Form
20-F
|
X
|
Form
40-F
|
Yes
|
No
|
X
|
Yes
|
No
|
X
|
Yes
|
No
|
X
|
Item
|
||
1.
|
Minutes of the Fiscal Council Meeting
of Cosan S.A.
Indústria e
Comércio held
on June 1,
2009
|
|
2.
|
Minutes of the Board of Directors’ Meeting of Cosan S.A. Indústria e Comércio held on June 1,
2009
|
|
3.
|
Call
Notice for Extraordinary Shareholders’ Meeting of Cosan S.A. Indústria e
Comércio to be held on June 18, 2009
|
|
4.
|
Material
Fact of Cosan S.A. Indústria e Comércio dated June 2,
2009
|
|
5.
|
Protocol
and Justification of Merger of Curupay S.A. Participações into Cosan S.A.
Indústria e Comércio
|
|
COSAN
LIMITED
|
||||||
Date:
|
June 5,
2009
|
By:
|
/s/
Marcelo Eduardo Martins
|
|||
Name:
|
Marcelo
Eduardo Martins
|
|||||
Title:
|
Chief
Financial and Investor Relations Officer
|
ITEM 4 |
COSAN
S.A. INDÚSTRIA E COMÉRCIO
Corporate
Taxpayer’s ID (CNPJ/MF) 50.746.577/0001-15
Corporate
Registry ID (NIRE) 35.300.177.045
|
NOVA
AMÉRICA S.A. AGROENERGIA
Corporate
Taxpayer’s ID (CNPJ/MF) 62.092.739/0001-28
Corporate
Registry ID (NIRE) 35.300.127.242
|
Marcelo
Eduardo Martins
|
Alberto
Asato
|
CFO and
Investor Relations Officer
Cosan S.A.
Indústria e Comércio
|
Managing
Director
and Investor
Relations Officer
Nova América S.A.
Agroenergia
|
1.
|
JUSTIFICATION
OF THE MERGER
|
2.
|
BASIS
FOR THE MERGER OPERATION
|
3.
|
REPLACEMENT
RATIO, NUMBER AND SPECIES OF THE SHARES TO BE ASSIGNED TO CURUPAY’S
SHAREHOLDERS AND SHARE RIGHTS GRANTED BY THE NEW
SHARES
|
4.
|
CRITERIA
FOR THE EVALUATION OF THE EQUITY OF CURUPAY AND COSAN, AND TREATMENT OF
EQUITY CHANGES
|
5.
|
SHARES
OF ONE COMPANY HELD BY THE OTHER
|
6.
|
INCREASE
IN AND BREAKDOWN OF COSAN’S CAPITAL STOCK FOLLOWING THE
MERGER
|
7.
|
AMENDMENT
TO COSAN’S BYLAWS
|
8.
|
EXTRAORDINARY
GENERAL MEETINGS
|
9.
|
WINDING-UP
OF CURUPAY
|
10.
|
NOTICES
AND NOTIFICATIONS
|
11.
|
FINAL
PROVISIONS
|
12.
|
ARBITRATION
|
Merged
Company:
|
|
CURUPAY
S.A. PARTICIPAÇÕES
|
Merging
Company:
|
|
COSAN
S.A. INDÚSTRIA E COMÉRCIO
|
Witnesses:
|
||||
Name: | Name: | |||
Identity Card (RG): |
Identity Card
(RG):
|
|||
Individual Taxpayers' ID (CPF/MF): | Individual Taxpayers' ID (CPF/MF): |
Credit Suisse Appraisal Report Cosan S.A. Industria e Comercio and Curupay S.A. - Participacoes April 30th, 2009 |
Table of Contents 1. Introduction 2 2. Transaction summary 8 3. Description of the market and the companies 14 3.1. Cosan S.A. Industria e Comercio 18 3.2. Curupay S.A. Participacoes ("NovAmerica") 25 4. General assumptions of the Appraisal Report 32 5. Cosan's Appraisal 34 5.1. Discounted Cash Flow 34 5.2. Economic value - comparable companies' multiples 44 5.3. Book value of shareholder's equity 46 5.4. Weighted average price by the stock's trade volume on BOVESPA 48 6. Nova America's Appraisal 51 6.1. Discounted Cash Flow 51 6.2. Economic value - comparable companies' multiples 60 6.3. Book value of shareholder's equity 62 7. Analysis of relationship of substitution 64 Appendix A. Companies' Weighted Average Cost of Capital (WACC) 67 Appendix B. Market multiples of comparable companies 69 Appendix C. Description of the applied evaluation methodologies 73 Appendix D. Terms and definitions used in the appraisal report 78 1 Credit Suisse |
1. Introduction 2 |
Introduction The Banco de Investimentos Credit Suisse (Brasil) S.A. ("CS") was appointed by Cosan SA Industria e Comercio ( "Cosan") to prepare an economic and financial appraisal report ("Appraisal Report ") in reference to the equity value of Curupay SA. - Participacoes ( "NovAmerica") and the equity value of Cosan (NovAmerica and Cosan combined herein denominated "Companies"), for the purposes of establishing a relationship of substitution between both parties under the proposed incorporation of NovAmerica (the "Transaction") as provided for in CVM Rule no. 319 of December 3rd, 1999, ("Regulation CVM 319/99"). The following information is important and should be read carefully and thoroughly: 1. This Appraisal Report has been prepared solely for the use of Cosan's Board of Directors and its shareholders for the evaluation of the proposed Transaction and should not be used for any other purpose, including, without limitation, to establish and increase capital, under the laws of S.A. (limited partnerships), in particular Articles 8 and 170, and other provisions of the S.A. laws involving the Company and / or its affiliates. This appraisal report should not be used by any other third parties and may not be used for any other purpose without prior written permission from CS. This appraisal report, including its analysis and conclusions, do not constitute a recommendation to any shareholder or member of the Board of Directors of NovAmerica or Cosan on how to vote or act on any matter relating to the Transaction. The data base used in this Appraisal Report is of April 30th, 2009. 2. To reach the conclusions presented in this Appraisal Report, among other things: (i) we reviewed the consolidated financial statements of Nova America S.A. - Agroenergia , audited by Delloite Touche Tohmatsu ("Delloite") for the years ended April 30th, 2006, 2007 and 2008 and the interim consolidated financial statements for the nine-month period ended January 31, 2009 (subject of a special review report by Delloite), this information does not reflect the effects of the corporate reorganization that preceded the Transaction, (ii) we reviewed the consolidated financial statements of Curupau S.A. - Participacoes ("NovAmerica"), audited by Delloite for the year ended April 30th, 2009, (iii) we reviewed the consolidated financial statements of Cosan, audited by Ernst & Young Independent Auditors S.C. ("Ernst & Young") for the years ended April 30th, 2006, 2007 and 2008 and the interim consolidated financial statements for the nine-month