June 14, 2017 / 4:38 PM / a month ago

UPDATE 1-Raízen set to win auction for two sugar mills in Brazil - creditor

3 Min Read

(Adds comments from creditor, context, data on mills on sale)

By Marcelo Teixeira

SAO PAULO, June 14 (Reuters) - Brazil's Raízen Energia SA, the world's largest sugar maker, is set to win on Friday a judicial auction for two sugar mills owned by Tonon Bioenergia SA, having made the highest bid, a manager at a group of cane producers told Reuters on Wednesday.

Fabiana Valencise Olmedo said the 823-million reais ($250 million) bid presented by Raízen, a joint venture between Cosan SA Industria e Comercio and Royal Dutch Shell , was almost double the size of the only other offer.

The producers group is a strategic creditor of Tonon, owner of three sugar and ethanol plants in Brazil, which is under bankruptcy protection. According to the restructuring plan approved by creditors in April, it will sell two of those mills to pay banks, bond holders and other creditors.

The auction is scheduled for Friday morning, in Jaú, Sao Paulo state. But Olmedo told Reuters that lawyers already had access to the only two proposals presented by the June 13 deadline, and Raízen's bid was larger by far.

"The auction is likely to be just a formality now, unless some other judicial decision comes in the way," she said.

The other bid was presented by Suem do Brasil, a local company which packages and export sugar. Suem offered 434 million reais for the two mills.

Raízen said on Tuesday, in a securities filing, that it had presented the proposal for the Tonon assets.

It said the conclusion of a deal, in the event it wins the auction, hinges on unspecified conditions.

Raízen owns 24 sugar and ethanol mills in Brazil. Three are in the region where the two Tonon plants on sale are located, a detail valued by sugar groups as they seek to concentrate operations in clusters to reduce cane transportation costs.

The two Tonon mills, named Santa Cândida and Paraíso, have a combined annual cane crushing capacity of 5.7 million tonnes. Tonon aims to retain its third mill, in the neighboring Mato Grosso do Sul state. (Reporting by Marcelo Teixeira; Editing by Phil Berlowitz and Richard Chang)

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