Renuka Sugars to pay 25% less for Brazil buyout

Date 24-Jun-2010        Source The Hindu        Reporter Our Bureau        News Id 198

Shree Renuka Sugars has renegotiated and sealed a deal to bring down the cost of its acquisition of Brazilian company Equipav SA Acucar e Alcool (Equipav AA) by 25 per cent to Rs 1,151 crore. The renegotiated deal reflects the bearish sentiment in the sugar sector owing to a sharp fall in global prices. According to the new terms, the company will buy 50.34 per cent, and not 50.79 per cent as agreed upon in February. The deal values Equipav AA at $1.147 billion, according to a press release. Equipav has two modern sugar and ethanol mills with integrated cogeneration facilities in Sao Paulo, South-east Brazil, with a combined crushing capacity of 10.5 million tonnes (mt) of cane a year (44,400 tcd). It also has a cogeneration capacity of 203 MW. The mills will be expanded to a combined crushing capacity of 12 mt and cogeneration capacity to 295 MW with an investment of Rs 562 crore. Besides capital expenditure, a part of the amount being paid will be used to repay debt and increase the working capital, the company said. As ofDecember 2009, Equipav had a debt of Rs 3,821 crore. “The Equipav investment brings Shree Renuka 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 company said. This deal is the company’s second acquisition in Brazil this year. In March, it had bought out Vale do Ivai S A Acuar e Alcool, a sugar and ethanol producer with an annual capacity of 3.1 mt. The company’s shares on the BSE were down one per cent to Rs 68 on Wednesday.