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Local management is still in charge

01 Nov 2008

Letter to the Editor

Race to the Coal (RG 9.08 p586)

Sir - While we were not in a position to make public statements about the sale of our stake in Central East African Railways (CEAR) and Corredor de Desenvolvimento do Norte (CDN) prior to our September 15 press release (RDC ‘Out of Africa’ ... for now!), I would like to make an important correction to your report that ‘CFM has taken back the day-to-day rail operations’.

Management of rail operations remains under the control of the existing local management team, who have evolved admirably over the years despite the difficult environment. In fact, the only change at all to the Nacala Corridor is that the foreign shareholders have crystallised their investment by selling their shares to local shareholders: the overall structure of the company, including the other shareholders, remains the same. It is also worthy of mention that the third-party debt financing that we raised from OPIC was paid in full.

You are correct in stating that the sale of our shares is linked to the prospect of Moatize coal traffic. Like our investment in our flagship Iowa Interstate Railroad, whose fortunes have improved with the evolution of new markets such as ethanol and biodiesel, ‘timing is everything’. Our core business is the restructuring and repositioning of railways in difficult environments, and that these railways have not just survived but been in a position to take advantage of new opportunities confirms our efforts.

Henry Posner III
Chairman, Railroad Development Corp
Pittsburgh, USA