JSL S.A. Publicly-Held Company Corporate Taxpayer ID (CNPJ/MF) 52.548.435/0001-79 Company Registry (NIRE): 35.300.362.683 MATERIAL FACT JSL S.A. ("Company or JSL ), a publicly-held company, with the most extensive portfolio of logistics services in Brazil, and a leader in its segment in terms of net revenue 1, in compliance with the requirements of Instructions 358/2002 and 319/1999 of the Brazilian Securities & Exchange Commission ( CVM ) and Law 6.1404/1976 ( Corporate Law ), hereby informs its shareholders and the market in general of the execution on this date of the Protocol and Justification of the Merger by JSL S.A. of Rodoviário Schio S.A. ( Schio Protocol and Justification ) by the management of the Company and Rodoviário Schio S.A., a privately held company headquartered at Avenida Cândido Portinari, 1188, Vila Piauí, CEP 05114-001, in the City of São Paulo, State of São Paulo, registered under Corporate Taxpayer ID (CNPJ/MF) 98.522.246/0001-28 ( Schio ), and the Protocol and Justification of the Merger by JSL S.A. of Transportadora Grande ABC Ltda. ( TGABC Protocol and Justification, and, together with the Schio Protocol and Justification, the Protocols and Justifications ), by the management of the Company and Transportadora Grande ABC Ltda., a limited liability company headquartered at Rua Frei Damião, 865, setor A, Vila Paulicéia, CEP 09695-100, in the City of São Bernardo do Campo, State of São Paulo ( TGABC and, together with Schio, the Acquired Companies ; the Company and the Acquired Companies are hereinafter collectively referred to as the Companies ). In compliance with applicable legal provisions, JSL's management hereby informs that the Company s merger with the two Acquired Companies (the Transaction ) will be submitted to the Company s and Schio s shareholders, in special shareholders meetings scheduled for December 29, 2011, and to TGABC's partners, in a Partners' Meeting, to be held on the same day, in accordance with the provisions of Article 227 of the Corporate Law and Articles 1,116 and 1,118 of Law 10,406/02, as described below. 1 According to the ranking of the publication The Biggest and Best in Transportation and Logistics 2010, Road Freight category.
1. Reasons and Justification for the Transaction As indicated in the Company s November 22, 2011 Material Fact, the Schio merger is the second and final phase of the acquisition of 100% of Schio s capital stock by the Company. With this merger, Mr. José Pio X Schio ( José Schio ), Schio s sole remaining original shareholder, will receive shares of the Company in exchange for the Schio shares in his possession, pursuant to the Private Contract for the Purchase and Sale of Interests and Other Agreements, signed on November 21, 2011 by Schio's original shareholders and the Company, and the Schio Protocol and Justification. The remaining Schio shares, corresponding to 87.5% of its capital stock, are currently held by JSL. As stated in JSL's November 21, 2011 Material Fact, the Company expects the acquisition of Schio to generate significant benefits, including: i. An increase in its platform of logistics services, introducing the Company to the food and controlled-temperature products market in a leadership position; ii. iii. iv. Further consolidation of a single platform for logistics services in Brazil, increasing its leadership in the domestic market and its entry into other South American countries; An expansion of its competitive advantages, such as greater economies of scale for the purchase and resale of assets and the acquisition of key inputs, coupled with the absorption of expertise and skilled labor; and Strengthening relationships with Schio s existing customers, with crossselling opportunities, offering services from the JSL portfolio to the new base of added clients. The acquisition of TGABC, whose capital stock is completely held by the Company, is aimed at simplifying the corporate structure of the Company's economic group, reducing its financial and operating costs, and streamlining JSL s and TGABC's operations. As a result of the Transaction, the Acquired Companies will be merged into the Company, with the totality of their respective net book values assigned to the Company. The Acquired Companies will then be fully eliminated, and the Company
will assume all of the Acquired Companies rights and obligations under Article 227 of the Corporate Law. The acquisition of 100% of Schio s capital stock, now in its second phase (i.e. the acquisition by JSL of Schio), is subject to the risks usually involved in similar transactions, which could have adverse effects on the Company s operations and financial condition or the operating results of the Company and/or Schio, including the following: The Schio acquisition may fail to enhance the business strategy or the image of JSL or Schio; The Schio acquisition may not be approved by the Brazilian Antitrust System; JSL may face a contingent liabilities, including those relating to civil, tax, labor or social security issues, issues related to Schio s intellectual property, accounting practices, financial statement disclosures or internal controls, as well as other regulatory issues; Implementation of the Schio acquisition could be time-consuming and, to a certain extent, the focus of JSL's and Schio's management may be diverted from their usual operations; There may be difficulties in integrating the operations, accounting, personnel and management information systems of JSL and Schio; JSL and Schio may have to manage additional unplanned costs relating to their integration; The investment made to acquire Schio may not generate the expected returns; Schio s cost structure could be different from that of JSL, and JSL's management may not be able to adapt these structures to those of JSL; and The Schio acquisition could generate goodwill, whose amortization may reduce the Company's net income and dividends. The estimated cost of Transaction is R$ 120,000.00 (one hundred and twenty thousand Brazilian reais), which includes the costs for legal and financial advice, valuations, and the registration and publication of the relevant corporate acts.
