BRAZIL: GranBio seeks investment from BNDES for 2nd-generation ethanol plant

Published: 11/06/2017, 3:34:27 PM

The Gradin family, founder and owner of Brazilian biotech company GranBio, is seeking investment from national development bank BNDES to proceed with operations of its second-generation ethanol (2G) plant, according to Brazil's O Estado de S. Paulo newspaper.

The second-generation ethanol plant, which uses sugarcane straw as raw material, received BRL1 billion (US$305 million) in investment five years ago, but is still facing operational issues. GranBio suffered setbacks, which included plant shutdown, fire in its stock of raw materials and a fight with suppliers. The project is delayed and now needs more money.

The Gradin family, which also owns a 20.6% stake in Brazilian infrastructure conglomerate Odebrecht, has a meeting scheduled for next November 9 to discuss a new contribution of BRL250 million (US$76.2 million) in GranBio by BNDESPar, the investment arm of BNDES.

The bank is the largest investor in the project: it paid BRL600 million (US$182.8 million) for a 15% stake at GranBio in 2013. The Gradin family invested BRL400 million (US$121.9 million).

But convincing BNDES to put more money into the company will not be easy, according to sources close to the bank. BNDES said in an official response to the newspaper that a new contribution is necessary, but that it had not made a decision on the issue.

Bernardo Gradin, former president of petrochemical company Braskem, signed a technological partnership with Italian company Mossi Ghisolfi, one of the most important petrochemical groups in the world, when he founded GranBio in 2011.

The Italians would supply machinery for the plant located in Alagoas state. The plant started operations in September 2014, but it soon became clear that the machinery solution sold to GranBio did not work. The plant could only operate for a few days until it had to stop for repairs.

Gradin tried to negotiate directly with the owners of Mossi Ghisolfi for compensation, but ended up appealing to arbitration in a court in London after the death of Guido Ghisolfi in 2015. Guido was one of the heirs of Mossi Ghisolfi and the main person responsible for negotiations with the Gradin family.

The Gradin family has also opened a lawsuit in a local court in Alagoas to produce evidence that the Italian technology did not work.

The situation became more complicated after Mossi Ghisolfi filed for bankruptcy in October, in Italy and in the U.S., with nearly US$1 billion in debt, reducing the chances of compensation for damages at GranBio. The Gradin family demands about BRL200 million (US$60.9 million) in compensation.

Mossi Ghisolfi didn't comment for the story. GranBio said it expects to reach a viable solution with the Italian company, and sees the group's judicial recovery as an opportunity. GranBio did not confirmed if there is any arbitration process in progress.