Bunge and BP complete formation of BP Bunge Bioenergia joint venture in Brazil
US-headed Bunge Ltd and BP plc have announced that they have completed the formation of BP Bunge Bioenergia, the Brazilian bioenergy joint venture that combines their Brazilian bioenergy and sugarcane ethanol businesses. BP Bunge Bioenergia is now the second-largest operator by effective crushing capacity in the Brazilian bioethanol market.
Announced in July 2019, the BP Bunge Bioenergia joint venture will operate on a stand-alone basis, with a total of 11 mills located across the Southeast, North and Midwest regions of Brazil. With 32 million tonnes of annual combined crushing capacity, the joint venture will have the flexibility to produce a mix of ethanol and sugar.
It will also generate renewable electricity – fuelled by waste biomass from the sugarcane – through its cogeneration facilities to power all its sites and sell surplus electricity to the Brazilian power grid.
BP and Bunge’s assets are largely complementary, with sites in five Brazilian states including three in the key region of São Paulo. The combined business will be ranked as the second-largest player in the industry in Brazil by effective crushing capacity.
As part of the transaction, Bunge received cash proceeds of US$775 million, comprising of US$700 million of non-recourse Bunge debt that was assumed by the joint venture at closing, and US$75 million from BP, before customary closing adjustments.
The proceeds were used to reduce outstanding indebtedness under the Company’s credit facilities. The non-recourse debt was arranged by a syndicate of banks, led by Sumitomo Mitsui Banking Corporation, ABN Amro Bank N.V., and ING Bank N.V.
Itaú BBA acted as exclusive financial advisor to Bunge, and Lefosse Advogados acted as legal counsel.