2. Corporate and Business Acts On November 21, 2011, the Company and Schio s shareholders signed the Private Contract for the Purchase and Sale of Interests and Other Agreements, by which the shareholders of Schio were required to divest all shares issued by Schio through their sale and the subsequent acquisition of Schio by JSL. On December 13, 2011, the managements of JSL and the Acquired Companies approved the Transaction proposal, authorizing the execution of the Protocols and Justifications, and summoning their respective Special Shareholders Meetings and Partners Meetings in order to make a decision regarding the Transaction. 3. Exchange Ratio, Number and Type of Shares to be Attributed to Schio Shareholders and their Share Rights Since TGABC is a company whose capital stock is wholly owned by JSL, its acquisition will not result in JSL issuing new shares, given that its net book value is already fully booked by JSL under the equity income method. The exchange ratio applicable to the Schio acquisition was negotiated between the Company and José Schio. The Company s management believes that the negotiated exchange ratio adequately reflects the best assessment of the Companies respective economic values. In line with the above, José Schio will receive 2,439,944 of the Company s common shares for each of the Schio common shares that he owns, resulting in a total emission of 2,439,944 new common shares by the Company, registered and without par value. For the purposes of Article 264 of the Corporate Law, the exchange ratio of Schio s shares for JSL s shares, taking into consideration their respective net book values at market prices, is the following: each of Schio s shares corresponds to 2.7128242 shares of JSL. The common shares of JSL to be assigned to José Schio in exchange for his Schio shares will have the same rights as those granted to the outstanding JSL shares, and José Schio will fully enjoy all of the benefits, including dividends and capital remuneration, that may be declared by JSL.
The tables below compare the political and financial advantages of the shares held by the controlling shareholders and all of the other shareholders of Schio and JSL, respectively, prior to the Transaction: Rights of the Schio Shares prior to the Transaction Controlling Shareholders All Other Shareholders Rights of the Schio Shares after the Transaction Controlling Shareholders One vote per share. One vote per share. Not applicable, since Right to participate, in accordance with the proportion of shares held, in the allotment of bonus shares resulting from the incorporation reserves. of minimum annual dividend not less than 10% (ten year. Right to participate, in accordance with the proportion of shares held, in the allotment of bonus shares resulting from the incorporation reserves. of minimum annual dividend not less than 10% (ten year. Rights of the JSL Shares prior to the Transaction Controlling All Other Shareholders Shareholders Not applicable, since Not applicable, since All Other Shareholders Not applicable, since Not applicable, since Not applicable, since Rights of the JSL Shares after the Transaction Controlling All Other Shareholders Shareholders One vote per share. One vote per share. One vote per share. One vote per share. annual dividend of not less than 25% (twenty five year, adding or subtracting the following amounts: (i) annual dividend of not less than 25% (twenty five year, adding or subtracting the following amounts: (i) annual dividend of not less than 25% (twenty five year, adding or subtracting the following amounts: (i) annual dividend of not less than 25% (twenty five year, adding or subtracting the following amounts: (i)
Rights of the JSL Shares prior to the Transaction Controlling All Other Shareholders Shareholders the amount allocated to the legal reserve; and (ii) the amount allocated to the creation of reserves for contingencies and the reversal of the same created reserves during previous fiscal years. the amount allocated to the legal reserve; and (ii) the amount allocated to the creation of reserves for contingencies and the reversal of the same created reserves during previous fiscal years. Rights of the JSL Shares after the Transaction Controlling All Other Shareholders Shareholders the amount allocated to the legal reserve; and (ii) the amount allocated to the creation of reserves for contingencies and the reversal of the same created reserves during previous fiscal years. the amount allocated to the legal reserve; and (ii) the amount allocated to the creation of reserves for contingencies and the reversal of the same created reserves during previous fiscal years. 