period ended January 31, 2009 (subject of a special review report by Ernst & Young), we (iv) reviewed and discussed with the administration of Cosan and NovAmerica the financial, operational and management projections of each of the Companies for the next 10 years, (v) discussed with the members of the administration of NovAmerica and Cosan the Company's business and prospects, (vi) in appraisals of this nature we have access to historical information on a comparable basis as to our projections, however, in this case, we had no access to historical financial statements of Curupay S.A. - Participacoes ("NovAmerica") pro forma effects of the corporate reorganization and these effects were not discussed with Delloite, however, we discussed with the administration of NovAmerica the impacts of the corporate reorganization in the result projections of NovAmerica and incorporated them in these projections and (vi) took into account other information, financial studies, analysis, research and financial, economic and market criteria that we consider relevant (collectively, the "Information"). 3. In the scope our review, we do not assume any responsibility for independent investigations of any of the information above and we trust that such information was complete and accurate in all material respects. Furthermore, we were not asked to perform, and did not perform an independent verification of such information, or independent verification or appraisal of any assets or liabilities (contingent or otherwise) of any of the Companies, we were not given any evaluation in this respect and we did not evaluate the solvency or fair value of the Companies considering the laws relating to bankruptcy, insolvency or similar issues. 3 |
Introduction (cont'd) 4. We will not, explicitly or implicitly, make any representation or statement with respect to any information (including financial and operating projections for each of the Companies or assumptions and estimates on which such projections were based) used for the preparation of the Appraisal Report. Furthermore, we do not assume any obligation to conduct, and did not conduct, any physical inspection of the Companies' properties or premises. We are not an accounting firm and do not provide accounting or auditing services in relation to this Appraisal Report or the Transaction. 5. The operational and financial projections of NovAmerica and Cosan were based on information obtained from the NovAmerica and Cosan and other public information, and we assume that these projections reflect the best estimates currently available with respect to the Companies' future financial performance, which were evaluated on a stand alone basis, without synergies. 6. In relation to the Companies' operational and financial projections that were sent to us, the Administration declared that these projections were prepared in a reasonable manner on assumptions that reflect the best estimates currently available and the Administration's best judgment with respect to the Companies' future financial performance. If this assumption is not valid, the results presented here may be altered substantially. 7. Projections related to demand and market growth were submitted by the Companies. We assumed, in good faith, that these projections were prepared in a reasonable manner reflecting the best estimates currently availables. 8. The Appraisal Report is not and should not be used as (i) an opinion on the adequacy (fairness opinion) of the Transaction, (ii) a recommendation in relation to any aspect of the Transaction and (iii) an opinion on the adequacy or determination of the fair and/or correct value of the Companies' shares. 9. Based on the discounted cash flow methodology, we assumed the macroeconomic scenario announced by the Central Bank of Brazil in its Focus Report, which reflects average market expectations and may present substantially different future results. Since the analysis and values are based on forecasts of future results, they do not necessarily indicate the Companies' actual and future financial results, which may be significantly more or less favorable than those suggested by our analysis. Moreover, since these analysis are inherently subject to uncertainties and are based on various events and factors outside of our and the Companies' control, we are not in any way responsible if any of the Companies' future results differ substantially from the results presented in this Appraisal Report. There is no guarantee that the Companies' future results will correspond to the financial projections used as basis for our analysis, and the differences between our projections and the Companies' financial results may not be relevant. The Companies' future results may also be affected by economic and market conditions. 4 |
Introduction (cont'd) 10. The preparation of a financial analysis is a complex process involving several definitions regarding methods of financial analysis most appropriate and relevant as well as the application of such methods. To reach the conclusions presented in the Appraisal Report, we conducted qualitative reasoning in regards to the considered analysis and factors. We reached a final conclusion based on the results of the conducted analysis, as a whole, and did not arrive at conclusions based on, or related to, any separate factors or methods of analysis. Thus, we believe that our analysis should be considered as a whole and that the selection of parts of our analysis and specific factors, without considering the entire analysis and conclusions, can result in an incomplete and incorrect understanding of the processes used for our analysis and conclusions. 