Bunge to Form Bioenergy Firm with BP

Bunge Ltd. announces an agreement with BP to form a 50:50 joint venture that will create a leading bioenergy company in Brazil, one of the world’s largest fast-growing markets for biofuels.

Bunge will receive cash proceeds of $775 million in the transaction, comprising $700 million in respect of non-recourse Bunge debt to be assumed by the joint venture at closing, and $75 million from BP, subject to customary closing adjustments. The proceeds will be used to reduce outstanding indebtedness under the Company’s credit facilities, resulting in a stronger balance sheet and greater financial flexibility

The deal progresses Bunge’s strategy to optimize its portfolio.

"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," says Gregory A. Heckman, Bunge’s CEO. "We have a strong, committed partner in BP, as well as flexibility in the medium and long term for further monetization, with full exit potential via an IPO or other strategic route.”

The joint venture, to be called BP Bunge Bioenergia, will operate on a stand-alone basis, with a total of 11 mills located across the Southeast, North and Midwest regions of Brazil. With 32 million metric tonnes of combined crushing capacity per year, the joint venture will have the flexibility to produce a mix of ethanol and sugar. It will also generate renewable electricity - fuelled by waste biomass from the sugar cane - through its cogeneration facilities to power all its sites and sell surplus electricity to the Brazilian power grid. BP and Bunge’s assets are largely complementary, with sites in five Brazilian states including three in the key region of São Paulo. The combined business will be ranked the second largest player in the industry in Brazil by effective crushing capacity.

Following completion, the aim is for BP Bunge Bioenergia to generate significant operational and financial synergies, including through scale efficiencies and by applying best practices, optimised technologies and operational capabilities across all the assets of the new business. The new business is expected to be headquartered in Sao Paulo. Mario Lindenhayn from BP will be Executive Chairman, Geovane Consul from Bunge, will be Chief Executive Officer (CEO). BP and Bunge will have equal representation on the Board of Directors.

Transaction Summary

• 50:50 joint venture between BP and Bunge’s Brazilian sugar and bioenergy production businesses.
• $775 million of total cash proceeds to Bunge from the transaction.
• Joint venture will operate on a stand-alone basis; and upon the closing of the transaction, Bunge will no longer consolidate its sugar and bioenergy operations in Brazil in its consolidated financial statements. Bunge will account for its interest in the joint venture under the equity method of accounting.

The transaction has been unanimously approved by the Board of Directors of Bunge.

Closing of the transaction is expected in the fourth quarter of 2019, subject to customary conditions, including receipt of required regulatory approvals.