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The Acquisition of Santa Vitória, Sugarcane Derivatives Plant, Will Boost Production of Jalles Machado Company
The company Jalles Machado announced this Thursday, 05/05, to the market, the acquisition of the Santa Vitória Plant, for ethanol, sugar, cogeneration etc., for about R$ 704.8 million. The purchase of a unit with public offering solutions was a promise of the Jalles Machado company since the IPO process. The Santa Vitória Plant acquired by the company is located in Minas Gerais and has an installed capacity of 2.7 million tons. The current industrial planning is to process two million tons in the 2022/23 harvest. The sugarcane cultivation covers about 37.6 thousand hectares and 100% of the cane used in the process is owned by the company. The energy produced from sugarcane is 113.6 kWh/ton and is sold at auction for R$ 438.2/MWh.
Jalles Machado’s Milling Capacity Will Rise with New Acquisition
The company Jalles Machado emphasizes that, with the acquisition of the Santa Vitoria Plant, the company’s milling capacity could rise by 46% to 8.5 million tons of milled sugarcane. In addition to the capacity being extended, the company has reduced the risk of exposure to the sugar and ethanol sector with more solid cogeneration and increased geographical diversity, having the two plants that the company owns in Goiás.
According to the Broadcast website, the deal made by the Jalles Machado company has an earn-out mechanism, meaning that if the milling of the current harvest exceeds 1.9 million tons, Jalles Machado will pay half of the net gains from the excess milling; however, if it falls below the intended level, Jalles Machado will receive half of the net losses caused by the lower volume of sugarcane milling.
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Get to Know the Santa Vitória Plant
The Santa Vitória plant was inaugurated in 2015 and features a modern industrial space, with an area of 210 hectares and only 7 years of operation. It also has a milling capacity of 2.7 million tons of sugarcane and produces more than 240 million liters of hydrated ethanol per season.
Initially, the construction of the Santa Vitória Plant was conceived for the production of green plastics derived from ethanol. The initiative had Dow Chemical as the idealizer and also involved the participation of the Japanese multinational Mitsui.
After its construction, the Santa Vitória plant suffered various losses from its conception until it was sold to the investor group Geribá. This sale generated tax losses totaling approximately R$ 1.6 billion. Additionally, the company holds approximately R$ 87.8 million in accumulated PIS and COFINS credits. In this recovery process of the Santa Vitória Plant, under the management of Geribá, the plant recorded its first year of profit only in 2021.
Purchase of Santa Vitória Plant Needs to Be Authorized by Administrative Council
The conclusion of the acquisition of the Santa Vitória plant by Jalles Machado now depends on the implementation of conditions for transactions of this nature, according to the rules established in the purchase and sale contracts. Furthermore, the acquisition is still subject to approval by the CADE (Administrative Council for Economic Defense) and regulatory agencies.
To purchase the Santa Vitória Plant, Jalles Machado was legally advised by the law firm Pinheiro Neto Advogados and financially by FG/A. According to Jalles Machado’s CEO, he thanks all the parties involved who facilitated the negotiation for the purchase of the Santa Vitória Plant and also appreciates the Geribá Investments Group for their trust.
The purchase of the Jalles Machado plant is part of an expansion plan for Jalles Machado, which began with its IPO in February 2021.
Once the negotiation of the Plant is approved, the shareholders of Jalles Machado will be able to exercise their right of withdrawal regarding all shares of the company that they have held uninterruptedly from the current date until 30 days counted from the date of publication of the minutes of the meeting that approved the purchase of the plant.
Shareholders who dissent will receive from Jalles Machado, if they exercise their right of withdrawal, the amount of R$ 4.51 per share issued by Jalles Machado, which was calculated based on the company’s net equity value as of December 31, 2021, and the number of shares currently dividing the capital of the Santa Vitória plant.
According to the journalism.com website, the company Jalles Machado will keep the market informed about the progress of the acquisition made by it. The company will hold a teleconference for the general market tomorrow, 05/05, at 3 PM, where it will provide more details about the transaction’s proceedings.
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