WHITE PLAINS, N.Y.,
July 22, 2019 /PRNewswire/
-- Bunge Limited (NYSE:BG) ("Bunge" or "the Company"), a
leader in agriculture, food and ingredients, today announced an
agreement with BP plc (NYSE:BP) to form a 50:50 joint venture that
will create a leading bioenergy company (the "joint venture") in
Brazil, one of the world's largest
fast-growing markets for biofuels.
Bunge will receive cash proceeds of $775
million in the transaction, comprising $700 million in respect of non-recourse Bunge
debt to be assumed by the joint venture at closing, and
$75 million from BP, subject to
customary closing adjustments. The proceeds will be used to
reduce outstanding indebtedness under the Company's credit
facilities, resulting in a stronger balance sheet and greater
financial flexibility.
The deal progresses Bunge's strategy to optimize its portfolio.
Gregory A. Heckman, Bunge's Chief
Executive Officer, said, "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. 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."
The joint venture, to be called BP Bunge Bioenergia, 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 metric tonnes of
combined crushing capacity per year, 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
sugar cane - 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 the second
largest player in the industry in Brazil by effective crushing capacity.
Dev Sanyal, chief executive of BP Alternative Energy, said:
"Biofuels have a key role to play in the energy transition and
Brazil is leading the way by
developing this industry at scale. In one step, this agreement will
allow BP to significantly grow the size, efficiency and flexibility
of our biofuels business in one of the world's major growth
markets. With our shared commitment to safety and sustainability,
the combination of BP and Bunge's assets and expertise will allow
us to improve performance, develop options for growth and generate
real value. BP Bunge Bioenergia will be well-placed to play a
significant part in meeting Brazil's growing demand for both biofuels and
biopower."
Following completion, the aim is for BP Bunge Bioenergia to
generate significant operational and financial synergies, including
through scale efficiencies and by applying best practices,
optimised technologies and operational capabilities across all the
assets of the new business.
The new business is expected to be headquartered in Sao Paulo. Mario Lindenhayn from BP will be
Executive Chairman, Geovane Consul
from Bunge, will be Chief Executive Officer (CEO). BP and Bunge
will have equal representation on the Board of Directors.
Transaction Summary
- 50:50 joint venture between BP and Bunge's Brazilian sugar and
bioenergy production businesses.
- $775 million of total cash
proceeds to Bunge from the transaction.
- Joint venture will operate on a stand-alone basis; and upon the
closing of the transaction, Bunge will no longer consolidate its
sugar and bioenergy operations in Brazil in its consolidated financial
statements. Bunge will account for its interest in the joint
venture under the equity method of accounting.
Approvals and Closing Timeline
The transaction has been unanimously approved by the Board of
Directors of Bunge. Closing of the transaction is expected in the
fourth quarter of 2019, subject to customary conditions, including
receipt of required regulatory approvals.
Advisors
Itaú BBA is acting as exclusive financial advisor to Bunge, and
Lefosse Advogados is acting as legal counsel.
About Bunge Limited
Bunge (www.bunge.com, NYSE: BG) is a world leader in sourcing,
processing and supplying oilseed and grain products and
ingredients. Founded in 1818, Bunge's expansive network feeds and
fuels a growing world, creating sustainable products and
opportunities for more than 70,000 farmers and the consumers they
serve across the globe. The company is headquartered in
New York and has 31,000 employees
worldwide who stand behind more than 360 port terminals, oilseed
processing plants, grain silos, and food and ingredient production
and packaging facilities around the world.
Website Information
We routinely post important information for investors on our
website, www.bunge.com, in the "Investors" section. We may use this
website as a means of disclosing material, non-public information
and for complying with our disclosure obligations under Regulation
FD. Accordingly, investors should monitor the Investors section of
our website, in addition to following our press
releases, SEC filings, public conference calls,
presentations and webcasts. The information contained on, or that
may be accessed through, our website is not incorporated by
reference into, and is not a part of, this document.
Cautionary Statement Concerning Forward-Looking
Statements
This press release contains both historical and forward-looking
statements. All statements, other than statements of historical
fact are, or may be deemed to be, forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements are not based on
historical facts, but rather reflect our current expectations and
projections about our future results, performance, prospects and
opportunities. We have tried to identify these forward-looking
statements by using words including "may," "will," "should,"
"could," "expect," "anticipate," "believe," "plan," "intend,"
"estimate," "continue" and similar expressions. These
forward-looking statements include, among others, statements
regarding the expected synergies and other benefits of the
transaction, expected proceeds and use of proceeds from the
transaction, expected accounting treatment of the transaction,
prospective business performance and opportunities of the joint
venture and the expected timing of completion of the
transaction. These forward-looking statements are subject to
a number of risks, uncertainties and other factors that could cause
our actual results, performance, prospects or opportunities to
differ materially from those expressed in, or implied by, these
forward-looking statements. The following important factors, among
others, could cause actual results to differ from these
forward-looking statements: the ability and timing to obtain
regulatory and other approvals and satisfy other closing conditions
to complete the transaction; the ability to effectively integrate
the combined businesses and obtain cost savings and other synergies
within expected timeframes; the ability to retain employees and
management; higher than expected operating costs and potential
business disruption; how customers, suppliers and employees will
react to the transaction; industry conditions, including
fluctuations in supply, demand and prices for sugar, ethanol and
electricity; fluctuations in energy and freight costs and
competitive developments; the effects of weather conditions; global
and regional agricultural, economic, financial and commodities
market, political, social and health conditions; the outcome of
pending regulatory and legal proceedings; changes in government
policies, laws and regulations affecting the sugar and ethanol
business, including agricultural and trade policies, tax
regulations and biofuels legislation; and other factors affecting
our business generally. The forward-looking statements included in
this release are made only as of the date of this release, and
except as otherwise required by federal securities law, we do not
have any obligation to publicly update or revise any
forward-looking statements to reflect subsequent events or
circumstances.
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SOURCE Bunge Limited