Thursday, September 17, 2015

Cargill near buy two more power plants

The Black River, the resource manager American multinational Cargill, are in advanced negotiations to acquire the two plants of the São Paulo group Antonio Ruette, Ruette Group known as Agribusiness. The due diligence has been virtually completed, and the focus now is to define the last financial details of the deal, which should be around $ 700 million. The Group Ruette arrived asking for judicial reorganization in February, but changed his mind and signed in March, a deal with creditors who foresaw the "delivery" of the plants for sale and payment of debts.
At the time, when the plants were put up for sale, beyond the Black River, four other players signed confidentiality agreements and entered the dispute-the Manager Brookfield and the sucroalcooleiras Nardini, Guarani and Santa Isabel. But the proposal of Black River's which was accepted. As it was found the value, the American Manager put on the table, in all $ 680 million, being R $ 530 million in assumption of debt and $ 150 million in investments. The proposal made by the Black River to incorporate debt of $ 530 million already considers a 30% discount (on a total liabilities of about $ 750 million). Banks that opt for this percentage of reduction will have a term of ten years, with two grace period, to receive their part, according to a source familiar with the operation. The American also proposed holding cash lenders who accept a discount of 50% of the debt.
Right now, the banks and the Black River are sewing the last details of the deal and setting the final value of the acquisition. "It's part of the game: the Black River will try to download the value, as well as the banks will try to raise it," said the source. There is no deadline set for the completion of negotiations, since it is a heterogeneous group formed by about 30 creditor institutions, with decision-making different profiles. Beyond Santander, main creditor and Attorney-in-fact of the sale of the plants, are in the American Amerra Fund Trading Opportunity, the Dutch Bank Agri ABN Amro and ED & F Man Capital Markets, in addition to BTG Pactual, Banco BBM and Banco do Brazil.
With two industrial units in the State of São Paulo, which add up to a grinding of 3.7 million tons of sugar cane per crop, Ruette group caused great unease in the financial markets when it filed its request for reorganization. Months before, he had received injections of new funds and banks, and no delinquencies. In addition, on the eve of the Justice, suspended export contracts of sugar that had been given to guarantee some loans.
In the end, the two sides sat down and signed an agreement that "armored" the Group of charges and protests (by the creditors signatories) for 180 days, extendible for a further 180. Two banks did not accept the agreement and move goods enforcement actions against the group. Between them, the French BNP Paribas, that snake in Justice r $ 50 million from the group, which has the Ruette legal advice from the Office Dias Carneiro Advogados. This creditor still has the possibility of adhering to the agreement or proceed with the implementation of goods on Justice.
If the acquisition of the plants of the group Black River is implemented Ruette, the operation of the assets will be in charge of the area of sugar and ethanol from Cargill in Brazil. Wanted by the report, the multinational answered no would comment the matter "until the completion of the process."
In Brazil, the American holds participation in three plants, totaling in 2014/15 a grinding of 9.2 million tons of sugar cane. In Sao Paulo, has 63% Cevasa, and in two units in Goias that runs in partnership with the SJC, Bioenergy has 50%. The multi also provides complete in 2016 the expansion of ethanol production capacity in one of the lines from Goiás from plants using corn as the raw material during the off season of sugarcane.
The dollar appreciated against real has been an attractive for purchase of assets in Brazil, according to experts. In the case of this deal, if the Black River to acquire the two plants of the Ruette for $ 680 million (us $ 530 million, plus the investment of r $ 150 million), the management company will be paying a multiple of R $ 180 per ton of cane processed by the group. For a foreign investor, such as the Black River, this acquisition in dollar (the exchange of R $ 3.80), was a multiple of $ 48 per tonne – well below the multiple of $ 100/tonne practiced in recent years in the segment.
Valor Economico News Item translated automatically
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