SUMMARY

This summary highlights certain information contained elsewhere in this prospectus. Because this is only a summary, it does not contain all of the information that may be important to you. For a more complete understanding of this exchange offer, we encourage you to read the entire prospectus, including our consolidated financial statements and the related notes and the “Risk Factors” included elsewhere in this prospectus. Unless otherwise specified or unless the context otherwise requires, in this prospectus, “Navios Logistics,” “Company,” “we,” “us” and “our” refer to Navios South American Logistics Inc. and its consolidated subsidiaries, as the context may require. We are incorporated as a Marshall Islands corporation. References to the “Co-Issuer” and “Logistics Finance” are to Navios Logistics Finance (US) Inc., our wholly owned subsidiary incorporated in Delaware that was formed solely for the purpose of serving as a co-issuer and guarantor of our debt securities and that does not have any material assets or operations. References to “Navios Holdings” are to Navios Maritime Holdings Inc., a Marshall Islands corporation. Navios Holdings , which along with its affiliates is our controlling stockholder, does not guarantee the outstanding notes and will not guarantee the exchange notes. The data related to our fleet, including without limitation the number of our owned vessels and deadweight tons, or “dwt”, reflected in this prospectus is as of January 30 ,2012. This prospectus includes forward-looking information that involves risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements.”

The information and data under “Market Opportunity” and elsewhere in this summary and this prospectus relating to the Hidrovia and regional waterborne transportation industry have been provided in the form and context in which they are included with the consent of Drewry Maritime Research, or Drewry. Drewry has based its analysis on information drawn from published and private industry sources and in this context advises us that (i) some industry data included in this discussion is based on estimates or subjective judgments in circumstances where data for actual market transactions either does not exist or is not publicly available, (ii) industry data is derived from information in Drewry’s database which has been assembled through Drewry’s methods of compilation, and (iii) while Drewry has taken reasonable care in the compilation of the industry statistical data and believe them to be correct, data collection is subject to limited audit and validation procedures.

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 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.

The Hidrovia represents an economically dynamic system of ports, terminals and waterways that flow through five countries (Argentina, Bolivia, Brazil, Paraguay and Uruguay) and facilitate trade in this fertile and resource-rich region while providing access to the Atlantic Ocean and the global export market. The Hidrovia is one of the largest navigable river systems in the world, comparable in length to the Mississippi River in the United States. According to Drewry, the countries along the Hidrovia accounted for approximately 51% of world soybean production in 2010, as compared to 32% in 1995. Soybean production in the region has grown from 2000 to 2010 by a compounded annual growth rate, or CAGR, of 6.6%, including 9.0% for Paraguay and 49% for Uruguay. In addition to grain commodities, in the Corumba area of Brazil, near the Paraguay River, iron ore mines owned by Vale and MMX Mineracao and Metalicos S.A. have increased their production from a combined 1.3 million metric tons in 2000 to a combined 6.0 million metric tons in 2010, representing a CAGR of 16.3%. We believe the Hidrovia river system and seaborne trade up and down the South American coast are efficient means of commodity transportation, given the current shortage of adequate highway and rail infrastructure in that area.

We have a diverse customer base including global petroleum, agricultural and mining companies. Our customers include affiliates of Archer Daniels Midland Company (“ADM”), Bunge Limited (“Bunge”), Cargill, Incorporated (“Cargill”), Exxon Mobil Corporation (“Esso”), Glencore International AG (“Glencore”), Louis Dreyfus SAS (“Louis Dreyfus”), Petróleo Brasilero S.A. (“Petrobras”), Petropar SA (“Petropar”) (the national oil company of Paraguay), Repsol YPF S.A. (“Repsol”), Royal Dutch Shell plc (“Shell”), and Vale S.A. (“Vale”). We

 

have a long history of operating in the Hidrovia region, having been founded in 1955 by one of our predecessor companies that 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, YPF 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. Between January 1, 2008 and December 31, 2010, we have grown our time charter, voyage and port terminal revenues and sales of refined oil products by 74.4% and our net income attributable to our common stockholders by 63.4%.

