LLX Logistica : Material Fact - MTO - Notice from the Controlling Shareholder

Prumo Logística S.A. ("Company") (Bovespa: PRML3), in accordance to article 12 of CVM Rule n. 358, of January 3rd, 2002, as amended, informs to its shareholders and the market in general that, on this date, it has received from EIG Energy XV Holdings (Flame), LLC and EIG LLX Holdings S.à.r.l. a notice pursuant to the transcription below:

January 13, 2017

To

Prumo Logística S.A.

Rua do Russel, 804 - 5th floor

Rio de Janeiro, RJ 22210-010

At.: Mr. Eugenio Figueiredo, CFO and Investor Relations Executive Officer

Ref.: Public Offer

Dear Sir,

EIG Energy XV Holdings (Flame), LLC, a Delaware limited liability company duly registered and validly existing in accordance with the laws of Delaware, United States, with its headquarters located at 1700 Pennsylvania Avenue, N.W., Suite 800, Washington, DC 20006, enrolled with the Brazilian Taxpayer's Registry (CNPJ/MF) under n. 21.530.014/0001-97, ("EIG Flame"), and EIG LLX Holdings S.à.r.l, a limited liability company duly registered and validly existing in accordance with the laws of Luxembourg, with its headquarters located at 2 Boulevard Konrad Adenauer, L-1115 Luxembourg, enrolled with the Brazilian Taxpayers Registry (CNPJ/MF) under n. 18.916.230/0001-60 ("EIG LLX" and, jointly with EIG Flame, "EIG"), together, the controlling shareholders of Prumo Logística S.A. ("Company" or "Prumo" and "Controlling Shareholders", respectively), in connection with the public offer for the acquisition of the outstanding shares issued by the Company for the cancelation of its registration in category A, as well as its withdrawal from the Novo Mercado Special Corporate Governance listing segment of the BM&FBovespa S.A. - Stock, Commodities and Futures Exchange ("Novo Mercado" and "Public Offer", respectively) hereby inform you the following:

EIG has analyzed and reviewed the appraisal report prepared by Brasil Plural S.A. Banco Múltiplo ("Brasil Plural") in connection with the Public Offer. The report indicates that the economic and fair market value of the Company's shares is within the range of R$9.98 to R$11.03 per share. In EIG's view, the "fair value" indicated in the appraisal report does not reflect status of the Company and adopts certain premises that lack credibility, as demonstrated herein.

As stated in the appraisal report, Brasil Plural considered a discounted cash flow methodology as most suitable to capture valuation of Prumo, which indicates a value of R$10.51 per share. However, this methodology relies on project revenue growth that is subjective and highly speculative in nature. Further, the methodology relies on Brasil Plural's ability to assess the risk of such projections and apply appropriate discount rates, another highly subjective exercise. As industry experts and as the controlling shareholder intimately familiar with Prumo's operations, EIG expressly disagrees with several of the premises used in the report. For example, the entire difference between the valuation report and EIG's view of the fair price at R$6.69 per share can be accounted for by two assumptions, for which Brasil Plural ignored Prumo management's guidance or neglected to appropriately consider current market conditions:

• First, Brasil Plural ignored Prumo management's view regarding a reasonable assumption as to the future volumes of crude oil to be transhipped at Açu Port. Without any notable oil & gas industry expertise or Brazilian oil transhipment market expertise to justify the assumption, the view adopted by Brasil Plural for this issue - which, again, ignores Prumo's own assessment - can account for up to R$2.00 per share of value by EIG's calculations.

• Second, it is EIG's view that the risk of Açu Port's land leasing business - which is reflected in the discount rate assumptions used in the valuation report - has not been properly assessed. To illustrate, Brasil Plural has chosen a discount rate to calculate the value of this particular business unit which is nearly equivalent to CDI Prime Lending rates in Brazil. While EIG certainly believes that this business will grow in the future, we are realistic that it is an inherently risky business which attracts a relatively high cost of capital. The risk of this business unit is proven as it has experienced no significant growth over the past two years due in part to the impacts of the Brazilian financial crisis. Despite this obvious display of risk, Brasil Plural chose a discount rate for this business unit which implies they believe that its future growth is so certain that it has similar risk as depositing money in the bank. EIG views this as an unrealistic assumption by Brasil Plural which may have manipulated the valuation by up to R$2.00 per share by EIG's calculations.

As demonstrated, the difference between EIG's view of fair price at R$6.69 per share and Brasil Plural's view of R$10.51 per share can be accounted for almost entirely by these two assumptions, both of which EIG entirely disagrees with. More disturbing to EIG, Brasil Plural chose to break from management guidance and the market without reasonable justification..

