Miller Magazine Issue: 116 August 2019

26 NEWS MILLER / AUGUST 2019 Bunge and BP to create a leading bioenergy company Bunge, a leader in agriculture, food and ingredients, an- nounced an agreement with British energy company BP to form a 50:50 joint venture that will create a leading bioenergy company 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 strong- er 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 flexibil- ity 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 lo- cated 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 pow- er 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 effec- tive crushing capacity. Dev Sanyal, chief executive of BP Alternative Energy, said: “Biofuels have a key role to play in the energy tran- sition and Brazil is leading the way by developing this in- dustry 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 mar- kets. With our shared commitment to safety and sustaina- bility, the combination of BP and Bunge’s assets and exper- tise 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 Bra- zil’s growing demand for both biofuels and biopower.” 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 Ex- ecutive Officer (CEO). BP and Bunge will have equal rep- resentation on the Board of Directors. U.S. grain trader Bunge has agreed to form a 50:50 joint venture with global energy giant BP, that will create a leading bioenergy company in Brazil. The joint venture, to be called BP Bunge Bioenergia, will operate on a stand-alone basis, with a total of 11 mills.