United states securities and exchange commission
Item 4. Information on the Company
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| Item 4. Information on the Company
<>A. History and Development of the Company <>We have a long history of operating in the Hidrovia region of South America. CNSA was founded by one of our predecessor companies in 1955. Horamar was formed in 1992, and combined with CNSA in January 2008 to form Navios Logistics. CNSA owned and operated the largest bulk transfer and storage port terminal in Uruguay. Horamar was a privately held Argentina-based group specializing in the transportation and storage of liquid cargoes and the transportation of drybulk cargo in South America along the Hidrovia river system. The combination of CNSA and Horamar under the Navios Logistics umbrella created one of the largest logistics businesses in the Hidrovia region of South America. <>On January 1, 2008, pursuant to a share purchase agreement, Navios Holdings contributed: (a) $112.2 million in cash; and (b) the authorized capital stock of its wholly owned subsidiary Corporacion Navios Sociedad Anonima (“CNSA”) in exchange for the issuance and delivery of 12,765 shares of Navios Logistics, representing 63.8% (67.2% excluding contingent consideration) of its outstanding stock. Navios Logistics acquired all ownership interests in the Horamar Group (“Horamar”) in exchange for; (a) $112.2 million in cash, of which $5.0 million was kept in escrow and payable upon the attainment of certain EBITDA targets during specified periods through December 2008 (the “EBITDA Adjustment”); and (b) the issuance of 7,235 shares of Navios Logistics representing 36.2% (32.8% excluding contingent consideration) of Navios Logistics’ outstanding stock, of which 1,007 shares were kept in escrow pending attainment of certain EBITDA targets. In November 2008, $2.5 million in cash and 503 shares were released from escrow when Horamar achieved the interim EBITDA target. As a result, Navios Holdings owned 65.5% (excluding 504 shares that remained in escrow as of such November 2008 date) of Navios Logistics. <>On March 20, 2009, August 19, 2009, and December 30, 2009, the agreement pursuant to which Navios Logistics acquired CNSA and Horamar was amended to postpone until June 30, 2010 the date for determining whether the EBITDA target was achieved. On June 17, 2010, $2.5 million in cash and the 504 shares remaining in escrow were released from escrow to the former shareholders of Horamar upon the achievement of the EBITDA target threshold. As of December 31, 2011, Navios Holdings owned 63.8% of Navios Logistics. <>During the first quarter of 2010, we began the construction of a grain drying and conditioning facility at our dry port facility in Nueva Palmira with a static capacity of 7,000 metric tons. The facility has been operational since May 16, 2011 and is being financed entirely with funds provided by the port operations. We paid an amount of $3.9 million as of December 31, 2011 for the construction of the facility ($3.0 million as of December 31, 2010). <>In June 2010, we entered into long-term bareboat agreements for two new product tankers, the Stavroula and the San San H, each with a capacity of 16,871 dwt. The San San H and Stavroula were delivered in June and July 2010, respectively. Navios has the obligation to purchase the vessels immediately upon the expiration of their respective charter periods at a purchase price of $15.2 million and $15.3 million, respectively. <>In 2010, we acquired two 29 acre parcels of land located south of the Nueva Palmira Free Zone as part of a project to develop a new transshipment facility for mineral ores and liquid bulks, paying a total of $1.0 million. <>During the second, third and fourth quarter of 2011, on various dates prior to October 24, 2011, we used a portion of the proceeds from the notes offering to acquire three pushboats, 66 barges and one floating drydock for a total cost of approximately $60.0 million, including transportation and other related costs. <>Following the acquisition of two pieces of land for a total of $1.0 million in 2010, we also paid $0.4 million in September 2011 for the acquisition of a third piece of land. All of these pieces of land are located at the south of the Nueva Palmira Free Zone and were acquired as part of a project to develop a new transshipment facility for mineral ores and liquid bulks. <>On July 25, 2011, we acquired the noncontrolling interests of our joint ventures, Thalassa Energy S.A., HS Tankers Inc., HS Navigation Inc., HS Shipping Ltd. Inc. and HS South Inc., in accordance with the terms of certain stock purchase agreements with HS Energy Ltd., an affiliate of Vitol S.A. (“Vitol”). We paid a total consideration of $8.5 million for such noncontrolling interests. <>During the third quarter of 2011, we commenced the construction of a new silo at our dry port facility in Nueva Palmira, Uruguay. For the construction of the new silo we had paid as of December 31, 2011, $6.4 million. The silo