Brazil's Santelisa to invest $1.6 bln in mills
Wed Oct 3, 2007 4:05pm EDT
SAO PAULO, Oct 3 (Reuters) - Santelisa Vale, Brazil's No. 2 sugar and ethanol producer, said on Wednesday the group intends to invest around 3 billion reais ($1.64 billion) to build new mills and to expand its five existing ones.
The company, which resulted from a merger between Vale do Rosario and Santa Elisa groups, also plans to go public, possibly by the end of 2008.
"A large company is being created, with ambitious growth plans for the coming years," Santelisa's chief executive officer, Anselmo Lopes Rodrigues, said by telephone. Earlier he announced the conclusion of the merger process, which took eight months.
Santelisa's main shareholder is the Biagi family, with a 72 percent capital stake, followed by U.S. investment bank Goldman Sachs (GS.N: Quote, Profile, Research) with a 17 percent share.
Planned investments include 2.5 billion reais in mills being built by Companhia Nacional de Acucar e Alcool (CNAA), a company created by Santelisa and private equity firms Carlyle Group (CYL.UL: Quote, Profile, Research) and Riverstone Holdings LLC, among other investors.
Santelisa has a 28 percent share in CNAA, which is building three mills in Minas Gerais and another one in Goias.
Two of them will start operating next year and the other two in 2009. Each plant will process 2.5 million tonnes of cane per year and could be doubled in the future.
Santelisa also is investing in a new mill in Goias, together with Brazilian group Maeda, which should begin operations in April 2008. The initial cane crushing capacity of 2.5 million tonnes per year could be doubled by 2010.
Besides, it has plans to expand its Continental mill, in Sao Paulo, which came on stream this season, with a capacity to process 2.1 million tonnes per year.
Santelisa is the main shareholder in Crystalsev, which recently announced a joint venture with Dow Chemical Co. (DOW.N: Quote, Profile, Research), the largest U.S. chemical producer, to make plastic from sugar cane. Their facility is expected to begin production in 2011.
These actions should prepare Santelisa to go public, probably on the Sao Paulo Stock Exchange (.BVSP: Quote, Profile, Research), Rodrigues said.
"This is a very clear path for us, and we should move forward in this direction in the coming months -- in the next year for sure," Rodrigues said.
Before deciding on the merger with Santa Elisa, Vale do Rosario group rejected various takeover bids, from companies like Brazil's largest sugar and ethanol producer, Cosan (CSAN3.SA: Quote, Profile, Research), and agribusiness giant Bunge Ltd.(BG.N: Quote, Profile, Research).
Despite the decision of Vale do Rosario's minority shareholders at that time to fend off those bids and to buy the control of the company and merge with Santa Elisa, Rodrigues said the company is always "open to new partnerships", even with foreign companies.
"We are always receptive to good partners. We do not have any objection to new parterships as long they are interesting for both parts", he said.
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