Sugar and Ethanol Company with Sugarcane Plantations in Brazil
Mumbai, 11th November, 2009
Shree Renuka Sugars Limited (“SRSL”) is pleased to announce that it has entered into Definitive Agreements for the acquisition of Vale do Ivaí S.A. Açúcar e Álcool (“VDI”), a Brazilian sugar and ethanol production company. The acquisition includes two sugar and ethanol production facilities located in the Southern State of Parana with a combined cane crushing capacity of 3.1 million tons per annum. In addition, VDI holds strategic stakes in several logistics assets including terminals for storage and loading of sugar and ethanol at the port of Paranagua. Larger part of the sugarcane requirements at VDI are met through its own cultivation of more than 18,000 Ha of land on long lease. VDI has currently a third production facility in the State of Minas Gerais which shall be spun off to the current shareholders of VDI as a consideration for the acquisition.
The Enterprise Value of VDI is USD 240 million. SRSL shall acquire 100% of the equity capital of VDI for approximately USD 82 million and the balance is the assumed debt which is to be repaid over 8 years. The acquisition has received approval of leading creditors of VDI and the other remaining conditions are expected to be completed over the next 45 days. Motilal Oswal Investment Advisors is the Strategic Advisor to SRSL for this acquisition.
Brazil is the largest producer and exporter of sugar with India being the largest consumer of sugar in the world. The acquisition provides Shree Renuka Sugars Ltd. with an entry opportunity in Brazil and it plans to grow and expand its production base in the Centre-South region of Brazil to enhance its competitiveness in the global sugar business.