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, which operate in our cabotage business. We have combined our ports in Uruguay and Paraguay with our versatile fleet of barges, pushboats and tankers to offer end-to-end logistics solutions for both our dry and liquid port customers seeking to transport mineral and grain commodities and liquid cargoes through the Hidrovia region. We provide transportation for dry cargo (cereals, cotton pellets, soybeans, wheat, limestone (clinker), mineral iron, and rolling stones), 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). Between January 1, 2008 and December 31, 2011, we have grown our fleet from approximately 123 to 303 vessels, including barges, pushboats and tankers. For the same period in our dry port terminal in Uruguay, we added 80,000 metric tons of storage capacity in 2009 reaching a total capacity of 360,000 metric tons, and we installed a newly constructed grain drying and conditioning facility which has been operational since May 16, 2011 and has a static capacity of 7,000 metric tons. We are currently constructing a new silo with 100,000 metric tons of storage capacity which is expected to be completed in March 2012 and will increase the total storage capacity of the dry port to 460,000 metric tons. 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 which 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.

We seek to maintain predictable revenues across our businesses through a mix of long term storage and transshipment contracts for our ports and time charters and Contracts of Affreightment (“CoAs”) for our fleet. In our dry port terminal, we typically sign three to five year contracts with our customers. In our barge business, we typically operate under a mix of time charters and CoAs with durations of one to five years, some of which have minimum guaranteed volumes, and spot contracts. In our cabotage business, we typically operate under time charters with durations in excess of one year at inception. For the year ended December 31, 2010 and for the nine month period ended September 30, 2011, approximately 62.2% and 78.3%, respectively, of our time charter, voyage and port terminal revenues was generated from fixed contracts. Revenues across our businesses are predominantly denominated in U.S. dollars and, in 2010 and the first nine months of 2011, 89.2% and 91.0%, respectively, of our total revenue was denominated in U.S. dollars.

We believe our dry terminal in Nueva Palmira, Uruguay, located at the confluence of the Parana and Uruguay rivers, is the largest independent bulk transfer and storage port terminal in Uruguay based on throughputs. Our dry port terminal is located in an international tax-free zone. In 2010, 3.9 million tons of dry cargo were moved through the terminal, as compared to 3.1 million tons of dry cargo in 2009. During the nine month period ended September 30, 2011, 3.0 million tons of dry cargo were moved as compared to 3.0 million tons of dry cargo in the same period in 2010. We currently have eight silos (some with internal separations) with total storage capacity of 360,000 tons. We have started the construction of a ninth silo with approximately 100,000 metric tons capacity which is expected to be completed in March 2012. On May 16, 2011, we completed the installation of a grain drying and conditioning facility on 13.6 acres of land adjacent to our dry port terminal. The drying and conditioning facility is focused primarily on Uruguayan soy for export and serves the needs of our customers for grain products that meet the quality standards required by international buyers.

 

We believe our liquid port terminal in San Antonio, Paraguay, located approximately 17 miles by river from the Paraguayan capital of Asuncion, is one of the largest independent storage facilities for crude and petroleum products in Paraguay based on storage capacity. Our liquid port terminal has a current capacity of 38,560 cubic meters. The port facility serves international operators from Paraguay and Bolivia supplying products that support the growing demand for energy. Approximately 337,385 cubic meters of liquid fuels (primarily diesel and naphtha) moved through our wet port terminal in 2010 as compared to 258,500 cubic meters in 2009. Approximately 217,825 cubic meters of liquid fuels (primarily diesel and naphtha) moved through our wet port terminal in the nine month period ended September 30, 2011 as compared to 265,395 cubic meters in the same period of 2010. We are constructing two new storage tanks at our wet port facility in Paraguay with a total capacity of 7,100 cubic meters to meet Paraguay’s growing demands for energy, which are expected to be completed in the first half of 2012.

Our current core fleet consists of a total of 303 vessels, barges and pushboats 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 January 27, 2012.

