ADV.L Regulatory News (ADV)

9 Apr 2008 09:45

Clean Energy Brazil PLC09 April 2008 9 April 2008 CLEAN ENERGY BRAZIL PLC ("CEB", the "Company" or the "Group") INTERNALISATION OF INVESTMENT MANAGEMENT The announcement released by CEB yesterday referred to trading results forinvestee companies Usaciga and Unialco for the nine months to 31 January 2008expressed in dollars rather than in cents per lb of sugar. In the nine months to31 January 2008, Usaciga achieved an EBITDA of US2.54 cents/lb and net income ofUS1.74 cents/lb on turnover of US13.27 cents/lb and Unialco achieved an EBITDAof US1.61 cents/lb and net income of US1.23 cents/lb on turnover of US11.80cents/lb (on an unaudited basis). The full text of the amended announcement is set out below: Clean Energy Brazil plc is pleased to announce a reorganisation of the Companyunder which CEB will take responsibility for the management of its investments.This change is geared toward improving returns on the Company's investments inthe Brazilian sugar and ethanol markets and the Board believes such change willbe beneficial for the shareholders in the Company. Highlights Since the IPO in December 2006, CEB has successfully invested a total of $214million in operating assets in Brazil. The Company is now fully invested inestablished and greenfield businesses, is fully integrated - from cane tocustomer - and has profitable operations. The Board has therefore decided toreorganise CEB as a self-managed investment company focusing on the productionof sugar, ethanol, electricity and other by-products from its sugar caneinvestments in Brazil. As part of the internalisation, the investment advisory agreement between CEBand Temple Capital Partners Limited ("TCP") will be terminated and CEB willacquire Temple Capital Partners Planejamento Empresarial Ltda ("TCP Brazil"),ensuring that all of the expertise available from that organization will nowreside within CEB. In consideration for the termination of the investment advisory agreement withCEB, following an analysis of the supporting calculations performed by KPMG LLCat the request of the Board, TCP, whose shareholders include the initialinvestors in CEB, will receive a payment of $23 million to be satisfied by theissue of 11,800,000 new ordinary shares in CEB (the "TCP Consideration Shares").As a result of the termination of the investment advisory agreement, themanagement and performance fees currently and potentially payable to TCP by CEBpursuant to such agreement will be saved. The issue of the TCP Consideration Shares will result in a dilution of 8% inrespect of CEB shareholders (except for those CEB shareholders who are also TCPshareholders and who will, as a result of the termination of the investmentadvisory agreement, increase their respective shareholdings in CEB). Following the reorganisation, the reporting lines within the Company will besimplified: Marcelo Junqueira, currently a non-executive director of CEB and adirector of TCP and TCP Brazil, will become Chief Executive Officer of CEB.Peter Thompson, a director of Czarnikow and Chairman of TCP, will become anon-executive director of CEB. The executive team has also been expanded toinclude Mr. John Sam Koutras, a former financial director of CMS Energy, who hasrecently been hired as CFO and Mr. Gilberto Mascioli, an executive from TCPBrazil, who has been recently appointed as COO. Current Trading Recent macro economic conditions have impacted positively on commodity priceswith sugar prices rallying 30% during the last three months from around 10.00cper lb. Both domestic and international ethanol demand remains strong. It isanticipated that the 2007/08 crop period will achieve an overall sugar/ethanolprice of 13.00c per lb sugar basis. This uplift in the sugar price has enabledCEB to hedge favourably the two subsequent crops. In the nine months to 31 January 2008, Usaciga achieved an EBITDA of US2.54cents/lb and net income of US1.74 cents/lb on turnover of US13.27 cents/lb andUnialco achieved an EBITDA of US1.61 cents/lb and net income of US1.23 cents/lbon turnover of US11.80 cents/lb (on an unaudited basis). Antonio Monteiro de Castro, Chairman of Clean Energy Brazil plc, commented: "Clean Energy Brazil is now an established investor in the Brazilian sugar canesector with good exposure both to the rapidly-growing domestic ethanol marketand the developing international ethanol market. Since the IPO, we have investeda total of $214 million and now own investments in a number of operating assetswhich have been acquired at advantageous prices, are profitable and which wecontinue to improve. We are a fully integrated investor in the market - fromcane to customer. Now is the right time to change to a self-managed investmentcompany and to focus on maximising the operational returns from ourinvestments." Ends Further enquiries: Clean Energy Brazil Tel: +55 11 3556 8750Antonio Monteiro de Castro a.castro@cleanenergybrazil.comMarcelo Junqueira m.junqueira@cleanenergybrazil.com Numis Securities Limited Tel: +44 (0) 20 7260 1000Jag MundiAnthony Richardson Smith & Williamson Corporate Finance Limited Tel: +44 (0) 20 7131 4000(Nominated Adviser)Azhic