Brookfield Asset Management Inc., Canada's largest alternative-asset manager, is in advanced talks to acquire sugar processor Renuka do Brasil SA for about 1.5 billion reais ($490-million U.S.) in debt, according to two people with direct knowledge of the matter.
Brookfield will take on the debt and negotiate with Renuka's creditors over repayment terms, the people said, asking not to be identified because the takeover discussions are private. Representatives from Brookfield and Renuka declined to comment when asked about the talks.
Renuka do Brasil, based in Promissao, Sao Paulo state, is owned by Mumbai-based Shree Renuka Sugars Ltd., which has 50.3 per cent of the outstanding shares, and Sao Paulo-based Grupo Equipav. The company has two sugar mills with capacity to crush 10 million tons of sugar cane per year.
Brazil's sugar producers have been struggling after prices for the commodity tumbled to a six-year low and the worst drought in eight decades wreaked havoc on producers' ability to meet obligations. Since 2011, 47 ethanol and sugar mills have closed and 70 are under bankruptcy protection, according to Unica, Brazil's sugarcane millers group.
Brookfield has also been in talks to inject capital in sugar and ethanol producers Tonon Bioenergia SA and Virgolino de Oliveira SA, which are seeking to restructure dollar debt, three other people with direct knowledge of the matter said.