11. This Appraisal Report indicates only the Companies' value and does not evaluate any aspect or implication of the Transaction or any contract, agreement or understanding reached with respect to the Transaction. We do not express any opinion as to what the value of the issued stock should be pursuant to the Transaction or as to the amount in which the Companies' stock will be or could be traded in the securities market at any time. This Appraisal Report does not address the merits of the Transaction as compared to other business strategies that may be available to NovAmerica and to Cosan, nor addresses the business decision of the parties involved of whether to carry out the Transaction. The results presented in this Appraisal Report refer exclusively to the Transaction and do not apply to any other matter or operation, present or future, relative to any of the Companies, the economic group to which they belong or the their industry. 12. Our Appraisal Report is based essentially on information that has been submitted to us on this date, and considering market, economic and other conditions as they present themselves and as evaluated on this day. Although future events and developments may affect the conclusions presented in this Appraisal Report, we have no obligation to update, revise, rectify or revoke this Appraisal Report, in whole or in part, due to any subsequent development or other purpose. 13. Our analysis deal with NovAmerica and Cosan as independent operations (stand-alone) and, thus, do not include benefits or operating losses, fiscal or of any other nature, including any premium, nor any synergies, incremental value and/or costs, if any, that NovAmerica or Cosan may incur from the completion of the Transaction, if carried out, or from any other operation. The appraisal also does not take into account any operational and financial gain or loss that may be incurred subsequent to the Transaction due to commercial alterations of the currently existing businesses between NovAmerica and Cosan. 14. Cosan has agreed to reimburse us for our expenses and to indemnify us, and those connected to us, for certain liabilities and expenses that may arise as a result of our employment. We will receive a commission relative to the preparation of this Appraisal Report regardless of the completion of the Transaction 5 |
Introduction (cont'd) 15. We, from time to time, in the past, has provided investment banking and other financial services to Cosan and its affiliates, for which we have been compensated, and may in the future provide such services to NovAmerica and Cosan and/or its affiliates, for which we expect to be compensated. We are a financial institution that provides a variety of financial and other services related to securities, brokerage and investment banking. In the normal course of our activities, we may purchase, hold or sell, for our account or for account and by order of our customers, stocks, debt instruments and other securities and financial instruments (including bank loans and other obligations) of NovAmerica and Cosan and of any other companies involved in the Transaction, as well as provide investment banking and other financial services to such companies, their parent companies or controlled companies. Moreover, the professionals of our securities analysis departments (research) and of other divisions may base their analysis and publications on various market and operating assumptions and different methods of analysis when compared with those used in preparing this Appraisal Report, in such a manner that the research reports and other publications prepared by them may contain results and conclusions that differ from those presented herein. We have implemented policies and procedures to preserve the independence of our securities analysts, which may have different views from those of our investment banking department. We have also implemented policies and procedures to safeguard the independence between investment banking and other areas and departments of CS, including but not limited to asset management, proprietary trading desk for stocks, debt instruments, securities and other financial instruments. 16. This Appraisal Report is the intellectual property of CS. 17. The financial calculations contained in the Appraisal Report may not always result in a precise sum due to rounding. 18. The Companies' fiscal year has a duration of one (1) year which begins on May 1st and ends on April 30th of each year, according to the respective Corporate Bylaws. Thus, at the end of each fiscal year, financial statements are prepared for the fiscal year ended. Banco de Investimentos Credit Suisse (Brasil) S.A. 6 |
Appraiser's Statement For the purpose of CVM (SEC) Rule No. 319/99, CS declares: o The funds managed by CS and its subsidiary, Credit Suisse HG Corretora de Valores SA, hold a minority share in Cosan, based on data as of April 30th, 2009. o It has no interest, direct or indirect, in the operation, as well as any other relevant circumstances that may characterize conflict of interest, reducing the required independence to perform their duties in preparing this Appraisal Report. o Major shareholders or Companies' directors did not direct, restrict, hinder or exercise any actions that may, or may have, compromised the access, the use or the knowledge of information, properties, documents or work methodologies relevant to the quality of the respective conclusions. o There is no conflict or pooling of interest, actual or potential, with Cosan's main shareholders, or because of its minority shareholder(s), or relative to NovAmerica, their respective partners, or concerning the Transaction. 7 |
2. Transaction summary 8 |
