Press Releases

02 August 2007
EEA Fund Management advises Trading Emissions PLC on acquisition of equity stake in Brazilian Biodiesel Plant.

EEA Fund Management Limited (EEA), a specialist global investment management group, has acted as advisers for Trading Emissions PLC (TEP), the AIM-listed closed-end investment company specialising in carbon credits, in taking a BRL$125 million equity stake in Bionasa Combustivel Natural S/A (Bionasa).

EEA and TEP have announced the closing of the final agreement which will see TEP’s investment financing the construction of a green-field biodiesel refining plant in the State of Goiás, Brazil with an annual capacity of 200,000 tonnes of biodiesel production. EEA has also secured in the deal for TEP, the rights to commercialise all Certified Emissions Reductions (CERs) that may be produced by the project. Commissioning of the project is expected in July 2008.

EEA, through its network in Brazil, identified the investment opportunity and has worked with the shareholders, the financial advisors and lawyers of Bionasa to structure a deal that delivers the capital requirements of the company in a manner structured so as to protect the investment of TEP. Ricardo Madrona, from the Brazilian law firm MHMK – Sociedade de Advogados, assisted EEA and TEP in this transaction.

Bionasa, a special purpose company established for the development, implementation and operation of the project, is a privately held Brazilian company located in the Goiás State and controlled by the Barretto family, leading players in the Brazilian tobacco industry as well as in agricultural-based pharmaceuticals. Paulo Henrique Todaro, from Mercatto, and Byung Soo Hong, from MHMK, were the financial and the legal advisers, respectively, of Bionasa and its shareholders.

Upon closing of TEP’s investment, Bionasa have contracted with Dedini Industrias de Base S.A., a large industrial manufacturing company that already has experience in the nascent biodiesel industry in Brazil, to supply and construct a multiple feedstock biodiesel facility. Additionally, the project will invest in the cultivation of non-edible feedstock, including jatropha, to provide a secure and cost effective supply to Bionasa.

Going forward the team at EEA will play an active role representing TEP on the board of the company, structuring project opportunities to deliver carbon credits from the deal and working with the financial advisers to look at potential exits and refinancings of the project as it enters its operational phase.

Ricardo Nogueira of EEA Fund Management, the investment advisor to TEP, commented:

“This is a great opportunity for TEP to partner with one of Brazil’s leading agricultural players and to benefit from the Brazilian government’s new legislation that sets mandatory targets for the proportion of biodiesel to be blended in to Brazil diesel.”

“EEA believes the key risks in projects of this type are related to feedstock supply. As a result, what really attracted us to this project was the experience of the Barreto family in contract farming and managing agricultural feedstock supply. This is critical to the project success and gives it a very strong edge over other similar investments we have reviewed”

Paulo Todaro of Mercatto Investimentos, the investment advisor to Bionasa, added:

“This deal represents one of the largest biodiesel projects in Brazil as well as one of the largest equity plays in this space”

Trading Emissions PLC offers investors exposure to the carbon market through the acquisition of tradable environmental instruments, particularly carbon credits generated from projects developed under the Clean Development Mechanism (CDM) and Joint Implementation (JI) framework of the Kyoto Protocol.

EEA has been the exclusive investment adviser to TEP since 2005, and is responsible for advising TEP’s Board of non-executive directors on the investment and management of TEP’s funds.

EEA's carbon team not only advises TEP but also manages carbon procurement accounts for a number of EU ETS participants. Such accounts include the provision of EU ETS trading services and the procurement of CERs.

For further information, please visit:
www.eeafm.com
www.tradingemissionsplc.com
www.bionasa.com.br