Navios Logistics Fleet Summary (owned and chartered-in)

 

Pushboats/ Barges/ Inland Oil tankers fleet		Number of vessels		Capacity/BHP		Type
Pushboat fleet (1)		22		66,600 BHP		Various Sizes and Horse Power
Dry Barges		223		311,000 DWT		Dry Cargo
Tank Barges (2)		45		125,500 m3		Liquid Cargo
LPG Barges		3		4,752 m3		LPG
Self-propelled Tank Barges (3)		2		11,600 m3		Liquid Cargo
Inland Oil Tankers		2		3,900 DWT		Liquid Cargo
Total		297

 

Product Tanker Fleet		Year Built		DWT		Type
Estefania H		2008		12,000		Double-hulled Product Tanker
Malva H		2008		8,974		Double-hulled Product Tanker
Makenita H		2009		17,508		Double-hulled Product Tanker
Sara H		2009		9,000		Double-hulled Product Tanker
San San H (4)		2010		16,871		Double-hulled Product Tanker
Stavroula (4)		2010		16,871		Double-hulled Product Tanker
Total				81,224

 

(1)	Two pushboats are chartered-in with total horsepower of 6,130 BHP.

 

(2)	23 Tank Barges are chartered-in with total capacity of 58,700 m3.

 

(3)	Serving in the Argentine cabotage business.

 

(4)

The San San H and the Stavroula were delivered in June and July 2010, respectively. Both tankers are chartered-in for a two-year period, and we have the obligation to purchase the vessels immediately upon the expiration of the respective charter periods at a purchase price of $15.2 million and $15.3 million, respectively.

 

Based on data from Drewry, in the Argentine cabotage trade, we operate the largest cabotage fleet in terms of capacity and one of the youngest fleets, consisting of six double-hulled product tankers and two self-propelled barges. We own four product tanker vessels and charter-in two additional product tanker vessels, representing a total capacity of 81,224 dwt. We also own two self-propelled barges, with a total capacity of 11,600 cubic meters. According to Drewry, the average age of the tankers in our market is 10 years, with 22% of the tanker vessels in our market having an age of 20 years or older. By comparison, our tanker fleet has an average age of approximately two years. Given that the MARPOL regulations require the retirement of all single-hull tanker vessels in the market by 2015, we believe our modern tanker fleet provides us with a competitive advantage.

Our cabotage operations serve oil majors and major trading companies in the region to transport petroleum products from the refineries to various coastal destinations. The time charter agreements of our product tanker vessels have a remaining average duration of 1.1 years. The Argentine cabotage market is restricted to established local operators with either Argentine flagged vessels or foreign flagged vessels with one-to-three year licenses for companies with sufficient Argentine tonnage. Our foreign-flagged cabotage tanker vessels operate under licenses of one to three years’ duration issued by the Argentinean maritime authorities. Our non-provisional licenses expire at various times between June 2012 and November 2013. Upon expiration, the licenses are generally renewed for periods of one to three years. For further information regarding our licenses, please see “Business—Cabotage Operations—Fleet”. We have the competitive advantage of being able to operate in the Brazilian cabotage market through our acquisition of 51% of a Brazilian pushboat operator, Hidronave South American Logistics S.A. (“Hidronave S.A.”), in October 2009, since Brazilian law provides a preference for the utilization of Brazilian-flagged vessels in its cabotage trade.

We believe there are considerable opportunities to expand our cabotage operations and take advantage of our cabotage privileges in both the Argentine and Brazilian coastal trades. For example, in May 2011 we signed 15-year charter contracts with Petrobras for six Panamax vessels, which will further expand our cabotage business. We have the option to cancel the contracts if we are unable to secure acceptable financing for the construction of the vessels.

Market Opportunity

We believe that the following factors create opportunities for us to successfully grow our business:

 

•

Growing Production and Exports of Grain Commodities:  The Hidrovia region produces and exports a significant and growing amount of agricultural products. Moreover, the region continues to have large amounts of unused arable land available for soybeans and other crops. The countries along the Hidrovia accounted for approximately 51% (or 135.9 million metric tons) of world soybean production in 2010, as compared to 32% in 1995 (or 39.9 million metric tons). Soybean production in the region has grown from 2000 to 2010 by a compounded annual growth rate, or CAGR, of 6.6%, including 9.0% in Paraguay and 49% for Uruguay. Production of corn (maize), wheat and other grains (primarily barley and sorghum) in the Hidrovia region have also grown during the period. Production of corn has increased from about 58.8 million metric tons in 2000 to 78.0 million metric tons for 2010, a CAGR of 2.9%. Production of wheat has increased from about 18.6 million metric tons in 2000 to 23.3 million metric tons for 2010, a CAGR of 2.3%.