is operational as of April 2012. In addition, we plan to construct an additional vessel loading conveyor belt at our dry port facility expected to be operational in the first half of 2013. <>In our liquid port in Paraguay, we added 3,000 cubic meters of storage capacity in December 2011 reaching a total capacity of 38,560 and we are currently constructing two additional storage tanks with combined capacity of 7,100 cubic meters and as of December 31, 2011 we had paid $0.3 million. These tanks are expected to be completed in the first half of 2012 and will increase the total storage capacity of the liquid port to 45,660 cubic meters. <>For a further discussion of our capital expenditures, see “Item 5.B Liquidity and Capital Resources.” <>B. Business Overview <>Our Company <>We are one of the largest logistics companies in the Hidrovia region of South America, focusing on the Hidrovia region river system, the main navigable river system in the region, and on the cabotage trades along the eastern coast of South America. We serve the storage and marine transportation needs of our customers through our port terminal, river barge and coastal cabotage operations. We are focused on providing our customers integrated transportation, storage and related services through our port facilities, our large, versatile fleet of dry and liquid cargo barges and our product tankers. We serve the needs of a number of growing South American industries, including mineral and grain commodity providers as well as users of refined petroleum products. Our controlling shareholder, Navios Maritime Holdings Inc., is one of the world’s leading shipping and maritime logistics companies and provides significant business expertise and know-how to our operations. <>Historically, the Company has had two reportable segments, Logistics Business and Dry Port Terminal Business. Following the recent business developments in our company, beginning in 2011, we report our operations based on three reportable segments: Port Terminal Business, Barge Business and Cabotage Business. The Port Terminal Business includes the dry port terminal operations (previously identified as the Dry Port Terminal Business) and the liquid port terminal operations previously included in the Logistics Business segment. The previously identified Logistics Business segment has been split to form the Barge Business segment and the Cabotage Business segment. For further historical segment information, please see Note 23 to our audited Consolidated Financial Statements included elsewhere in this report. <>We have a diverse customer base including global agricultural, mining and petroleum companies. Our customers include affiliates of ADM, Bunge, Cargill, Exxon Mobil Corporation, Glencore, Vitol, Louis Dreyfus, Petrobras, Petropar (the national oil company of Paraguay), Repsol, Shell and Vale. We have a long history of operating in the Hidrovia region, being founded in 1955 by one of our predecessor companies which operated in the region, and have been able to generate and maintain longstanding relationships with our customers. In our dry port facility in Uruguay, we have been serving three of our key global customers, ADM, Cargill and Louis Dreyfus, for more than 13 years on average. In our liquid port facility, liquid barge transportation and cabotage business, we have long-term relationships with our global petroleum customers for more than 10 years on average (such as Exxon Mobil Corporation, Petrobras Group, YPS Repsol and Shell). In our dry barge business, we started our relationship with Vale in 2008 for iron ore transportation and have signed new contracts since then. We are committed to providing quality logistics services for our customers and further developing and maintaining our long-term relationships. <>We serve our customers in the Hidrovia region through our two port storage and transfer facilities, one for agricultural, forest and mineral-related exports located in Uruguay and the other for refined petroleum products located in Paraguay. We complement our two port terminals with a diverse fleet of 293 barges and pushboats and two small inland oil tankers that operate in our barge business and eight vessels, including six oceangoing tankers and two self-propelled barges, that operate in our cabotage business. We provide transportation for dry cargo (cereals, cotton pellets, soybeans, wheat, limestone (clinker), mineral iron, and rolling stones) and liquid cargo (hydrocarbons such as crude oil, gas oil, naphtha, fuel oil and JP1 and vegetable oils) and liquefied cargo (liquefied petroleum gas or LPG). <>Since the business combination in January 2008, we have grown our vessel fleet from approximately 123 to 303 vessels, including barges, pushboats and tankers, of which 276 are owned by us and 27 are chartered-in under long-term charter-in contracts. The following is the current core fleet as of April 5, 2012. <>Navios Logistics Fleet Summary (owned and chartered in)
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