By Colin Kellaher
Bunge on Monday said it agreed to form a joint venture with BP PLC to create the second-largest bioenergy company in Brazil in terms of effective crushing capacity.
Bunge said it will receive cash proceeds of $775 million in the deal, including $700 million in respect of nonrecourse Bunge debt to be assumed by the venture and $75 million from BP.
The White Plains, N.Y., agribusiness company said the venture, to be called BP Bunge Bioenergia, will operate on a stand-alone basis and have 11 mills in Brazil. The venture will have 32 million metric tons of combined annual crushing capacity and the flexibility to produce a mix of ethanol and sugar, the company said.
Bunge said it will no longer consolidate its sugar and bioenergy operations in Brazil in its consolidated financial statements, instead accounting for its interest in the venture under the equity method.
Bunge said it will use proceeds from the transaction, which it expects to complete in the fourth quarter, to reduce debt, resulting in a stronger balance sheet and greater financial flexibility.
Write to Colin Kellaher at email@example.com