Although not all grain commodities produced in the Hidrovia region are shipped for export through the Hidrovia waterway, we believe that the increased grain production in the region is expected to increase the amount of grains transported via the Hidrovia over time. For example, in 2010, 64.3 million metric tons of grains were transported via the Hidrovia, as compared to 44.3 million metric tons in 2009. Portions of soybean production in Bolivia, Paraguay and southern Brazil for export must be transhipped by barge to deepwater ports, and is particularly important for the Hidrovia. Significant portions of Argentine and Uruguayan production is transported over land to ports on the Hidrovia for export on oceangoing ships. In addition, global growth in wealth and in industrial agriculture has resulted in greater consumption of meat and convenience foods, raising demand for soybeans as animal feed and as soybean oil (the second most widely used vegetable oil after palm oil). Soybeans are vital to the production of livestock feed, industrial oils, infant formula, soaps, solvents, clothing and other household materials.

 

We believe exporting grain and grain products provides a valuable solution to global water scarcity challenges. Agriculture is the largest economic sector in terms of water use. Sufficient water resources are available in the Hidrovia region and can be utilized economically to produce grain and grain products for export, while growing grain in many importing countries would require use of scarce water resources better utilized for other activities. As one of the richest regions in terms of available fresh water resources per capita, South America is a major exporter of “virtual water” products (those products that require significant water for production). In contrast, Asia, with about 60% of the world population, has a high food demand and is one of the largest importers of virtual water products in the world. The increasing virtual water trade to developing countries is expected to drive agricultural growth and export in South America.

Hidrovia Region Soybean Production

 

 

Source: Data from Drewry

 

•

Growing Exports of Mineral Commodities: In addition to grain commodities, companies in the region are initiating the production of other goods, including forest products, iron ore and pig iron. In the Corumba area of Brazil, near the Paraguay River, iron ore mines owned by Vale and MMX Mineracao and Metalicos S.A. have increased their production from a combined 1.3 million metric tons in 2000 to a combined 6.0 million metric tons in 2010, representing a CAGR of 16.3%. Their production of iron ore is transported by barge via the Hidrovia. South America is becoming a significant exporter of mineral commodities to emerging market countries, including China, which has had to look to new sources at greater distances to meet its growing commodity demand. We believe the Hidrovia region will benefit significantly from this continuing trend going forward.

Corumba Iron Ore Production

 

 

Source: Data from Drewry

 

•

Reliance on Waterborne Transportation in the Hidrovia.  The Hidrovia is a vital transportation link in South America given the limited highway and rail alternatives and is critical to facilitating access to the Atlantic Ocean and the global export market. The Hidrovia river system passes through five countries (Argentina, Bolivia, Brazil, Paraguay and Uruguay), and encompasses over 4,500 kilometers, comparable to the length of the Mississippi river system in the United States. There is dredging work underway to increase the water

 

depth in certain portions of the river and to add a 600 kilometer section from Santa Fe to Corrientes, to allow for better barge access to agrarian products in northern provinces. The dredging work is expected to allow for an increase of laden ship and barge traffic in both high and low water seasons.

 

•

Efficient Means of Transportation:  River barges are an efficient and cost-effective mode of transportation compared to other modes of transportation such as railroads and trucks. According to a 2007 Texas Transport Institute study commissioned by the U.S. government, one Mississippi River-type barge, the type of barge in our fleet, has the carrying capacity of about 15 railcars or 58 tractor-trailer trucks. Additionally, the capacity of a 15 barge tow is equivalent to 870 tractor-trailer trucks and can be manned by only eight crew members. In addition, when compared to inland barges, trains and trucks produce significantly greater quantities of certain air pollutants.

