Notice to the Market – Signing of the EcoNoroeste Concession Agreement
ECORODOVIAS INFRAESTRUTURA E LOGÍSTICA S.A. (“Company” or “EcoRodovias”) and its direct subsidiary, ECORODOVIAS CONCESSÕES E SERVIÇOS S.A. (“ECS”), hereby inform that, in connection with the information provided in the Material Fact notice dated September 15, 2022, the Concession Agreement (“Concession Agreement”) was signing into by and between its indirect subsidiary CONCESSIONÁRIA DE RODOVIAS NOROESTE PAULISTA S.A. (“EcoNoroeste” or “Concessionaire”) and the São Paulo State Government, represented by the São Paulo Secretariat for Partnerships in Investments – SPI (“Granting Authority”), with the São Paulo State Public Transportation Services Regulatory Agency (“ARTESP”) and the State Roadway Department – DER, as intervening consenting parties, for commercial exploration for a period of 30 years, as from the signing date of the Initial Transfer Agreement (“Assumption Date”), of the Northwest Lot Highway System (Sistema Rodoviário Lote Noroeste), composed of the highway stretches currently operated by the concessionaires AB Triângulo do Sol (442.2 km) and TEBE (158.2 km), as well as an additional 0.6 km stretch, for an aggregate total of 601 km.
The deposit to the value of the Fixed Concession Fee, in the amount of R$1,285.0 million (base March, 2022: R$1,236.6 million adjusted by IPCA inflation in the period), was made on April 10, 2023, which fund was obtained through the 1st issue of debentures of the Concessionaire, in the amount of R$1,400.0 million at the cost of CDI+2.5% p.a., with maturity on September 30, 2025, of which R$400.0 million was subscribed by the International Finance Corporation (IFC), member of World Bank Group and the world’s largest development institution focusing on the private sector in developing countries, demonstrating the concession’s solidity and sustainability in the long term.
The assumption date and start of toll collection on the stretch currently operated AB Triângulo do Sol are estimated for May 1, 2023, with the toll revenue accounting for approximately 80% of the total estimated toll revenue of the Concessionaire. In addition, the start of toll collection on the stretch currently operated by TEBE is estimated for March 2025, with the toll revenue accounting for approximately 20% of the total estimated toll revenue.
Expansion and improvement works include road duplication, additional lanes, frontage roads, bicycle paths, footbridges and rest areas for truck drivers. In 2023 and 2024, initial works are planned related mainly to pavement renewal, emergency repairs and adaptation of signage. The main expansion works are planned for the 3rd to 7th years of the concession (1st cycle of works) and the 15th to 19th year of the concession (2nd cycle of works).
The concession agreement has important innovations aligned with ESG (Environmental, Social and Governance) best practices, notably: (A) Environmental: implementation of the Zero Carbon Program to neutralize greenhouse gas emissions from the operations of the future highway concessionaire in the highway system and the gradual conversion of the ten toll plazas across the highway network to the free flow system between the 2nd and 7th years of operation (as from the start of the concession term), with the goal of improving traffic and reducing environmental pollution, with the risk of evasion fully assumed by the Concession Authority; (B) Social: implementation of the International Road Assessment Program (iRap), a road safety program focused on reducing accidents and the risk of deaths on highways, implementation of a connectivity system across the concession stretch for communication between users and the customer service team, installation of rest areas for truck drivers, and regional development through the generation of jobs; and (C) Governance: concession agreement with clauses on mechanisms for settling disputes, amicable resolution of conflicts, arbitration, dispute board and transparency in related parties.
EcoNoroeste generates EBITDA from the start of the concession and lengthens the duration of EcoRodovias’ portfolio. The signing of the Concession Agreement demonstrates the Company’s commitment to growth with sustainable returns and financial discipline and is consistent with the strategy of focusing on highway concession assets and creating value for its shareholders. Including this concession, the Company will have 11 highway concession assets, with a total of 4,700 km under concession, consolidating its position as Brazil’s largest highway asset management company in kilometers managed.
EcoRodovias reaffirms its commitment to its obligations as a publicly held company listed on the Novo Mercado segment of B3, and will disclose all and any material information in accordance with applicable laws.
To access the Notice to the Market, click here.
São Paulo, April 12, 2023
Marcello Guidotti
CEO and Investor Relations Officer
EcoRodovias Infraestrutura e Logística S.A.
+55 (11) 3787 2683/2612/2674/2686
invest@ecorodovias.com.br
https://ri.ecorodovias.com.br/
Hugo Rafael Mitz
Investor Relations Officer
EcoRodovias Concessões e Serviços S.A.