Noble Group to buy two Brazil ethanol mills for $940 mil

The Noble Group, Asia's largest commodities trading group, has agreed to buy two ethanol refineries from Brazil's Cerradinho Group for Reais 1.6 billion ($940 million) of cash and debt, the Valor Economico newspaper reported Thursday.

The two ethanol plants in Brazil's Sao Paulo state have the capacity to process 7.6 million mt/year of sugarcane and will be paid for with Reais 600 million of cash and the assumption of Reais 1 billion of debt, the paper said.

The capacity of the plants is about 1.4% of the annual cane crush in Brazil's principal growing region, according to data from Unica, Brazil's main sugarcane growers group.

Brazil is the world's largest exporter of ethanol and second largest ethanol market after the US.

If completed, the purchase will increase Noble's Brazilian sugarcane crushing capacity by 84% to 16.6 million mt/yr, according to Noble's website.

Noble already has two sugarcane mills in Sao Paulo state that can crush about 9 million mt/yr of cane. The mills also sell electricity to Brazil's power grid.

Noble will conduct due diligence work to confirm the state of the Cerradinho operations over the next several months before it completes the purchase, Valor said.

Valor reported that Cerradinho plans to transfer Reais 300 million of debt related to the plants being purchased by Noble to its Porto das Aguas, Brazil unit in Brazil's state of Goias.

In November, the Estado de Sao Paulo newspaper reported that BP made a Real 800 million ($471 million) bid for 50% of Cerradinho.

Catunduva, Brazil-based Cerradino's Sao Paulo press office declined to comment on the Valor report or say if Noble is in talks with the company.

The press office said that Cerradinho is seeking a partner as part of efforts begun in December 2009 to reduce and reorganize its debt.

Valor reported that Cerradinho plans to transfer Reais 300 million of debt related to the plants being purchased by Noble to its Porto das Aguas, Brazil unit in Brazil's state of Goias.

source: platts