 

•

Key Part of Region’s Oil Supply System:  Waterborne transportation via the Hidrovia and coastal tanker trade form a key part of the region’s oil supply system. Approximately 70% of Argentina’s refinery capacity is located in the Plate estuary. Petroleum product distribution systems within Argentina rely on transport from the refineries to various coast destinations such as Bahia Blanca and southern Argentina. Much of northern Argentina’s petroleum products reaches consumers via the Hidrovia. Paraguay does not produce any crude oil and only has one small refinery. It relies on the Hidrovia for imports of crude oil and petroleum products. Imports into Paraguay from larger, more complex refineries in Argentina can provide higher specification products and take advantage of economies of scale. In Brazil, for example, Petrobras announced its business plan for 2011-2015, which includes a projected capital expenditure budget of $224.7 billion and provides for an increase in drilling rigs.

Competitive Strengths

We believe that the following strengths allow us to maintain a competitive advantage within the markets we serve.

Leading Integrated Logistics Company in the Hidrovia Region Serving Diversified End Markets.  We believe we own and operate the largest independent bulk transfer and storage port terminal in Uruguay based on throughputs and one of the largest independent storage facilities for crude and petroleum products in Paraguay based on storage capacity. We believe we also are one of the largest owners and operators of a diverse and versatile fleet of dry and wet barges, pushboats and oil tankers in the Hidrovia region. Our port, barge and cabotage operations serve the needs of a diverse range of industries, including mineral and grain commodity providers as well as users of refined petroleum products. We have been able to combine our ports, barges, pushboats and tankers to offer an integrated logistics solution to our customers. For example, we have customers that use both our dry port and dry barge services such as ADM and Vicentin, and other customers that use our liquid port, liquid barge and cabotage services such as Petrobras and Esso. Approximately 67% of our revenue for the nine month period ended September 30, 2011 was derived from customers that have used our services across two or three of our business segments. We believe our diversification in the end markets we serve hedges us against potentially cyclical markets.

 

 

Developing Leading Position Through Investment and Expansion in our Port Terminals. We believe that our long-standing relationships with major global commodity companies such as ADM, Cargill, Louis Dreyfus, Petrobras, Vale and Shell combined with the key location of our port facilities in Uruguay and Paraguay and the ports’ capacity for growth have enabled us to develop a leading position in the port logistics business in the Hidrovia region. Our dry port facility has served the growing grain exports of countries in the Hidrovia region since 1955 and its location at Nueva Palmira serves our customers’ export needs by providing easy access to the Atlantic Ocean. We are currently constructing a new silo with a capacity of 100,000 metric tons to meet customer demand, which will bring the terminal’s total capacity to 460,000 metric tons by March 2012. We believe that our storage and port handling services complemented by the drying and conditioning facility that has been operational since May 2011 provides our customers with significant savings by reducing costly and time-consuming transportation. We believe that our recent land purchases, including the acquisition of approximately 58 acres of land north of the Nueva Palmira Free Zone where we want to develop a new transshipment facility for wet and dry commodities, and active investigation of other prospective land acquisitions provide us with significant potential for further expansion at our dry port terminal. Our crude and petroleum product port and storage facility in Paraguay is located at the convergence of land and river transportation in an area we believe will become an industrial hub. Our facility’s 38,560 cubic meters of storage, which will expand to 45,660 cubic meters with the construction of new tanks expected by the end of the first half of 2012, serves the needs of our customers in Paraguay, a country with no crude production and limited refining capacity, and in the Hidrovia region.

Large Scale and Modern Fleet Drive Efficient Operations. We believe we are one of the largest providers of storage and marine transportation services in the Hidrovia region, which gives us economies of scale and increased negotiating power. As a fully integrated operator with in-house technical and commercial management of our fleet, we are able to control costs and increase savings across our vertically integrated business lines. We closely monitor operating expenses and continuously undertake cost-cutting initiatives such as the adoption of best practices and the utilization of process improvement teams. In addition, the use of modern vessels in our cabotage operations permits us to use advanced technology and a computerized navigational system that allows for efficient maneuverability and decreased fuel consumption for our vessels.