Transaction Summary Phase I: reorganizing NovAmerica's structure Cosan SA Industria e Comercio announced on March 12th, 2009 its intentions to merger their activities with that of Curupay SA - Participacoes, whereas Curupay S.A. - Participacoes will be incorporated by Cosan. o Binding Memorandum of Understanding ("MOU") signed with Rezende Barbosa S.A. Administracao e Participacoes ("Rezende Barbosa"), controlling shareholder of Curupay S.A. - Participacoes o Rezende Barbosa conducted a corporate reorganization, whereas all assets related to marketing, logistics and industrial production of sugar and ethanol were incorporated by Curupay S.A - Participacoes ("NovAmerica") and all assets related to agricultural activity were transferred into a new company, not involved in the transaction Phase II: NovAmerica's incorporation by Cosan Cosan intends to incorporate NovAmerica by substituting all of its common stock for Cosan's shares of the same class o Rezende Barbosa will receive approximately 132.5676 shares of Cosan's stock for each share currently held of NovAmerica's stock, so as to own the equivalent of 11.89% of Cosan's capital after the Transaction o Rezende Barbosa owns 100% of NovAmerica's capital o Cosan is registered with the Securities Commission ( "CVM") and its stock is traded on the Bolsa de Valores de Sao Paulo Note: Curupay S.A. - Participacoes was defined in this Appraisal Report as NovAmerica, thus their only assets are the following corporations: Nova America Agroenergia, Nova America Trading and NovoRumo. For more details, see page 28 of this Appraisal Report. 9 |
Appraisal Summary Cosan S.A. Industria e Comercio Based on the economic value obtained through the discounted cash flow method (DCF), the value of Cosan's stock is between R$ 25.75 and R$ 28.32. For more information with respect to the calculation methodology used, see Appendix C - Description of applied appraisal methodologies on page 74 of this report Economic Value (DCF) (R$ million) Equity value 8,876 Number of shares (thousands) 328,285 -4.75% +4.75% -------------------------------------------------------------------------------- Equity value 8,454 8,876 9,298 Price per share (R$) 25.7527.04 28.32 -------------------------------------------------------------------------------- Source: Cosan and Credit Suisse. Base date: April 30th, 2009. Economic Value (Multiples) -------------------------------------------------------------------------------- (R$ million) 2009/10E 2010/11E EBITDA $1,638.8 $1,948.1 x EV/EBITDA((2)) 6.4x 5.8x = Enterprise Value 10,420.1 11,251.0 - Net debt $3,521.0 $3,521.0 = Equity Value 6,899.1 7,730.0 Number of shares (millions)((1)) 328.3 328.3 -------------------------------------------------------------------------------- low (-4.75%) R$ 20.02 R$ 22.43 R$/share average R$ 21.02 R$ 23.55 high (+4.75%) R$ 22.01 R$ 24.67 -------------------------------------------------------------------------------- Source: Cosan and Credit Suisse. Net Worth (R$ million) 01/31/2009 Total assets R$ 11,039.4 (-) Total liabilities 7,311.3 (-) Minority interest 31.5 = Shareholder's equity 3,696.6 Number of shares (millions)((1)) 328.3 R$/share 11.26 -------------------------------------------------------------------------------- Source: Cosan. Weighted Average of Stock Prices ------------------------------------------------------------------------------- 12 month period prior to communicating the relevant R$ 18.99 fact ------------------------------------------------------------------------------- (11-mar-08 to 11-mar-09) ------------------------------------------------------------------------------- 90 day period prior to communicating the relevant R$ 10.68 fact ------------------------------------------------------------------------------- (11-dec-08 to 11-mar-09) ------------------------------------------------------------------------------- Period between the date the relevant fact was R$ 12.05 communicated and the date of the appraisal report ------------------------------------------------------------------------------- (12-mar-09 to 30-apr-09) -------------------------------------------------------------------------------- Source: Bloomberg, according to information on page 49 of this report. (1) Source: CVM,(SEC) includes stocks in Treasury. (2) Considers average trading multiples of comparable companies as of April 30th, 2009. 10 |
Appraisal Summary Curupay S.A. - Participacoes ("NovAmerica") Based on the economic value obtained through the discounted cash flow method (DCF), the value of NovAmerica's stock is between $ 3,433.98 and R$ 3,776.47. For more information with respect to the calculation methodology used, see Appendix C - Description of applied appraisal methodologies on page 74 of this report Economic Value (DCF) (R$ million) Equity value 1,205 Number of shares (thousands) 334 -4.75% +4.75% -------------------------------------------------------------------------------- Equity value 1,148 1,205 1,262 Price per share (R$) 3,433.98 3,605.223,776.47 -------------------------------------------------------------------------------- Source: NovAmerica and Credit Suisse. Base date: 30th Apriil 2009. -------------------------------------------------------------------------------- Economic Value (Multiples) -------------------------------------------------------------------------------- (R$ million) 2009/10E 2010/11E EBITDA $377.8 $413.9 x EV/EBITDA((2)) 6.4x 5.8x = Enterprise Value 2,402.0 2,390.3 - Net debt $1,100.1 $1,100.1 = Equity Value 1,301.9 1,290.3 Number of shares (millions)((1)) 0.3 0.3 ------------------------------------------------------------------------------ low (-4.75%) R$ 3,710.79 R$ 3,677.65 R$/share average R$ 3,895.85 R$ 3,861.05 high (+4.75%) R$ 4,080.90 R$ 4,044.45 -------------------------------------------------------------------------------- Net Worth((1)) -------------------------------------------------------------------------------- (R$ million) 3/30/2009 Total assets R$ 1,815.7 (-) Total liabilities 1,481.5 (-) Minority interest 0.0 = Shareholder's equity 334.2 Number of shares (millions)((1)) 0.3 R$/share 1,000.0 -------------------------------------------------------------------------------- Source: NovAmerica. Source: NovAmerica and Credit Suisse. (1) Values of Total Assets, Total Liabilities, Minority Interests, Liquid Net Worth and Number of Stock Shares according to NovAmerica's audited Balance Sheet dated April 30th, 2009. (2) Considers average trading multiples of comparable companies as of April 30th, 2009. 11 |
