ADV.L Regulatory News (ADV)

21 Aug 2009 07:00



21 August 2009

Clean Energy Brazil PLC

("CEB" or the "Company")

Proposed dividend and EGM

Proposed dividend

Clean Energy Brazil PLC, an investment company focused on Brazil's sugar cane/ethanol industry, announces that the Board has decided to return part of the Company's surplus cash resources to Shareholders via an interim dividend of US$12.5 million in aggregate or 8.5 US cents per Ordinary Share (equivalent to 5.15p per Ordinary Share at an exchange rate of US$1.65/£1).  In order to make this distribution, an EGM is being convened to propose that the current share premium account of approximately £50.0 million (representing US$82.58 million at an exchange rate of US$1.65/£1) be cancelled and re-classified as a distributable reserve. The Company currently has cash reserves of US$25.1 million (including US$5.8 million held in an escrow account); this would be reduced to US$12.6 million by the payment of the proposed interim dividend.

Background and market

The Company currently has minority investments in two operational sugar and ethanol production facilities; Usaciga and Unialco MS, and two wholly owned subsidiaries with greenfield cane plantations; Pantanal and Agua Limpa.  The Board has decided that, for the time being, no further investment of the Company's free cash reserves will be made in any of its existing investments.  In light of this decision, the Board has decided that it is appropriate to distribute part of the Company's cash resources to Shareholders and accordingly is proposing to pay the interim dividend referred to above.

The Board is currently seeking to maximise the value of the Company's remaining investments for the benefit of its Shareholders and further announcements will be made as appropriate. In addition, in light of the reduced scope of the Company's expansion plans, the Board has decided to implement a significant reduction in the Company's ongoing operational costs. Further information on these cost cutting measures will be announced in due course.

The Board has noted and welcomes the recent strength in sugar prices however it should be borne in mind that most of the 2009/10 sugar production at CEB's investments has already been hedged at prices which are significantly lower than the current market prices and furthermore that, due to financial constraints, CEB's investee companies have not been able to enter hedging contracts for next year's production to take advantage of the current strength of the sugar futures market. In addition it should be noted that a significant proportion of the production of CEB's investments is of ethanol, which has not experienced the same degree of price strength as sugar.

EGM

A circular convening the EGM to be held at 10:00 a.m. on 16 September 2009 will be sent to shareholders shortly and will be available on the Company's website: www.cleanenergybrazil.co.uk. Following approval from Shareholders, an application will then be made to the High Court of Justice of the Isle of Man for the re-classification of the share premium account.  The reserve then created will be available for distribution to Shareholders.  If Shareholder approval is obtained at the EGM, it is expected that the approval of the High Court of Justice of the Isle of Man will be obtained within 50 days after the EGM.  The dividend would be paid to Shareholders shortly thereafter.

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