Further, to achieve Brasil Plural's view of "fair price", the valuation report suggests that the Company will incur over R$6.0 billion in future capital expenditures. This assumption is not compatible with the available capital of the Company and therefore implies significant future equity investment from shareholders. It is common knowledge that the Company has continuously requested funds for its considerable levels of CAPEX and that bank financing is scarce. For a minority shareholder to expect to receive R$10.51 per share, EIG would suggest this inherently assumes that, absent a Public Offer, the minority shareholders would be willing to financially support the Company with new capital in the future in a manner that is not consistent with the results of the Company's capital increases in the past. For instance, since 2013 the Company's equity needs have been provided almost exclusively by EIG, through the investment of more than R$2.3 billion in primary capital. The minority shareholders, which have had the opportunity to participate in each capital increase, have contributed slightly over 10% of the Company's equity capital needs during this period. Therefore, EIG has funded nearly 90% of the Company's equity capital needs despite its original ownership of approximately 51%. This track record proves that Prumo's listing and the minority shareholders are not a reliable source of capital to support the Company's future financial needs.

In addition, Brasil Plural's view of "fair value" is simply disconnected from the reality of the market. In 2016, the shares traded below R$7.00 per share for a majority of trading sessions, including during the "run-up" periods caused by activist minorities speculating on EIG's Public Offer. EIG disagrees with Brasil Plural's lack of consideration for the market price. More definitive evidence of the market setting the fair price occurred during the last capital increase, which was approved on July 23, 2016 and was executed at a subscription price of R$6.69 per share. The offering was predominantly subscribed to by EIG while most minority rights were left unsubscribed. If Brasil Plural's calculated price of R$10.51 per share were actually the "fair price" in accordance with the market, then by definition minority shareholders should have subscribed at to their available rights at R$6.69 per share. EIG disagrees with Brasil Plural's notion that a minority shareholder that failed to support the company at a fair price of R$6.69 per share deserves to be paid R$10.51 per share in a Public Offer.

It is also worth noting the extraordinarily low demand in the market for the Company's shares, as calculated by daily trading volumes on the exchange. In the event the Public Offer is canceled, historical trading data would suggest that it is highly unlikely that any shareholder would have an opportunity to sell its shares in the market at the "fair price" indicated by Brasil Plural. This is particularly relevant with respect to the most significant minority shareholders. Mubadala and Itaú, together hold over 43 million shares of the Company. Considering that the average trading volumes in 2016 were less than 240,000 shares per day, Prumo's listing currently provides insufficient liquidity for such shareholders to sell their shares in the market. These two positions alone are greater than half of all 2016 trading volumes. EIG holds the view that it would be impossible for either Itaú or Mubadala to liquidate their shares on the market with suffering an extraordinary discount and driving the share price down to depressed levels.

EIG views Mubadala's and Itaú's stakes as long-term investments in Prumo. Further, it is EIG's philosophy that such significant shareholders have a responsibility to financially support the Company. Mubadala has demonstrated its financial commitment to Prumo with its participation in the most recent capital increase. Itaú, however, has not financially contributed to the Company since EIG has been the controlling shareholder. EIG's view is that it is irrational to reward a shareholder such as Itaú that has no liquidity for its shares in the market at a valuation that inherently requires future investment that they have demonstrated they are not willing to provide.

Having stated its disagreement with the results of Brasil Plural's valuation report, EIG still believes that it is in the best interest of Prumo to be delisted due to its failure to attract equity capital in the listed market to fund the Company's ongoing financial needs. For this reason, EIG has been in conversations with Mubadala and Itaú and EIG is willing to proceed with the Public Offer for the price of R$ 10.51 (ten reais and fifty one cents) per share, only if Itaú and Mubadala accept (i) to approve the Company's cancelation of registration as a publicly-held company and (ii) commit to remain as shareholders of the Company after the Public Offer (agree not to tender their shares in the auction).

Finally, EIG believes that time is of the essence in regards to the Public Offer when considering the upcoming capital requirements of Prumo. The schedule has continuously been under threat of obstruction by activist minority shareholders without merit. Therefore, in the event EIG's stated conditions are met and the Public Offer is launched, EIG will only proceed at a price of R$ 10.51 (ten reais and fifty one cents) per share if there is no request from minority shareholders for a second appraisal report, pursuant to Article 24 of CVM Rule no. 361/2002 and Article 4th-A of Law 6.404/76.

Yours sincerely,

______________________________________________

EIG LLX HOLDINGS S.Á.R.L