We believe we have high fleet utilization due to our modern cabotage fleet. Our cabotage fleet of six double-hulled product tankers is one of the youngest in Argentina with an average age of approximately two years as compared to the industry average of 10 years, based on data from Drewry. This modern fleet has helped increase our fleet utilization since younger vessels typically have greater flexibility in their employment and less maintenance time is needed to operate such vessels. Our cabotage fleet utilization rate for the years ended December 31, 2009 and 2010 was 92.5% and 87.1%, respectively, while at the same time fleet available days increased from 1,679 days to 2,220 days between these two years.

We also seek to optimize the use of pushboats. For example, we use our pushboats as part of convoys which are mixed to include both liquid and dry barges. Since most liquid products are transported upriver and most dry products are transported downriver in the region, the use of these mixed convoys allows us to use our pushboats efficiently and limit the incurrence of additional costs related to the repositioning of our barges along the river system.

Preferential Treatment in Certain Markets.  Most countries provide preferential treatment, referred to as “cabotage privileges,” for vessels that are flagged in their jurisdiction or chartered in for operation by local ship operators. All of our oceangoing vessels enjoy cabotage privileges in Argentina. In addition, Brazilian law provides a preference for the utilization of Brazilian-flagged vessels in its cabotage trade. Our Brazilian subsidiary gives us the competitive advantage of being able to operate in the Brazilian cabotage market, enabling us to obtain employment in preference to vessels without those cabotage privileges. Furthermore, the countries of the Hidrovia region have established a regional cabotage system in which we participate.

Long-Term Relationships with High Quality Customers.  We have a long history of operating in the Hidrovia region of South America. Corporacion Navios Sociedad Anonima (“CNSA”) was founded by one of our predecessor companies in 1955. Compania Naviera Horamar S.A. (“Horamar”) was formed in 1992, and combined with CNSA in January 2008 to form Navios Logistics. We have long-standing relationships with a diverse group of large customers, primarily comprised of major international agriculture and oil companies and their affiliates, such as ADM, Cargill, Louis Dreyfus, Petrobras, Petropar, Shell, Vale and Repsol. These long-term customer relationships

 

arise from our reputation for reliability and high-quality service. In our dry port facility in Uruguay, we have been serving three of our key global customers 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. In our barge business, we started our relationship with Vale in 2008 for iron ore transportation and have signed new contracts since then. Our two largest customers accounted for approximately 17.5% and 9.5% of revenues in 2010, respectively, and our five largest customers in terms of revenues accounted for approximately 50.0% in 2010. For the nine month period ended September 30, 2011, our two largest customers accounted for 16.3% and 10.2% of our revenues, respectively, and our five largest customers in terms of revenues accounted for approximately 54.4% for the same period.

Track Record of High Standards of Performance and Safety.  We pride ourselves on our operational excellence, our ability to provide high quality service and our commitments to safety, quality and the environment. Our in-house technical ship management services are provided in accordance with the highest standard in the industry established by class societies, the International Maritime Organization (“IMO”), and the Oil Companies International Marine Forum (“OCIMF”) and have been vetted by the oil majors. The quality of our fleet as well as the expertise of our fleet managers, crews and engineering resources, help us maintain safe, reliable and consistent performance. We maintain well documented and internationally certified safety and quality management systems, perform periodic audits and conduct training, each of which affects all areas of our activities, including operations, maintenance and crewing.

Established History and Experienced Management Team.  We have operated in the Hidrovia region for more than 50 years and have an experienced management team, led by our Chief Executive Officer Claudio Pablo Lopez. Mr. Lopez and his family members have collectively been involved in the logistics industry in the region since 1976. Our directors and senior executive officers have, on average, 19 years of experience in the logistics and transportation industries. Our management team has significant expertise in various lines of businesses and has been instrumental in developing and maintaining our certified safety, quality management systems and executing our growth plan. Our management has driven significant growth in time charter, voyage and port terminal revenues and sales of products.