Analysis of the relationship of substitution based on DCF ----------------------------------------------------------------------------------- Cosan ----------------------------------------------------------------------------------- Economic value per stock using the discounted cash flow method R$ in millions, except price per share (R$ million) Equity value 8,876 Number of shares (thousands) 328,285 -4.75% +4.75% ---------------------------------------------------------------------------------- Equity value 8,454 8,876 9,298 Price per share (R$) 25.75 27.04 28.32 ---------------------------------------------------------------------------------- ----------------------------------------------------------------------------------- NovAmerica ----------------------------------------------------------------------------------- Economic value per stock using the discounted cash flow method R$ in millions, except price per share (R$ million) Equity value 1,205 Number of shares (thousands) 334 -4.75% +4.75% ---------------------------------------------------------------------------------- Equity value 1,148 1,205 1,262 Price per share (R$) 3,433.98 3,605.22 3,776.47 ---------------------------------------------------------------------------------- 121.2492x 133.3423x 146.6415x o Based on the methodology and assumptions presented, the estimated Value of Cosan's Stock is between R$ 6,967M and R$ 7,662M, or per share value between R$ 21,22 and R$ 23,34 o Based on the methodology and assumptions presented, the estimated Value of NovAmerica's Stock is between R$ 1,235M and R$ 1,358M, or a per share value between R$ 3,694.22 and R$ 4,062.68 o The relationship of substitution range between Cosan's stock and NovAmerica's stock is 158.2819 and 191.4297x, based on the comparison of the calculated indicative stock values for both Companies o The implicit relationship of substitution agreed upon by Cosan and NovAmerica in the Memorandum equals 132.5676 x Source: CVM,(SEC) Cosan's financial statements (on 1/31/2009) and NovAmerica's financial statements (on 1/31/2009 and 4/3/2009) and Credit Suisse. 12 |
Analysis of the relationship of substitution based on Multiples -------------------------------------------------------------------------------------- - Cosan -------------------------------------------------------------------------------------- - Economic value per stock by the multiples method R$ in millions, except price per share (R$ millions) Equity value ((1)) 7,315 Number of shares (thousands ) 328,285 -4.75% +4.75% ----------------------------------------------------------------------- Equity value 6,967 7,315 7,662 Price per share (R$) 21.22 22.28 23.34 ----------------------------------------------------------------------- NovAmerica ------------------------------------------------------------------------- Economic value per stock by the multiples method R$ in millions, except price per share (R$ millions) Equity value ((1)) 1,296 Number of shares (thousands ) 334 -4.75% +4.75% --------------------------------------------------------------------------- Equity value 1,235 1,296 1,358 Price per share (R$) 3,694.22 3,878.45 4,062.68 --------------------------------------------------------------------------- 158.2819x 174.0686x 191.4297x o Based on the methodology and assumptions presented, the estimated Value of Cosan's Stock is between R$ 6,967M and R$ 7,662M, or per share value between R$ 21.22 and R$ 23.34 o Based on the methodology and assumptions presented, the estimated Value of NovAmerica's Stock is between R$ 1,235M and R$ 1,358M, or a per share value between R$ 3,694.22 and R$ 4,062.68 o The relationship of substitution range between Cosan's stock and NovAmerica's stock is 158.2819 and 191.4297x, based on the comparison of the calculated indicative stock values for both Companies o The implicit relationship of substitution agreed upon by Cosan and NovAmerica in the Memorandum equals 132.5676x Source: CVM(SEC), Cosan's financial statements (on 1/31/2009) and NovAmerica's financial statements (on 1/31/2009 and 4/30/2009) and Credit Suisse. (1) Value of shares equivalent to the average value based on the multiples EV/EBITDA 2009/10E and EV/EBITDA 2010/11E 13 |
3. Description of the market and the companies 14 |
Overview of sugar and ethanol market General industry outlook for Brazil According to USDA data, Brazil is one of the world's largest producers and exporters of sugar and ethanol. Projections indicate Brazilian production of the 2009/10 harvest will represent approximately 23% of the world's sugar market and 37% of all ethanol produced globally. Brazil exported approximately 61% of total sugar and 16% of all ethanol produced in the 2007/2008 harvest. Largest world producers of sugar [GRAPHIC OMITTED] Source: USDA, 2009/10 harvest projections in April 2009. Largest world producers of ethanol [GRAPHIC OMITTED] Source: RFA and F.O. Licht, 2008/09 harvest projections. Note: USDA - United States Department of Agriculture. 15 c |
