Bulletin: Rumo S.A.'s Renewal Of Concession For Paulista Network Will Help Maintain Growth Strategy

SAO PAULO (S&P Global Ratings) May 28, 2020--S&P Global Ratings said today that Rumo S.A.'s (BB-/Stable/B) early renewal of the Paulista Network concession, which it announced yesterday, supports the company's long-term growth strategy. The concession renewal incorporates a fee of R$2.9 billion and mandated investments of R$6.1 billion over a 38-year span. In addition, the company agreed to pay about R$1.1 billion during the same period, stemming from legal disputes over the original concession fee. We expect the concession renewal to unlock investments that will more than double the Paulista network capacity until 2058 and boost efficiency given asset modernization and very low execution risks. Given that we adjust the concession bid (R$2.9 billion for the renewal and R$1.1 billion

...May 28, 2020 SAO PAULO (S&P Global Ratings) May 28, 2020--S&P Global Ratings said today that Rumo S.A.'s (##-/Stable/B) early renewal of the Paulista Network concession, which it announced yesterday, supports the company's long-term growth strategy. The concession renewal incorporates a fee of R$2.9 billion and mandated investments of R$6.1 billion over a 38-year span. In addition, the company agreed to pay about R$1.1 billion during the same period, stemming from legal disputes over the original concession fee. We expect the concession renewal to unlock investments that will more than double the Paulista network capacity until 2058 and boost efficiency given asset modernization and very low execution risks. Given that we adjust the concession bid (R$2.9 billion for the renewal and R$1.1 billion for legal disputes over the original bid) to our debt levels, we expect Rumo's leverage to increase in 2020 slightly without impacting the ratings. We expect debt to EBITDA to rise to 3.5x-4.0x...

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