Business Strategy

Our business strategy is to continue to operate as a diversified logistics and port terminals company and to maximize our growth and profitability while limiting our exposure to the cyclical behavior of individual sectors of the logistics industry. We intend to leverage our expertise and strong customer relationships to increase volume, efficiency and market share in a targeted manner. We will continue to build upon our reputation in the logistics and port terminals industry by pursuing the following strategies:

Capitalize on Attractive Fundamentals in Our Businesses.  As one of the largest owners and operators of barges and product tankers in the Hidrovia region, with some of the largest, most modern and strategically located port facilities, we believe we are well positioned to capitalize on the attractive fundamentals for storage and marine transportation services in the region. There currently exists a shortage of adequate rail and highway infrastructure in South America to meet the growing demand for exports, and the Hidrovia river system and coastal trade represent some of the more cost-efficient methods of transportation in the region. The Hidrovia river system is one of the largest navigable river systems in the world, comparable in length to the Mississippi River system in the United States. A comparison of the two river systems illustrates the significant potential for future development of the Hidrovia. During 2009, the Mississippi and Ohio Rivers carried approximately 6.5 times the amount of cargo (based on metric tons and tons per kilometer) as the Hidrovia, according to Drewry. According to Drewry, the Mississippi River system serves regions in the United States with an average GDP per capita of $41,856 with a well-developed infrastructure system and a large and diverse number of exports, while the Hidrovia is at an early phase of its development, serving a region with an average GDP per capita of $12,167 (on a 2008 U.S. Dollar purchasing power parity). The economies of the countries in the Hidrovia are expected to grow faster than the United States. According to the most recent data from the International Monetary Fund (IMF), the South American economy is estimated to have grown by 4.5% in 2011 and is projected by the IMF to grow by 4.0% in 2012. The Brazilian economy grew by 3.8 % in 2011 and is expected to grow by 3.6% in 2012. For Argentina, the respective figures are 8.0% and 4.6%. The growth estimates for 2011 and forecasts for 2012 for Paraguay are 6.4% and 5.0%, respectively; for Uruguay 6.0% and 4.2%,

 

respectively, and for Bolivia 5.0% and 4.5%, respectively. These projections are based on the IMF’s September 2011 update to the World Economic Outlook. Advanced economies, including the United States, are provisionally estimated to have grown by 1.4% in 2011 and are projected to grow by only 1.2% in 2012 according to the same source. If such growth in the Hidrovia Region economies does not materialize, it could materially delay or prevent the Hidrovia Region from realizing its potential.

We plan to use our position as a market leader in the Hidrovia region to grow our businesses to take advantage of this opportunity. We regularly review opportunities to invest in new port facilities and other infrastructure and increase the size and capacity of our barge fleet. For example, we are developing a new transshipment facility for mineral ores and liquid bulks in Nueva Palmira. We also plan on incorporating additional chemical/product tankers into our cabotage fleet. We believe that these tankers will serve a demand for vessels from our existing customers to service routes where both the point of origin and destination are in South America. We may also seek to add capacity by acquiring assets or companies currently operating in the Hidrovia region, and may add businesses and services that we believe are complementary to those we currently offer. We may also enter into joint venture arrangements with third parties with respect to these businesses.

Continue to Optimize Our Chartering Strategy.  We continually monitor developments in the logistics industry and make charter-related decisions based on an individual vessel and segment basis, as well as on our view of overall market conditions in order to implement our overall business strategy. Some of our charters provide fixed pricing, minimum volume requirements and fuel price adjustment formulas. On other occasions, we enter into CoAs, which allow us flexibility in transporting a certain cargo to its destination. We have been working with our customers in our barge business to increase the proportion of our business under time charters and CoAs of one to five years’ duration, some of which have minimum volume guarantees. Furthermore, we intend to develop relationships with new customers and cargoes as we grow our fleet capacity. For the year ended December 31, 2010, approximately 62.2% of our time charter, voyage and port terminal revenues were generated from fixed contracts. For the nine month period ended September 30, 2011, approximately 78.3% of our time charter, voyage and port terminal revenues were generated from fixed contracts. We expect the contracted percentage of our revenues to increase as we seek to enter into time charters and CoAs, including those with minimum volume guarantees, with our customers more frequently.

