Bunge Ltd. and BP PLC announced Dec. 2 that they have completed the formation of BP Bunge Bioenergia, the Brazil-based bioenergy joint venture that combines their Brazilian bioenergy and sugarcane ethanol businesses. BP Bunge Bioenergia is now the second-largest operator by effective crushing capacity in Brazil's bioethanol market.

As part of the transaction, Bunge received cash proceeds of $775 million, comprised of $700 million of non-recourse Bunge debt that was assumed by the joint venture at closing and $75 million from BP, before customary closing adjustments. The proceeds were used to reduce outstanding indebtedness under the company's credit facilities. The non-recourse debt was arranged by a syndicate of banks, led by Sumitomo Mitsui Banking Corp., ABN Amro Bank N.V. and ING Bank N.V.

Mario Lindenhayn from BP will be the executive chairman of BP Bunge Bionergia, and Geovane Consul from Bunge will be chief executive. BP and Bunge will have equal representation on the board of directors of the company.

“Biofuels is an increasingly important part of a lower-carbon energy system,” Lindenhayn said. “We are proud to complete the formation of BP Bunge Bioenergia, which provides a strong foundation to build upon the capabilities of both organizations to develop ideas for growth and deliver significant operational and financial synergies.”

The joint venture has 11 biofuel sites in five Brazilian states, with more than 10,000 employees. It has total crushing capacity of 32 million metric tons of sugarcane per year, is capable of producing more than 1.5 billion liters of ethanol and 1.1 million tons of sugar and can export 1,200 gigawatt hours of electricity to the national grid in Brazil.