An investment in securities involves a high degree of risk. All investors should carefully consider the following factors in addition to the other information in this investor relations website before investing in – Santos Brasil Participações S.A.’s securities. In general, investing in the securities of issuers in emerging market countries, such as Brazil, involves a higher degree of risk than investing in the securities of U.S. issuers or issuers in other countries with highly developed capital markets. Santos Brasil Participações S.A.’s business, financial condition, results of operations and prospects may be materially adversely affected by any of these risks.

The risks briefly described below are those that the Company currently believes most likely may materially affect its performance.

1) Risks Relating to Santos Brasil Participações S.A.’s Businesses
  • Santos Brasil Participações S.A. various business units may face fierce competition.
  • The Company’s ability to substantially increase container throughput volume depends on the continuous improvement, expansion and maintenance of the rail and road networks to which Santos Brasil Participações S.A. is connected and the maintenance and improvement of the draft in front of its berths.
  • The Company’s leases may be terminated prior their maturity upon the occurrence of certain events, and Santos Brasil Participações S.A. may not receive adequate compensation for the value of its assets or loss of profits.
  • Demand for its services is substantially dependent upon the overall volume of Brazilian foreign trade and decreases in such volume may adversely affect Santos Brasil Participações S.A..
  • The Company may be unable to successfully implement its growth strategies.
  • Implementation of its growth strategies will require significant capital expenditures, and may require additional debt or equity capital, which may not be available or, if available, may not be on terms acceptable to Santos Brasil Participações S.A..
  • The loss of members of its senior management or its failure to attract and retain additional senior management personnel could have an adverse effect on the Company.
  • Santos Brasil Participações S.A.’s business is both cyclical and seasonal in nature, and the Company may experience fluctuations in its operating results.
  • Delays in customs inspections may materially and adversely affect the flow of trade at the Port and its container throughput volume.
  • Terminal operators are exposed to changes in port laws and regulations that may require them to retain additional independent unionized laborers. These workers are more expensive than terminal operators’ regular work force.

2) Risks Relating to Macroeconomy
  • The Brazilian government has exercised, and continues to exercise, significant influence over the Brazilian economy. This influence, as well as Brazilian political and economic conditions, could adversely affect Santos Brasil Participações S.A..
  • Inflation, coupled with the Brazilian government’s measures to fight inflation, may significantly contribute to economic uncertainty in Brazil and may have an adverse effect on the Company and on the market price of its underlying shares.
  • Political, economic and social developments, and the perception of risk in other countries, particularly emerging market countries, may adversely affect the Brazilian economy, Santos Brasil Participações S.A.’s business, and the market price of Brazilian securities, including shares.
  • Exchange rate instability may adversely affect the market price of the Company’s underlying shares.
  • Increases in the interest rates may adversely affect the Brazilian economy, and may have an adverse effect on Santos Brasil Participações S.A..

3) Risks Related to Santos Brasil Participações S.A.’s Shares and GDSs
  • Santos Brasil Participações S.A.’s current shareholders may have interests conflicting with its other investors’ interests.
  • An active market for the Company’s shares or GDSs may not develop.
  • The relative volatility and illiquidity of the Brazilian securities markets may substantially limit investors’ ability to sell Santos Brasil Participações S.A.’s shares at the price and time they desire.
  • The Company may need additional funds in the future and may issue additional shares of common stock in lieu of incurring indebtedness, which may result in a dilution of investor’s interest in Santos Brasil Participações S.A.’s shares.
  • The sale of a significant number of the Company’s shares may adversely affect the market price of its shares and GDSs.
  • Investors may not receive any dividends or interest on shareholders’ equity, and the reduction or elimination of these distributions could negatively affect the market price of Santos Brasil Participações S.A.’s shares or GDSs.
  • Dividends paid by Santos Brasil Participações S.A. will not be eligible for the favorable rate of U.S. federal income taxation applicable to certain “qualified dividend income”
  • The protections afforded to minority shareholders in Brazil are different from those in the United States and may be more difficult to enforce.

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