SAO PAULO Jan 16 French commodities company
Louis Dreyfus may sell the biomass energy plants of its
Brazilian subsidiary Biosev, which has struggled to
turn a profit in the local sugar and ethanol industry, a
newspaper said on Thursday.
Biosev's investor relations office said it is not currently
involved in a deal to sell its electric energy assets, which the
Valor Economico newspaper said were valued at 1 billion reais.
But the company did not discard the possibility that it might
consider the sale of existing plants or of future projects at
mills not currently generating electricity.
The paper reported that Biosev has contacted local and
international energy companies that may be interested in buying
its cogeneration plants, as it tries to generate capital after
failing to raise 500 million reais ($211 million) in a bond
offer in the last quarter of 2013.
Valor Economico did not name its sources.
Biosev, Brazil's second biggest sugar and ethanol producer
after Cosan, currently sells 1,000 megawatts/hour of
energy in long-term contracts at a price of 140 reais per
megawatt/hour at its thermoelectric plants that produce
electricity from burning bagasse, or sugar cane leftovers.
Louis Dreyfus, frustrated with the performance of
Biosev's results, shook up the management at its largest
subsidiary recently. Former Chief Executive Christophe Akli gave
way to Rui Chammas, the former head of Braskem, Latin
America's largest petrochemicals company. The company's chief
financial officer is also stepping down later this year.
The shakeup comes after several quarters of poor results
from Biosev. The company posted a loss of 245 million reais in
its second quarter that ended in September after bad weather
dented the company's sugar cane yields.
Biosev's potential sale of its energy assets comes as put
options that the company sold to get its 2013 initial public
offering off the ground near their expiration in April.
Holders of the options, which gives them the right to sell
Biosev shares at the initial price of the IPO, are deep in the
money and expected to exercise the puts. The strike price is
16.57 reais and shares are now trading at 10.16 reais.
Sources told Valor that Biosev has not been generating the
necessary cash flow "to stand on its own legs" without the help
of Louis Dreyfus, which has injected 1.2 billion reais in its
subsidiary in just the past year.
The potential sale of the company's biomass energy assets
comes at an opportune moment. The Brazilian government is
struggling to drum up new generation capacity for distributors
which need to cover a supply and demand gap for electricity
expected in the coming few years.