Generating Operational Efficiencies.  We have identified opportunities and are implementing our plans to improve overall efficiency and profitability. For example, in our barge business, we plan to increase the size and capacity of our barge fleet and invest in new engines that burn less expensive fuel for our line pushboats, which we use on our longer river voyages. We will also continue to focus on optimizing our barge and tug scheduling, maximizing loads and convoy size and minimizing empty return voyages.

Continue to Improve Quality.  We have developed a reputation for having quality operations in the storage and marine transportation industry. We have implemented a quality improvement process to identify customer requirements and maintain processes designed to meet those requirements. We seek to involve the entire workforce to continually improve these processes on an ongoing basis. Our emphasis on quality allows us to provide customer service at a competitive price. Our reputation enhances our ability to successfully secure valuable contracts and has allowed us to build strong relationships with our customers.

Continue to Capitalize on Our Relationship with Navios Holdings.  Navios Holdings has developed considerable experience and a global network of relationships during its 55-year history of investing and operating in the maritime industry. We believe our relationship with Navios Holdings, including our ability to leverage Navios Holdings’ global network of relationships, and its relationships with commercial and other banks will enable us to engage in innovative financing and access debt financing on favorable terms.

We also believe that we benefit from the leading risk management practices adopted by Navios Holdings. Navios Holdings closely monitors its counterparties’ credit exposure. Navios Holdings has established policies designed for contracts to be entered into with counterparties that have appropriate credit history and we have access to Navios Holdings’ policies and personnel for this purpose. We believe that we can use our relationship with Navios Holdings and its established reputation in order to obtain favorable long-term contracts and attract new customers.

 

Navios Holdings has indicated that it has been evaluating a number of strategic alternatives for us, including our becoming an independent business. While there can be no certainty as to timing, Navios Holdings could decide to pursue these alternatives during 2012. If our relationship with Navios Holdings ends or is significantly altered, our business, results of operations and financial position could be materially adversely affected. See “Risk Factors—Risks Relating to Our Industry and Our Business—We have a meaningful relationship with Navios Holdings, and we depend on Navios Holdings for certain legal, advisory, administrative and other services and benefit from its global network to obtain competitive financing. If our relationship with Navios Holdings ended or was significantly altered, our business and results of operations could be materially adversely affected.”

Our History

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.

Historically, we had two reportable segments, Logistics Business and Dry Port Terminal Business. Since we were formed by the business combination between CNSA and Horamar, we have grown our vessel fleet from approximately 123 to 303 vessels, including barges, pushboats and tankers, through acquisitions of vessels and the acquisition of a 51% interest in Hidronave S.A., a Brazilian pushboat operator.

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. Historical information has been reclassified in accordance with the new reportable segments.

Corporate Information

We have been incorporated under the laws of the Republic of the Marshall Islands since December 17, 2007. On February 1, 2010, we registered a Uruguayan branch office at Luis A. de Herrera 1248, World Trade Center, Torre B., 17th Floor Montevideo, Uruguay, where we have our office and principal place of business (our telephone number is +(30) (210) 417-2050). Our website is http://www.navios-logistics.com. The information on our website is not a part of this prospectus.

Our Controlling Stockholder

Navios Maritime Holdings Inc., or Navios Holdings, through its wholly owned subsidiary, Navios Corporation, is our controlling stockholder. Navios Holdings is a global, vertically integrated seaborne shipping and logistics company focused on the transport and transshipment of drybulk commodities including iron ore, coal and grain. Navios Holdings’ shares of common stock trade on the New York Stock Exchange under the symbol “NM”.

 

Corporate Structure

The chart below summarizes our ownership and corporate structure as of January 27, 2012.

 

 

Shaded entities are guarantors of the notes.

 

*	Third party joint venture partner owns 49% of the Joint Venture.

†	100% directly or indirectly owned.

(1) Angeliki Frangou, our Chairman, beneficially owns approximately 23.3% of the outstanding common stock of Navios Maritime Holdings Inc.

(2) Claudio Pablo Lopez, our Chief Executive Officer and Director, Carlos Augusto Lopez, our Chief Commercial Officer-Shipping Division and Director, and Horacio Enrique Lopez, our Chief Operating Officer-Shipping Division and Director, together own 100% of Grandall Investment S.A.