Overview of sugar and ethanol market (cont'd) Brazil has significant competitive advantages that facilitate their position as one of the world's largest producers of sugar and ethanol: - Favorable climatic conditions - Vast land availability - Strong domestic market - Large production scale and low production costs - Raw material (sugar cane) with long life cycle (5-6 years) o The State of Sao Paulo is the largest producer of sugar and ethanol in Brazil: 62% of total sugar and 59% of all ethanol produced during the 2007/08 harvest o The sector accounted for approximately 2% of Brazilian GDP in 2007 Regional production of sugar cane [GRAPHIC OMITTED] Source: UNICA. Sugar and ethanol production - South-central region Production 2007/08 2008/09e2009/10e ------------------------------------------------------------------------ Sugar (millions of tons) 26.2 26.5 27.0 ------------------------------------------------------------------------ Ethanol (billions of 20.3 23.9 26.9 liters) ------------------------------------------------------------------------ Domestic Consumption ------------------------------------------------------------------------ Sugar (millions of tons) 9.8 8.0 8.0 ------------------------------------------------------------------------ Ethanol (billions of 17.3 19.7 23.7 liters) ------------------------------------------------------------------------ Available for export ------------------------------------------------------------------------- Sugar (millions of tons) 16.4 18.5 19.0 ------------------------------------------------------------------------- Ethanol (billions of 3.1 4.2 3.2 liters) ------------------------------------------------------------------------------- Source: UNICA. -------------------------------------------------------------------------------- Brazilian production of sugar cane -------------------------------------------------------------------------------- [GRAPHIC OMITTED] Source: UNICA. 16 |
Overall market overview of sugar and ethanol (cont'd) Brazilian production of ethanol [GRAPHIC OMITTED] Brazilian production of sugar [GRAPHIC OMITTED] Source: UNICA and Foreign Trade Office (Secretaria de Comercio Exterior) 17 |
3. Description of the market and companies 3.1. Cosan S.A. Industria e Comercio 18 |
Cosan's Summary Brief Description Overview The COSAN Group is one of the largest producers, traders and global exporters of sugar and ethanol, with milling capacity of 44.8 million tonnes per year They are the largest global generators of electricity produced from sugar cane bagasse The own 18 plants, two refineries and two port terminals, one for sugar and one for ethanol With operations thus far concentrated in Sao Paulo, they initiated 2005 - IPO on Bovespa's New Market the Jatai unit operation in 2009, the first module of a greenfield project in Goias Recently, they entered into two new businesses - land acquisition and fuel distribution - and are present in every link of the sugar- alcohol agro industrial chain, becoming the first Brazilian company of renewable energy to be fully integrated Produces seven types of sugar for industrial use: crystal, crystal demerara, VHP (Very High Polarization), refined amorphous, refined granulated, liquid sucrose and inverted liquid Produces four types of alcohol: refined hydrated alcohol, neutral hydrated alcohol, hydrated ethanol fuel and ethanol anhydrous History 1936 - Incorporation of Usina Costa Pinto 1984-94 - Development of VHP sugar (Very High Polarization) 1996 - Granted concession of terminal to export sugar 1997 - Partnership with Tate & Lyle 2000 - Official incorporation of Cosan S.A. 2000 - Alliance with Tereos and Sucden 2002 - Acquisition of Da Barra 2005 - Loan with IFC 2005 - Alliance with the Kuok Group 2006 - Perpetual bond issue (US$ 450 million) 2007 - 10 year bond Issue (US$ 400 million) 2007 - NYSE IPO of Cosan Ltd, controlling company 2008 - Cosan S.A. capital Increase (R$ 880 million) 2008 - Establishment of Radar subsidiary 2008 - Acquisition of Exxon assets in Brazil ($ 900 million) Note: Greenfield: term for projects that take place at a location where there are no assets of operations. Source: Website and companies reports. 19 |
Cosan's Summary (cont'd) Company Overview Status: Listed on the New Market (Bovespa) - Ticker: CSAN3 Founded in: 1936 Headquarters: Piracicaba, Sao Paulo, Brazil Administration: Rubens Ometto Silveira Mello, CEO Pedro Isamu Mizutani, Executive Vice President Marcelo Eduardo Martins, CFO, Investor Relations and M&A Executive Director Marcos Marinho Lutz, Commercial and Logistic Vice President Board Members: Rubens Ometto Silveira Mello, President Pedro Isamu Mizutani, Vice-President Marcelo Eduardo Martins, Member Burkhard Otto Cordes, Member Pedro Luiz Cerize, Independent member Mailson Ferreira da Nobrega, Independent member Marcus Vinicius Pratini de Moraes, Independent member Operational Highlights - harvest of 2007/08 40.3 million tons of processed sugar cane 1.6 billion liters of sold ethanol 415.5 million liters of exported ethanol Source: Website and the company's consolidated financial dada . 20 |
Cosan's organization structure [GRAPHIC OMITTED] Source: Cosan S.A. Annual Report (2008) . 21 |
Cosan's financial information Financial information In millions of R$ Consolidated Income Statement Fiscal year ended in April 30 9 months ended in 2006 2007 2008 Jan-31-08 Jan-31-09 Net Operational Revenues 2,477.9 3,605.1 2,736.2 1,893.2 4,199.2 Gross Profit 756.6 1,123.9 349.0 199.7 559.5 Margin 30.5% 31.2% 12.8% 10.5% 13.3% Revenues (Expenses) Operational (819.1) (558.6) (428.0) (262.5) (1,285.8) Profit (Loss) Operational (62.5) 565.3 (79.0) (62.9) (726.2) Margin -2.5% 15.7% -2.9% -3.3% -17.3% Net Income (64.6) 357.3 (47.8) (42.5) (433.6) Margin -2.6% 9.9% -1.7% -2.2% -10.3% EBITDA 517.7 928.0 172.9 126.7 435.5 Margin 20.9% 25.7% 6.3% 6.7% 10.4% Source: Cosan's financial statements, CVM. Cosan's consolidated financial statements, audited by Ernst & Young for year-ended April 30th 2006, 2007 and 2008 and the interim consolidated financial statements for the nine-month period ended January 31, 2008 and 2009 (subject of a special review report by Ernst & Young) 22 |
