Shree Renuka Sugars Set To Take Over Brazil Unit

Shree Renuka Sugars Ltd., said it had signed a revised agreement to acquire a controlling stake in Brazil's Equipav S.A. Acucar e Alcool.

As per the revised terms, the company would be investing R$450 million ($250 million or Rs.1,151 crore) in Equipav, compared to the R$600 million ($329 million or Rs.1,530 crore) envisaged earlier.

This values Equipav at an enterprise value of R$2,064 billion ($1.147 billion). Post-closure, Renuka Sugars will hold a majority stake of 50.34%.

Equipav AA consists of two very large and modern sugar/ethanol mills with integrated co-generation facilities in Sao Paulo state in Southeast Brazil having a combined cane-crushing capacity of 10.5 million tons per annum (44,400 tcd). It also has a co-generation capacity of 203-MW. The mills will be expanded to a combined capacity of 12 million tons (56,600 tcd) per annum and 295-MW with a capital expenditure of R$218 million.

Cane-cultivation comes from the cultivation of around 115,000 Ha of land, of which around 2/3rd are cultivated by the company with very high level of mechanization for both planting and harvesting. The mills have easy access to the main ports of Santos and Paranagua.

The company said the investment would fund capital expenditure as mentioned above, partly to clear debt and increase the working capital. The remaining debt will get repaid over a period of ten years.

The Equipav investment brings Shree Renuka Sugars closer to building a global sugar and ethanol business, combining the most cost-efficient and scalable production areas in the world along with a leading presence in the largest ethanol and sugar markets of the world.

The acquisition also significantly multiplies Shree Renuka Sugar's presence in the Centre-South region of Brazil and enhances its competitiveness and size in global business, it said.

Group Equipav is one of the large conglomerates in Brazil, holding equity stakes in over 20 companies, besides the above which are present in highway concessions, bus terminals, water and sewage, electricity-generation, mortar-production, waste- management and maintenance of green areas. The group is present in sugar and ethanol sectors since 1980.

In March, Shree Renuka Sugars acquired Vale do Ivai S.A. Acucar e Alcool, a Brazilian company producing sugar and ethanol. The acquisition included two sugar-and-ethanol-production facilities located in the southern state of Parana with a combined crushing capacity of 3.1 million tons per annum and a share-holding in logistic assets, including terminals for storage and loading of sugar and ethanol at Paranagua.

source: rttnews