Usina Delta S.A.

completed

Created in October 2012 as a spin-off of Usina Caeté S.A., a traditional player in Brazil’s sugar and ethanol industry, Usina Delta S.A. is a privately-held company (the ”Company”) with a crushing capacity of 10.5 million tons of sugarcane per year. Delta’s three mills are located in a geographically concentrated cluster in the “Triângulo Mineiro” region of southwestern Minas Gerais state. The mills are: Delta (located adjacent to the town by the same name), Volta Grande (approximately 15 km away from the town of Conceição das Alagoas), and Conquista de Minas (approximately 10 km outside of the town by the same name). The latter mill is on a long-term lease from a bank. All three mills produce sugar (capacities of about 613,000 tons/year in Delta, 429,000 tons/year in Volta Grande and 98,000 tons/year in Conquista de Minas). Ethanol and energy are produced only in Delta and Volta Grande (capacities of about 147,000 m3 of ethanol and 30MW of power at Delta – of which about 8MW are sold – and [245,000] m3 of ethanol and 45MW of power – of which about 22MW are sold – at Volta Grande). In 2013, the company sourced sugarcane from around 156,122 hectares of nearby land, including approximately 66,14 percent from its own or leased lands (of which the company farms itself) and 33,86 percent from independent suppliers (many of whom also farm Delta lands as sharecroppers). In the 2012-13 harvest, Delta S/A milled 9.27 million tons of sugarcane and produced 15.3 million sacks of sugar (69 percent of company revenues) and 278,000 m3 of ethanol (25 percent). The remaining 6 percent of revenue came from energy co-generation (from the bagasse produced as a by-product of crushing cane) and soybeans, cultivated for crop rotation purposes. IFC Loan of up to US$ 80 million is part of a financing package for Delta’s 3 year capital improvement program. During this period Delta will invest to expand energy co-generation at the Delta mill and production capacity of anhydrous ethanol, as well as increasing agricultural and productive efficiency and storage capacity, thereby helping the company to expand its revenue streams, which rely primarily on sugar and ethanol production. This $208 million investment program includes: (i) installing a new fluidized bed boiler of 330tv/h and a power generator of 70MW expanding energy external sales from 8MW to approximately 50 MW), including civil works, a substation (138kV), and a transmission line (138kV, 15km) to connect to the grid at Unit Uberaba 5, which belongs to CEMIG-MG (ii) to acquire new equipment to increase anhydrous production capacity in the Delta sugar mill, (iii) replanting 35,000 hectares of sugarcane in order to reach full crushing capacity, (iv) purchasing agricultural equipment to increase the level of harvest mechanization, (v) increase sugar storage capacity at the Volta Grande sugar mill building one new warehouses of 7,750 m2, and (vi) upgrading some mill rollers mills to increase sugar recovery rates (the project).