Cosan's financial information (cont'd) Balance sheet In millions of R$ Balance Sheet Fiscal year ended in April 30 2006 2007 2008 Jan-31-09 Assets 5,604.8 6,263.5 7,393.5 11,039.4 Current Assets 2,013.5 2,224.8 2,283.6 3,409.0 Cash and Cash and Equivalents 831.5 1,217.1 1,010.0 689.7 Derivative Financial Instruments 288.6 37.6 86.5 17.9 Accounts Receivable 212.6 112.3 215.2 459.0 Inventories 390.8 503.4 570.5 1,643.7 Advances to Suppliers 132.7 211.4 226.2 239.9 Related Parties - - 16.3 35.8 Deferred Income Taxes 41.4 38.1 - - Recoverable Taxes 63.4 54.0 129.8 240.7 Other Assets 52.5 50.9 29.1 82.3 Noncurrent Assets 3,591.3 4,038.7 5,109.9 7,630.4 Deferred Income and Social Contrib. Taxes 361.8 242.5 357.0 665.0 Advances to Suppliers - - 77.3 125.3 Other Assets 204.4 554.1 618.3 676.8 Investments 13.4 93.2 120.3 280.5 Property, Plant and Equipment 1,656.4 2,013.1 2,771.4 3,365.0 Goodwill 1,353.0 1,133.2 1,160.7 2,493.8 Deferred Charges 2.3 2.6 4.9 24.0 Source: Cosan's financial statements, CVM. Cosan's consolidated financial statements, audited by Ernst & Young for year-ended April 30th 2006, 2007 and 2008 and the interim consolidated financial statements for the nine-month period ended January 31, 2008 and 2009 (subject of a special review report by Ernst & Young) 23 |
Cosan's financial information (cont'd) Balance sheet --------------------------------------------------------------------------------------- In millions of R$ Balance Sheet Fiscal year ended in April 30 2006 2007 2008 Jan-31-09 Liabilities & Shareholder's Equity 5,604.8 6,263.5 7,393.5 11,039.4 Current Liabilities 670.0 591.9 577.7 2,358.3 Loans and Financing 68.8 89.0 83.3 1,484.7 Derivatives Financial Instruments 65.4 35.5 41.9 49.5 Suppliers 201.7 113.8 191.0 518.2 Salaries Payable 49.7 63.3 80.7 77.7 Taxes and Social Contributions Payable 111.1 126.2 116.1 163.2 Advances from Customers 79.2 49.4 26.3 33.1 Other Liabilities 94.1 114.7 38.4 31.9 Noncurrent Liabilities 3,565.3 4,020.4 3,472.3 4,953.1 Loans and Financing 2,002.7 2,770.4 2,136.2 2,904.5 Taxes and Social Contributions Payable 446.9 338.5 359.3 336.0 Provision for Contingencies 907.4 728.0 832.4 1,114.1 Other Liabilities 208.3 183.5 144.4 598.5 Minority Interest 14.0 20.2 17.7 31.5 Shareholder's Equity 1,355.5 1,631.0 3,325.8 3,696.5 Capital 1,185.8 1,192.7 2,935.3 3,815.3 Profit Reserves - 227.3 180.2 180.2 Other Reserves 195.9 211.0 210.3 109.1 Stock in Treasury - - - (4.2) Accumulated Profits (Losses) (26.2) - - (403.9) -------------------------------------------------------------------------------------- Source: Cosan's financial statements, CVM. Cosan's consolidated financial statements, audited by Ernst & Young for year-ended April 30th 2006, 2007 and 2008 and the interim consolidated financial statements for the nine-month period ended January 31, 2008 and 2009 (subject of a special review report by Ernst & Young) 24 |
3. Description of the market and companies 3.2. Curupay S.A. Participacoes ("NovAmerica") [GRAPHIC 25 |
NovAmerica's Summary Brief Description Overview With over 60 years of history, the NovAmerica group is one of the largest sugar cane processors in Brazil Total milling capacity of over 8.5 million tons per year Largest sugar and ethanol producer in the Medio Vale do Paranapanema, in the state of Sao Paulo The group is the current leader of the Brazilian refined sugar retail market, with a share of approximately 37.6%, operating under the brands: Union, Dolce, Ducula and Neve They own three sugar and ethanol plants: Taruma, Maracai and Paraguacu Distillery, which together are responsible for milling approximately 90% of the sugar cane consumed by the group They own two packing units (in Sertaozinho - SP and Araquari -SC) and one refining and packing unit (in Piedade-RJ) Portfolio of products: crystal sugar, refined amorphous and granulated, light, liquid, confectioner's, ethyl alcohol (anhydrous and hydrated), yeast from sugar cane and electricity from biomass -------------------------------------------------------------------------------- History 1944 - Renato de Rezende Barbosa purchase Fazenda Nova America 1994 - Production of the refined brand Dolce 2005 - Incorporation of Usina Maracai 2005 - Uniao brand acquisition 2008 - Acquisition of Paralcool (Paraguacu Destillery) -------------------------------------------------------------------------------- Operational Highlights ------------------------------------------------------ Harvest of 07/08 UNITS TOTAL ------------------------------------------------------ Milling Tons (`000) 8,700 Sugar Tons (`000) 656 Ethanol m(3) (`000) 311 Anhydrous m(3) (`000) 247 Hydrated m(3) (`000) 64 Sugar mix % 42.2 Ethanol mix % 57.8 Electric energy MW 150,000 ------------------------------------------------------- Source: Website and company reports. 26 |
NovAmerica's organizational structure Structure on January 31st, 2009 [GRAPHIC OMITTED] Note: TEAS is to be the object of a purchase and sale transaction and is not included in the incorporation. 27 |
NovAmerica's organization structure Structure after corporate reorganization [GRAPHIC OMITTED] Note: TEAS is to be the object of a purchase and sale transaction and is not included in the incorporation. 28 |