BasirovDavid Jones Fishburn Hedges Tel: +44 (0) 20 7839 4321(Financial PR Adviser) ceb@fishburn-hedges.co.ukAndy Berry +44 (0) 7767 374421Morgan Bone +44 (0) 7767 622967 CLEAN ENERGY BRAZIL PLC ("CEB", the "Company" or the "Group") INTERNALISATION OF INVESTMENT MANAGEMENT The Group had originally entered into contractual arrangements with itsinvestment manager, Temple Capital Partners Limited ("TCP"). TCP in turn hadentered into service agreements with Czarnikow Group Limited ("Czarnikow") andTCP Brazil. These arrangements gave the Group access to a team of professionals,enabling it to utilise their knowledge, relationships and understanding of thesugar cane sector in Brazil to implement the Group's investment strategy. TheCompany, through its subsidiaries, invests directly in Brazil's growing sugarand ethanol industry. The aim of the reorganisation is to allow CEB to rationalize the management ofits investments and to enhance operational focus on its existing investments. Aspart of the reorganisation, the following will take place: 1. Termination of Investment Advisory Agreement The investment advisory agreement between Clean Energy Brazil Limited (awholly-owned subsidiary of CEB) and TCP, pursuant to which TCP provides servicesto the Group (the "Investment Advisory Agreement"), will be terminated for aconsideration of $23 million to be satisfied as set out below . The Investment Advisory Agreement, which has an initial term of ten years, wasentered into at the time of the Company's admission to trading on AIM inDecember 2006. On termination of the Investment Advisory Agreement, CEB will berepresented on the boards of its investee companies by employees of the Grouprather than by representatives of TCP. The boards of CEB and TCP have agreed that, as consideration for the terminationof the Investment Advisory Agreement and the management fees and performancefees that TCP is expected to be entitled to pursuant to the terms of suchagreement, new ordinary shares in CEB will be allotted and issued to TCP. Thecurrent value of such management and performance fees has been agreed betweenthe CEB and the TCP boards as being $23 million and an analysis of thesupporting calculations has been performed by KPMG LLC at the request of theBoard of the Company. In consideration for the termination of the agreement,11,800,000 new ordinary shares of 1 pence each in the capital of the Companywill be allotted and issued to TCP. Application has been made for these sharesto be admitted to trading on AIM and this is expected to take place on 11 April2008 ("Admission"). The issue of the TCP Consideration Shares will result in adilution of 8% in respect of the shareholders of CEB (except for those CEBshareholders who are also TCP shareholders and who will, as a result of thetermination of the investment advisory agreement, increase their respectiveshareholdings in CEB). Certain of the TCP shareholders, namely AgropecuariaOrlando Prado Diniz Junqueira ("Agrop"), Czarnikow and Numis Corporation Plc,have each undertaken to the Company that, except in certain limitedcircumstances, they will not dispose of the TCP Consideration Shares each ofthem respectively acquire (amounting in aggregate to approximately 7.56 millionCEB ordinary shares) for a period of 2 years following Admission. 2. Acquisition of TCP Brazil CEB will acquire an 88% equity interest in TCP Brazil for a nominalconsideration. Consequently, TCP Brazil will become responsible for theday-to-day management of the Company's investment activities. 3. Provision of Czarnikow's services Going forward, Czarnikow will continue to provide services directly to CEB'sinvestee companies. 4. Board changes Mr Marcelo Junqueira, who is currently a non-executive director of the Company,and is a director of TCP and TCP Brazil, will be appointed as Chief ExecutiveOfficer of the Company and Mr Peter Shaun Duncan Thompson (aged 48), a directorof Czarnikow and Chairman of TCP, will be appointed as a non-executive directorof the Company. Mr Thompson holds 105,264 ordinary shares in the Company andwarrants to subscribe for 179,104 ordinary shares. Once implemented, the reorganisation as outlined above will streamline theGroup's operating structure, bringing the management of the business within theGroup and making the Group's corporate structure more transparent. In turn, thiswill lower operating costs and remove the participation of TCP as the investmentmanager in the performance of the Group, for the benefit of the Company'sshareholders. Related party transactions The termination of the Investment Advisory Agreement and the acquisition of TCPBrazil (although the acquisition is not material in the context of the Group asa whole) are related party transactions. The directors of CEB (with the exception of Marcelo Junqueira, who is a 20%shareholder in TCP, was a 94% shareholder in TCP Brazil and is a director ofboth companies) consider, having consulted with the Company's nominated adviser,that the terms of the transactions are fair and reasonable insofar as theCompany's shareholders are concerned. This information is provided by RNS The company news service from the London Stock Exchange