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IndoAgri Brazil JVs propose to reorganise and consolidate sugar assets, operations

INDOFOOD Agri Resources' joint ventures (JVs) have proposed to reorganise and consolidate their sugar assets and operations in Brazil into one legal structure.

The joint ventures are Companhia Mineira de Açúcar e Álcool Participações (CMAA) and Canápolis Holding, the agribusiness group said in a bourse filing on Thursday.

Together, they have an annual cane crushing capacity of 8.8 million tonnes and own, in total, 9,374 hectares (ha) of freehold land.

IndoAgri Brazil Participações - which is wholly owned by IndoAgri, has a 35 per cent stake in CMAA. The two other joint-venture partners are Ápia SP Participações and JFLIM Participações, which own 35 per cent and 30 per cent in CMAA respectively.

JFLIM Participações is a 50:50 joint venture between Marseille FIP and Rio Grande Investment, a member of Salim Group.

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Meanwhile, Canápolis is a 50:50 joint venture between IndoAgri Brazil and JF Investmentos.

CMAA has two wholly-owned subsidiaries Vale do Tijuco Açúcar e Álcool (UVT) and Vale do Pontal Açúcar e Etanol (UVP), which are principally engaged in the cultivation and processing of sugar cane for the production and marketing of ethanol and sugar. They each operate one mill in Minas Gerais in Brazil and also own 2,481 ha and 1,012 ha of freehold land respectively.

Meanwhile, Canápolis has two wholly-owned subsidiaries - Canápolis Açúcar e Etanol (UCP) and Terra Forte Empreendimentos e Participações. UCP operates a sugar mill in Minas Gerais, while Terra Forte owns 5,881 ha of freehold land.

IndoAgri said the mills owned by UVT, UVP and UCP are in close proximity to each other, forming a "strong cluster" enabling operating and management synergies.

CMAA and Canápolis are proposing a merger which will see the latter's subsidiaries UCP and Terra Forte transferred to CMAA. Livakovic Participações - a 50:50 joint venture between Marseille FIP and Rio Grande - will also be transferred to CMAA.

Livakovic Participações owns 5,984 ha of planted sugarcane on third-party land with an average distance of 20 kilometres from UVT's mill. Both entities will subsequently be merged.

The proposed reorganisation and consolidation will also see the splitting of sugarcane mill operations and land ownership. A total of 3,493 ha of freehold land owned by UVT and UVP will be transferred to CMAA at their book value. CMAA will then transfer the land to Terra Forte.

When the proposed reorganisation is completed, CMAA will own all the mills held through UVT, UVP and UCP, while a newly-incorporated entity called Strebinger Participações owns all the freehold land through Terra Forte. CMAA will transfer all its shares in Terra Forte to Strebinger Participações.

IndoAgri Brazil will own a 36.21 per cent stake each in CMAA and Strebinger Participações.

Shares of mainboard-listed IndoAgri closed flat at 29.5 Singapore cents on Wednesday.

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