Bunge Limited , a leader in agriculture, food and ingredients, announced an agreement with BP plc to form a 50:50 joint venture that will create a leading bioenergy company in Brazil.
The joint venture, to be called BP Bunge Bioenergia, will operate on a stand-alone basis, with a total of 11 sites located across the Southeast, North and Midwest regions of Brazil. With 32 million metric tonnes of combined crushing capacity per year, the joint venture will have the flexibility to produce a mix of ethanol and sugar. The renewable energy generated from biomass will be used to power all its 11 sites and the surplus will be sold to the Brazilian power grid.
Bunge Limited will receive cash proceeds of $775 million in the transaction, comprising $700 million in respect of non-recourse Bunge debt to be assumed by the joint venture at closing, and $75 million from BP, subject to customary closing adjustments, the report stated.
“This partnership with BP represents a major portfolio optimization milestone for Bunge which allows us to reduce our current exposure to sugar milling, strengthen our balance sheet and focus on our core businesses,” stated Gregory A Heckman, Bunge’s CEO.
Dev Sanyal, chief executive of BP Alternative Energy, said: “Biofuels have a key role to play in the energy transition and Brazil is leading the way by developing this industry at scale. In one step, this agreement will allow BP to significantly grow the size, efficiency and flexibility of our biofuels business in one of the world’s major growth markets.”
Closing of the transaction is expected in the fourth quarter of 2019, subject to customary conditions, including receipt of required regulatory approvals, the company stated.
Itaú BBA is acting as exclusive financial advisor to Bunge, and Lefosse Advogados is acting as legal counsel.
