The company consists of two sugar/ethanol mills with integrated co-generation facilities in Sao Paulo state in Southeast Brazil having a combined cane crushing capacity of 10.5 million tons of cane per annum (44,400tcd). In addition, Equipav has a co-generation capacity of 203MW.
The mills will be expanded to a combined capacity of 12.0 million tons (56,600tcd) per annum and 295MW with a capital expenditure of BRL218m. Cane supply comes from the cultivation of about 115,000Ha of land of which nearly two-third is farmed by the company with high level of mechanization for both planting and harvesting. The mills have access to the main ports of Santos and Paranagua, the company said.
SRSL said that this acquisition will multiply its presence in the Centre-South region of Brazil and enhance its competitiveness and size in the global sugar business. In November 2009, SRSL entered into an agreement to acquire Vale Do Ivai, a Brazilian sugar/ethanol production company.
That acquisition included two sugar/ethanol production facilities in the state of Parana, with a combined cane crushing capacity of 3.1 million tons of cane per annum and a shareholding in logistic assets including terminals for storage and loading of sugar and ethanol at the port of Paranagua.
SRSL will achieve (after closing adjustments) a majority stake of not less than 50.79%. The balance stake in the venture would be held by the founding Equipav group.
The deal is subject to approval of an acceptable debt restructuring package by the lenders to the company and certain other conditions customary to such transactions. Closing is expected in 40 days. Banco Itau, Brazil and Motilal Oswal Investment Advisors acted as the strategic and financial advisors to Shree Renuka. Veirano e Advogados Associados, Brazil and Crawford Bayley & Co. acted as legal advisors.
Narendra Murkumbi, managing director of SRSL, said: "This investment brings us closer to building a global sugar and ethanol business combining the most cost-efficient and scalable production areas in the world alongwith a leading presence in the largest ethanol and sugar markets of the world.
"Equipav has one of the biggest and most vertically integrated, modern operations in Brazil, with economies of scale and opportunities to form a cluster of contiguous mills; hence the partnership with Grupo Equipav."
