Business
Investment sale and cost redu
Investment sale and cost redu.
About this update from Beacon Energy Plc
[{"type":"text","content":"\n RNS Number : 3598Y Clean Energy Brazil PLC 02 September 2009 \n \n2 September, 2009\n\nClean Energy Brazil PLC\n('CEB' or the 'Company')\n\nUsaciga sale and CEB cost reduction measures\n\nSale of Usaciga\n\nClean Energy Brazil PLC, an investment company focused on Brazil's sugar cane/ethanol industry, announces that it has sold its 49% shareholding in Usaciga Acucar, Alcool e Energia Electrica Ltda. ('Usaciga') to Agrocana Participacoes Ltda, the 51% owner of the business, for US$8.7 million. The consideration will be payable in cash as follows: (i) US$5.8 million through the immediate release of this amount from an escrow account already held by CEB and (ii) US$2.9 million due by March 2010. Usaciga's liabilities are estimated to be approximately US$185 million in total. It is intended that the net sale proceeds will be returned to shareholders in due course as part of the ongoing process of returning available funds. \n\nBackground\n\nThe Usaciga Group comprises an operational sugar mill located in Cidade Gaucha, with a cane crushing capacity of 2.3 million tones, and a partly-developed greenfield project at Rio Parana together with minority shareholdings in certain sugar terminal and trading businesses.\n\nAs previously announced, due primarily to the financial burden of high debt levels, industry/market conditions and the liquidity crisis, Usaciga has encountered significant trading and debt servicing problems and CEB has explored a number of strategic options for this investment over a protracted period. Several alternatives were evaluated in detail before the decision to sell was reached. Usaciga was unable to attract further equity investment due principally to the liquidity squeeze, and no viable solution was found to alleviate the debt burden of the business. Bank of America Merrill Lynch acted as advisor to CEB in relation to the sale.\n\nNotwithstanding the recent strength of the sugar futures market, the relatively low profitability of ethanol together with the continued shortage of credit for most of the industry and the volatility in the foreign exchange market, mean that the sector continues to face significant challenges.\n\nUsaciga's 2008/09 crop season resulted in an estimated net loss of ...