October 22, 2018 / 9:12 PM / 25 days ago

Exclusive: Dreyfus sugar unit Biosev in talks to sell more mills - sources

SAO PAULO (Reuters) - Biosev SA (BSEV3.SA), the Brazilian sugar and ethanol producer controlled by global commodities trader Louis Dreyfus [AKIRAU.UL], is in talks to sell more assets in the country as it seeks to cut debt, two sources with knowledge of the plans told Reuters on Monday.

Biosev, which announced the sale of a sugar and ethanol mill a month ago, hired Datagro Financial, the financial services division of Sao Paulo-based consultancy Datagro, and the investment banking unit of Banco Santander Brasil SA (SANB11.SA) to assist in the process to sell other mills, the sources said.

Shares of Biosev (BSEV3.SA) surged 37.2 percent to close at 4.54 reais on Monday, their highest price in seven months. Traded volume was more than 20 times larger than the daily average during last week’s sessions at Sao Paulo exchange B3.

Biosev and Datagro declined to comment. Santander did not immediately respond to a request to comment.

The possible asset sale comes seven months after Louis Dreyfus bailed out the money-losing unit with a capital injection of $1.05 billion and follows the departure of former Biosev Chief Executive Rui Chammas, who was replaced by Juan José Blanchard in July.

“Yes, there is an asset sale process ongoing,” said the first source, who asked for anonymity because negotiations are private. The two sources said Biosev wants to sell some mills.

A month ago, Biosev announced the sale of its Estivas unit in the northeastern state of Rio Grande do Norte for 203.6 million reais ($55.3 million) to local group Pipa Agroindustrial.

At the time, Chief Financial Officer Gustavo Lopes Theodozio told Reuters the company planned to use proceeds from the sale to pay down a debt that was not included in a recent debt restructuring.

The source said that the logic behind the process was to raise the use of installed capacity in remaining mills after an eventual sale of units and reduce debt, which hovered around 6 billion reais.

The second source, who is also familiar with the restructuring process at Biosev, told Reuters the company is trying to sell a mill in Brazil’s centre-west, a relatively new frontier for sugar companies, and another in Sao Paulo state, Brazil’s top cane belt.

Biosev has a large plant idled in centre-west’s Mato Grosso do Sul state, the Maracaju mill, whose operations were interrupted late last year.

In total, considering the Maracaju mill, Biosev has nine plants in Brazil, the world’s largest sugar producer. It also operates a sugar exporting terminal in the coastal city of Guarujá (Sao Paulo state).

The sources did not want to specify the stage of the talks or address whether a possible leak could have led to the share surge on Monday.

Reporting by Tatiana Bautzer and Marcelo Teixeira in Sao Paulo; Editing by Matthew Lewis

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