AB Foods Regulatory News (ABF)

26 Jun 2007 07:03

Associated British Foods PLC26 June 2007 Associated British Foods plc ABF in joint venture to build £200m UK biofuel plant For immediate release Associated British Foods plc ("ABF"), the international food, ingredients andretail group has today announced that it has reached agreement with BP andDuPont on an investment to build a world-scale biofuel plant in the UK. A jointventure will be formed, subject to regulatory approval, to build the plant andoperate the business. ABF and BP will each hold 45% of the joint venture andDuPont will hold the remaining 10%. The plant will produce bioethanol from wheat and will be built at a cost of£200m at BP's chemicals site at Saltend, Hull. Its capacity will be 420m litres(330,000 tonnes) of bioethanol per year and is planned to come on stream in late2009. ABF expects a return on its investment ahead of its cost of capital inthe first full year of operation. The plant will initially produce bioethanol, but the partners will look at thefeasibility of converting it to biobutanol once the technology is available. BPand DuPont intend to build a jointly funded biobutanol demonstration plant,which will run in parallel with the main plant, to support this objective. It is expected that formal agreements will be entered into by the joint venture,after its formation, with other ABF businesses: Frontier Agriculture and ABAgri. The supply of locally grown wheat would be arranged by Frontier which isthe UK's leading grain marketer and supplier of agricultural inputs. The majorco-product of bioethanol production, distillers' grain, would be sold to ABAgri. It will use its highly specialised sales and marketing business, whichsources and develops co-products from the food, drink and energy industries, tomarket the distillers' grain as an alternative feed for livestock. This announcement follows the previously announced investment by British Sugarto build the UK's first bioethanol plant at Wissington, Norfolk. Its capacitywill be 70m litres (55,000 tonnes) of bioethanol a year, using sugar beet as afeedstock, and the plant will start production next month. The European Investment Bank is finalising its approval for the provision of£120m of project financing for both of ABF's biofuel investments at attractiveinterest rates. This would be the first direct financing provided by the Bankfor a biofuel project. George Weston, Chief Executive of Associated British Foods, said, "This exciting project will make ABF the major producer of biofuel in the UK.Its announcement reflects our confidence in our sugar and agriculturalbusinesses, in our partners BP and DuPont and in the government's commitment tobiofuel production." For further information please contact: Associated British Foods +44 20 7399 6500John Bason, Finance Director Citigate Dewe Rogerson: +44 20 7638 9571Jonathan Clare/Chris Barrie/Fiona Bradshaw There will be a press conference at 09.30 on 26 June 2007 at:BP plc, 1 St James's Square, London SW1Y 4PD Notes to editors 1. Associated British Foods is a diversified international food,ingredients and retail group with global sales of £6 billion and 75,000employees. It is listed on the London Stock Exchange with a marketcapitalisation of £7.2 billion. It operates in 46 countries with significantbusinesses outside Europe in Southern Africa, the US, China and Australia. Its aim is to achieve strong, sustainable leadership positions in markets thatoffer potential for profitable growth. It strives to achieve this through acombination of organic growth, the acquisition of complementary businesses andachievement of high levels of operating efficiency. The group has established atrack record of successful value adding acquisitions including Illovo Sugar, ABMauri (its leading international yeast and bakery ingredients business),Littlewoods stores for Primark and the grocery brands Mazola and Ovaltine. 2. British Sugar is a substantial business within ABF. It has operationsin the UK, Poland, China and Southern Africa which process some 4 million tonnesof sugar annually. It is recognised as the most efficient sugar producer inEurope and has a proven ability to create value through improvement inagricultural yields, operational efficiencies, co-product development, marketingand product innovation. A number of its operations are already successful jointventures. It has world class production facilities and technical expertise.Wissington in Norfolk is the largest and most efficient beet sugar factory inthe world and is the site for the UK's first bioethanol plant. 3. AB Agri (Associated British Agriculture) is the UK's largest and mostsuccessful agri business supplying technology driven products, including animalfeeds, and services to improve agricultural efficiency. Its products are soldworldwide and it has established a successful feed manufacturing business inChina. Its KW Trident business is the UK's market leader in the sourcing,development and marketing of food, drink and energy industry co-products.Co-product feeds are a developing part of livestock feeding and KW Trident areat the forefront of this development. 4. Frontier Agriculture is the UK's leading grain marketer and supplier ofagricultural inputs. It operates from 36 sites in the UK and has a revenue of£650m. Frontier was formed in 2005, through the merger of Allied Grain andBanks Cargill Agriculture, and is owned in equal shares by ABF and Cargill.Frontier works closely with farmers to advise on crop selection and agronomy tomanage for optimum yield and quality. It offers farmers a unique opportunity togrow for specific markets with contracts tailored to suit them. Anunderstanding of the whole supply chain enables Frontier to develop creativesolutions to overcome the challenges faced by both farmers and end-users. This information is provided by RNS The company news service from the London Stock Exchange