July 22 (Renewables Now) - US oilseed processing Bunge Ltd (NYSE:BG) said today it has reached an agreement with British oil firm BP plc (NYSE:BP) to create a 50/50 bioenergy joint venture (JV) in Brazil.
The new company, named BP Bunge Bioenergia, will focus on the production of ethanol and sugar as well as renewable power, using waste biomass from the sugar cane. The renewable energy will be used to power all its 11 sites and the surplus will be sold to the Brazilian power grid.
According to its press release, Bunge will receive USD 775 million (EUR 690.8m) in cash proceeds from this transaction. More specifically, the JV will assume USD 700 million of non-recourse debt at closing, while BP will make a payment of USD 75 million, subject to customary closing adjustments.
"This partnership with BP represents a major portfolio optimization milestone for Bunge which allows us to reduce our current exposure to sugar milling, strengthen our balance sheet and focus on our core businesses," stated Gregory A Heckman, Bunge's CEO.
The transaction is expected to be closed in the fourth quarter of 2019, as it is pending customary approvals, Bunge noted.
(USD 1 = EUR 0.89)