Mubadala makes cope with banks to take management of Atvos

Negotiations should remove Lone Star from the company’s command, after coordinating operational improvements in the last two years; deal includes capital injection

In yet another twist in the saga of the sugar and alcohol company Atvos, Mubadala Capital may take control of the company this week, in an agreement closed with creditor banks and without the participation of the current controller, the American fund Lone Star, found Pipeline.

BNDES, Banco do Brasil, Itaú, Bradesco and Santander have called a meeting for Friday, the 16th, in which they will vote on the change of control, already with predefined votes. The possibility was foreseen in Atvos’ judicial recovery plan, and will be given by exchanging old debt for new debt and a capital injection of R$ 500 million in the company.

If, on the one hand, the banks are interested in resolving the fate of Atvos once and for all and having one less problem with their liabilities, the terms and timing of the agreement are considered peculiar by sources close to the matter. This is because the company is once again generating cash and paying its debt commitments, but the agreement establishes an estimated discount of approximately R$ 2 billion on the debt, at present value, with maturity in 20 years and grace period of three.

Atvos ended the last fiscal year with adjusted Ebitda of R$ 2.2 billion, an increase of 83% over the previous year and 121% in the comparison of two years ago, almost doubling the planted area in the period. The company should close the current year with a cash balance of R$ 1.2 billion. With the agreement, the company will change management again.

The banks’ agreement also releases Novonor from guarantees that were still linked in operations with creditors, in a private negotiation that did not involve a competitive process with other players. Sources close to the banks say that the capital injection was one of the strengths of the proposal, for the company’s long-term liquidity, and that the process is part of what was approved and ratified in RJ. The group brings together 80% of creditors.

There are conditions for the new administration, such as maintaining a minimum cash position of BRL 400 million from 2027, having a limitation on the flow of dividends and, after the third year, submitting any IPO plans or sale of control to third parties to creditors.

Mubadala becomes the controller through the MC Green Energy fund, and the vehicle Agroenergia FIP Multiestratégia, defined as FIP Gestor, takes a 5% stake.

The United Arab Emirates fund became more active in the country this year. It made a proposal for the acquisition of Burger King Brasil, proposed the BP Bunge Energia ethanol joint venture and led a capitalization round at Cerc. At the end of last year, it bought the Mataripe refinery from Petrobras. Mubadala operates with different pockets in Brazil, with its own capital from the sovereign wealth fund of Abu Dhabi and with private equity that includes resources from third parties.

At Atvos, public banks are the largest creditors. Sought after, Mubadala, Lone Star, Novonor, BB and BNDES did not comment until the publication of this report.

Source: Pipeline Valor