4. Evaluation of the Acquired Companies The evaluation of TGABC s net book value was prepared by Acal Auditores Independentes S/S, a company headquartered at Avenida Rio Branco, nº 181, sala 1802 (parte), City and State of Rio de Janeiro, CEP 20.040-07, registered with the Regional Accounting Board of Rio de Janeiro (CRC/RJ) under the number 4,080/O-9 and registered under the Corporate Taxpayer ID (CNPJ/MF) 07.377.136/0001-64, ( Appraisal Company ), with the reference date of December 31, 2010 and taking into account the criteria for the net equity book value, according to a valuation report issued by the Appraisal Company ( TGABC Valuation Report ). The evaluation of Schio's book value for the effective paying in of the Company was prepared by the Appraisal Company with the reference date of December 31, 2010 and taking into account the criteria for the net equity book value, according to a valuation report issued by the Appraisal Company ( Schio Valuation Report ). In addition, for the purposes of Article 264 of the Corporate Law, the Appraisal Company prepared valuation reports on the net book values of the Company and Schio, with the reference date of December 31, 2010 and taking into account the criteria of the book value at market prices ( PLM Valuation Reports and, together with the TGABC Valuation Report and the Schio Valuation Report, the Transaction Valuation Reports ).
The Appraisal Company and its professionals responsible for preparing the valuation reports for the Transaction state (i) that they have no direct or indirect interest in the Companies involved in the Transaction, nor does the Appraisal Company have any current or potential conflicting or shared interests with the controlling shareholders of any of the Companies, or with those of the minority shareholder(s) of any of the Companies, their respective partners, or any aspects of the operation itself or any other material circumstance that could characterize a conflict of interest, and (ii) that no controlling shareholder or manager of the Companies directed, limited, impaired or engaged in any act that has compromised or might compromise the access, utilization or collection of information, goods, documents or work methodologies relevant to the quality of their respective conclusions. All variations in book value occurring at the Acquired Companies and JSL prior to the execution date of the Transaction will be borne by the respective company. 5. Composition of JSL s Capital Stock Before and After the Acquisitions JSL s capital stock prior to the Transaction totals R$ 617,054,627.00 (six hundred and seventeen million, fifty four thousand, six hundred and twenty seven Brazilian reais), divided into 198,889,656 (one hundred and ninety-eight million, eight hundred and eighty-nine thousand, six hundred and fifty-six) common, registered, book-entry shares, with no par value. JSL s capital stock after the Transaction, given the acquisition of Schio, will total R$ 625,751,971.38 (six hundred and twenty-five million, seven hundred and fiftyone thousand, nine hundred and seventy-one Brazilian reais and thirty-eight centavos) divided among 201,329,600 (two hundred and one million, three hundred and twenty-nine thousand, six hundred) common, registered, book-entry shares, with no par value. JSL holds all of the shares representing TGABC's capital stock, as well as holding 87.5% of the shares representing the Schio s capital stock. TGABC and Schio do not own JSL shares. 6. Increase in JSL s Net Book Value The net book value of Schio to be acquired by the Company is R$ 8,697,344.38 (eight million, six hundred and ninety-seven thousand, three hundred and forty-four Brazilian reais and thirty-eight centavos), which is based on the Schio Valuation
