of Mato Grosso do Sul) to Alto Taquari (State of Mato Grosso). In April 2002, another 90-km segment was inaugurated, interconnecting Alto Taquari and Alto Araguaia, both in broad gauge. With the continuity of the expansion project, Ferronorte will reach Rondonópolis (State of Mato Grosso), and afterwards Cuiabá (State of Mato Grosso).

Portofer is a special purpose company constituted on June 28, 2000 by Ferronorte and by Ferroban, partners which hold 50% of its quotas each. It controls 90 km of railroads in Port of Santos, and its goal is to perform the rail movement of goods in the port, through an agreement executed with CODESP (Companhia Docas do Estado de São Paulo) for a 25-year period, which may be extended by mutual agreement between the parties.

The concession and lease agreements related to the terminals Terminal XXXIX, TGG and TERMAG were executed on August 8, 1997 between Ferronorte and CODESP. The period for the concessions is 25 years, which may be extended under agreement between the parties.

Novoeste Brasil S.A. (Novoeste Brasil) is a closely-held company and holding of the cargo rail transportation industry, resulting from the partial spin-off of Brasil Ferrovias, which occurred on May 13, 2005, and it is the parent company of Ferrovia Novoeste S.A.

Ferrovia Novoeste S.A. (Novoeste) has the right to operate part of the Brazilian rail network, with an approximate length of 1,600 km by July 2026, a period that may be renewed by the granting authorities for an additional 30 years. The railroad has interconnection with waterway terminals in Porto Esperança and Ladário, both in the State of Mato Grosso do Sul, and it interconnects with Ferroban, in Bauru (State of São Paulo) and the Bolivian Ferrovia Oriental in Corumbá (State of Mato Grosso do Sul).

ALL Central has the right to operate part of the Argentine rail network, in a total length of 5,690 km, the main lines of which extend from Mendoza, on the Chilean border, to Buenos Aires, by August 2023, a period that may be renewed for an additional 10 years. ALL Mesopotámica has the right to operate part of the Argentine rail network, in a total length of 2,704 km, the main lines of which extend from Buenos Aires to Uruguaiana, by October 2023, a period that may also be renewed for an additional 10 years. In Uruguaiana these networks are interconnected to the rail network of ALL in Brazil and the border with Paraguay, in Corrientes.

Boswells S.A. is a financial investment company based in Uruguay.

ALL Intermodal provides logistics and road transportation services, mainly by trucks, to the most populated Brazilian regions. This Company also distributes goods in urban areas and provides road freight services.

On December 1, 2001, the Company sold all of its partner rights in ALL Argentina to Logispar Logística e Participações S.A. (Logispar), a Company’s jointly-controlled subsidiary, for R$256,201. At that time, this amount was equivalent to the amount paid in May 1999 by ALL Argentina for the acquisition of ALL Central and ALL Mesopotámica, plus irrevocable advances for capital increases made up to that date, approximating its market value according to the valuation report prepared by independent appraisers. On December 31, 2003, the Company reacquired all the
shares of Logispar at market value.

Based on the Extraordinary General Meeting held on March 29, 2006, the right of enjoyment over ALL Argentina’s shares was transferred from Logispar to the Company, by means of Capital Stock reduction, and its purpose was to directly concentrate the rights and obligations over issuance shares and rights over AFAC’s (advances for future capital increase) made in ALL Argentina at the Parent Company. On September 29, 2006, the Board of Directors approved and merged Logispar’s net assets by its parent company ALL.

The Company’s activities are focused on the control and planning of operational, commercial and strategy activities of the subsidiaries, in addition to the supply of financial resources to enable the subsidiaries’ operations.

(b) Limitations and con ditions to operate the concession granted to ALL Brasil, Ferroban and Novoeste
The Companies are subject to complying with specific conditions established in the privatizations offer and in the concession agreements for the operation of Rail Networks.

The concession agreements of these subsidiaries may be terminated in view of the following events: expiration of the contractual term; expropriation; forfeiture; termination; annulment and bankruptcy; or extinguishment of the concessionaire.

The main impacts of the extinguishment of any of the concessions would be as follows:

• all rights and privileges transferred to the Companies will return to the Federal Government, together with leased assets and those resulting from investments that are considered reversible by the Federal Government for being necessary to the continuous rendering of services under the concession.
  
  
• the assets considered reversible will be indemnified by the Federal Government at the residual cost value, calculated in accordance with the accounting records of the Companies, net of depreciation; this cost will be subject to technical and financial analyses by the Federal Government. Any and all improvements made to the permanent track superstructure will not be considered as investments for indemnification purposes.