Bunge Ltd., a White Plains-based agribusiness focused on sourcing, processing and supplying oilseed and grain products and ingredients, has teamed with the U.K.’s BP plc on a joint venture to create BP Bunge Bioenergia, a bioenergy company in Brazil.
Bunge stated that it will receive cash proceeds of $775 million in the transaction, with $700 million in nonrecourse Bunge debt to be assumed by the joint venture at closing and $75 million coming from BP.
BP Bunge Bioenergia will operate on a standalone basis and consist of 11 mills in Brazil’s southeast, north and midwest regions. The mills will produce a mix of ethanol and sugar with a combined crushing capacity of 32 million metric tons per year while generating renewable electricity fueled by the sugar cane waste biomass. The electricity will be used to power the new sites and the surplus electricity will be sold back to the Brazilian power grid.
“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,” Bunge CEO Gregory A. Heckman said. “We have a strong, committed partner in BP, as well as flexibility in the medium and long term for further monetization, with full exit potential via an IPO or other strategic route.”
BP and Bunge will have equal representation on the new company’s board of directors, with BP’s Mario Lindenhayn serving as executive chairman and Bunge’s Geovane Consul as CEO.