Report, which takes into account the portion of Schio s net book value already accounted for at JSL as equity income. This amount will be allocated to the capital stock, increasing the value of the company s capital stock from R$ 617,054,627.00 (six hundred and seventeen million, fifty four thousand, six hundred and twenty seven Brazilian reais), divided among 198,889,656 (one hundred and ninety-eight million, eight hundred and eighty-nine thousand, six hundred and fifty-six) common shares to R$ 625,751,971.38 (six hundred and twenty-five million, seven hundred and fifty-one thousand, nine hundred and seventy-one Brazilian reais and thirtyeight centavos) divided among 201,329,600 (two hundred and one million, three hundred and twenty-nine thousand, six hundred) common shares, with the issuance of 2,439,944 (two million, four hundred and thirty-nine thousand, nine hundred and forty-four) common, registered, book-entry shares, with no par value, to be subscribed to by Schio's management, by the order of Joseph Schio, in accordance with Article 227, paragraph 2, of the Corporate Law, and paid for through the inclusion of the Schio s net book value among JSL s assets. 7. Statutory Adjustments The wording of the introduction of Article 5 of JSL's Bylaws will be altered in order to reflect the increase in capital resulting from approval of the Transaction, and will go into effect with the following, new wording: Article 5 The Company s capital stock after the Transaction, fully subscribed and paid in, totals R$ 625,751,971.38 (six hundred and twenty-five million, seven hundred and fifty-one thousand, nine hundred and seventy-one Brazilian reais and thirty-eight centavos) divided among 201,329,600 (two hundred and one million, three hundred and twenty-nine thousand, six hundred) common, registered, bookentry shares, with no par value. 8. Appointment of the Specialized Company Responsible for the Transaction s Valuation Reports The management of JSL appointed the Appraisal Company as the specialized company responsible for preparing the TGABC Valuation Report and Schio Valuation Report. This appointment must be ratified by JSL's shareholders at JSL's Special Shareholders' Meeting to examine the Protocols and Justifications. At the end of its appraisal, the Appraisal Company delivered to JSL the TGABC Valuation Report, annexed to the TGABC Protocol and Justification, and the Schio Appraisal Report, annexed to the Schio Protocol and Justification.
9. Corporate Acts and the Right to Withdraw The following corporate acts must be executed in order to the Transaction to come into effect: (a) (b) (c) A Special Shareholders Meeting by Schio to approve (i) the acquisition by JSL of Schio, in accordance with the terms and conditions of the Schio Protocol and Justification; and (ii) the execution, by Schio's management, of the acts necessary for the implementation of the cited acquisition, including JSL s capital increase subscription; TGABC s Partners Meeting to approve (i) the acquisition of TGABC by JSL, under the terms and conditions of the TGABC Protocol and Justification; and (ii) the execution, by TGABC s management, of the acts necessary for the implementation of the cited acquisition; A Special Shareholders Meeting by JSL to approve (i) the Transaction, under the terms and conditions of the Protocols and Justifications; (ii) the Protocols and Justifications; (iii) the ratification of the appointment of the Appraisal Company as being responsible for the appraisal of the net book values of the Acquired Companies, as well as the preparation of the TGABC Valuation Report and the Schio Valuation Report; (iv) the TGABC Valuation Report and the Schio Valuation Report; (v) the increase in JSL s capital stock with the issuance of 2,439,944 (two million, four hundred and thirtynine, nine hundred and forty-four) new common, registered, book-entry shares, with no par value; (vi) the subsequent alteration of Article 5 of JSL s Bylaws, aimed at reflecting the increase in its capital stock; and (vii) the execution, by JSL's management, of the acts necessary for implementing the Transaction. The Company s shareholders will not have withdrawal rights. 10. General Provisions The Company is currently Schio s majority shareholder, which is why the acquisition of Schio is subject to the provisions of Article 364 of the Corporate Law. With the conclusion of the Transaction, JSL will absorb the goods, rights, assets, obligations and responsibilities of the Acquired Companies, which will be fully eliminated.
The Protocols and Justifications, the Valuation Reports, and the management s proposal containing the information and documents required by CVM Instruction 481, of December 19, 2009, will be available on the websites of the CVM (www.cvm.gov.br), the BM&FBOVESPA (www.bmfbovespa.com.br), JSL s investor relations website (www.jsl.com.br/ri), and at its headquarters, Avenida Angélica, nº 2346, Consolação, in the City of São Paulo, State of São Paulo. The Schio acquisition was submitted for approval by the Brazilian Antitrust System. * * * São Paulo, December 13, 2011. Denys Marc Ferrez Executive Officer Administration, Finance and Investor Relations SP - 106843-00019 - 6982500v1