NovAmerica's financial information Financial information In millions of R$ Consolidated Income Statement Fiscal year ended in March 30 2006 2007 2008 9M08((1)) 9M09((1)) Net Operating Revenues 1,099.6 1,244.1 912.3 855.7 1,009.8 Gross Profit 258.1 286.5 120.5 127.1 177.7 Margin 23.5% 23.0% 13.2% 14.9% 17.6% Operational Revenues (Expenses) (247.8) (192.2) (257.4) (195.9) (267.0) Operational Profit (Loss) 10.2 94.3 (136.9) (68.8) (89.3) Margin 0.9% 7.6% -15.0% -8.0% -8.8% Net Income 17.9 73.8 (72.3) (27.7) (58.8) Margin 1.6% 5.9% -7.9% -3.2% -5.8% EBITDA 123.5 119.4 36.4 76.8 169.9 Margin 11.2% 9.6% 4.0% 9.0% 16.8% ---------------------------------------------------------------------------------- Source: Nova America S.A. - Agroenergia's consolidated financial statements, audited by Delloite Touche Tohmatsu ("Delloite") for year-ended April 30th 2006, 2007 and 2008; the interim consolidated financial statements for the nine-month period ended January 31, 2009 (subject of a special review report by Delloite) and Curupay S.A. - Participacoes ("NovAmerica") financial statements, audited by Delloite for year-ended April 30th, 2009 29 |
NovAmerica's financial information (cont'd) ---------------------------------------------------------------------------------------------------------------- Balance Sheet ---------------------------------------------------------------------------------------------------------------- In millions of R$ Balance sheet Fiscal year ended in March 30 2006 2007 2008 jan-31-08 jan-31-09 apr-31-09((1)) Assets 903.9 1,056.7 1,598.9 1,445.1 1,760.6 1,815.7 Current Assets 393.2 483.9 457.2 514.2 490.4 409.1 Cash and Cash Equivalents 38.1 71.2 126.6 72.6 37.2 40.0 Accounts Receivable 148.2 103.7 105.1 132.0 156.5 121.6 Inventories 158.1 243.4 180.1 266.7 247.6 159.1 Others 48.8 65.7 45.4 42.9 49.1 88.3 Noncurrent Assets 510.7 572.8 1,141.7 931.0 1,270.2 1,406.6 Deferred Income and Social Contributions Taxes 27.2 27.3 136.5 85.3 233.3 86.7 Others 20.7 28.7 42.6 31.1 - 234.2 Fixed Assets 462.8 516.7 962.6 814.6 1,036.9 1,085.7 Investiments 0.7 1.4 164.3 165.1 0.6 72.4 Property, Plant and Equipment 400.0 468.1 764.1 611.6 838.1 693.1 Intangible 62.0 47.3 34.2 38.0 198.3 320.3 Source: Nova America S.A. - Agroenergia's consolidated financial statements, audited by Delloite Touche Tohmatsu ("Delloite") for year-ended April 30th 2006, 2007 and 2008; the interim consolidated financial statements for the nine-month period ended January 31, 2009 (subject of a special review report by Delloite) and Curupay S.A. - Participacoes ("NovAmerica") financial statements, audited by Delloite for year-ended April 30th, 2009 (1) NovAmerica's audited Balance Sheet, after corporate restructuring. 30 |
NovAmerica's financial information (cont'd) Balance sheet In millions of R$ Balance sheet Fiscal year ended in March 30 2006 2007 2008 jan-31-08 jan-31-09 apr-31-09((1)) Liabilities & Shareholder's Equity 903.9 1,056.7 1,598.9 1,445.1 1,760.6 1,815.7 Current Liabilities 236.0 345.8 657.0 412.2 716.5 921.1 Loans and Financing 53.0 226.1 87.5 107.1 384.7 636.5 Debentures - - 321.3 5.7 11.5 - Suppliers 82.0 60.6 75.7 59.1 92.5 159.9 Taxes 18.3 17.6 34.9 35.2 41.1 - Dividends Payable 63.1 - - - - - Provisions 17.1 16.4 22.1 13.1 14.5 - Liabilities with Related Parties - 21.3 68.4 143.2 94.0 - Others 2.6 3.9 47.1 48.8 78.3 124.7 Noncurrent Liabilities 306.9 341.6 645.3 691.3 668.9 560.5 Loans and Financing 185.3 229.9 195.2 200.9 195.5 503.7 Debentures - - - 306.9 150.0 - Provisions 19.2 14.5 19.5 19.1 23.7 13.9 Liabilities with Related Parties - - 150.1 - 156.2 - Advances for Future Capital Raising 4.2 - 103.7 14.9 - 0.5 Others 60.6 61.3 141.0 113.5 107.6 42.5 Results from Future Periods 37.7 35.9 35.9 35.9 35.9 - Minority Interest 0.9 0.1 0.2 0.0 0.2 0.0 Shareholder's equity 360.9 369.4 296.5 341.7 375.2 334.2 Capital 262.0 314.0 314.0 314.0 448.0 334.2 Capital Reserve 2.0 - - - - - Profit Reserve 4.2 4.7 4.7 4.7 4.7 - Accumulated Profit (Losses) 92.7 50.7 (22.1) 23.0 (77.5) - --------------------------------------------------------------------------------------------------------------------------------- Source: Nova America S.A. - Agroenergia's consolidated financial statements, audited by Delloite Touche Tohmatsu ("Delloite") for year-ended April 30th 2006, 2007 and 2008; the interim consolidated financial statements for the nine-month period ended January 31, 2009 (subject of a special review report by Delloite) and Curupay S.A. - Participacoes ("NovAmerica") financial statements, audited by Delloite for year-ended April 30th, 2009 (1) NovAmerica's audited Balance Sheet, after corporate restructuring. 31 |
4. General Assumptions of the Appraisal Report 32 |
Macro-economic Assumptions The macroeconomic assumptions detailed below represent estimated values presented in the Focus Report by Banco Central as of April 30th 2009 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 Exchange rates R$/US$ end of period 2.22 2.25 2.25 2.27 2.32 2.37 2.43 2.49 2.55 2.61 R$/US$ average 2.23 2.22 2.22 2.24 2.29 2.35 2.40 2.46 2.52 2.58 Inflation IGP-M((1)) 2.9% 4.5% 4.5% 4.5% 4.4% 4.4% 4.4% 4.4% 4.4% 4.4% IPCA((1)) 4.3% 4.4% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% EUA inflation((2)) 0.1% 1.1% 1.5% 1.8% 1.9% 1.9% 1.9% 1.9% 1.9% 1.9% Taxa de juros Average Selic((1)) 9.9% 9.5% 9.5% 9.5% 9.5% 9.5% 9.5% 9.5% 9.5% 9.5% Gross Domestic Product GDP Real Growth - Brazil((1)) 1.0% 3.7% 4.1% 4.2% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% GDP Real Growth - Global((3)) 0.9% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% GDP Real Growth - USA((3)) -0.5% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Source: Focus Report of Brazilian Central Bank as of April 30, 2009. Note: Values converted from calendar year to Cosan and NovAmerica's fiscal year (May 1st to April 30th). (1) Because of the inexistence of interest rates, inflation and GDP estimates from 2014, w as considered the values presented in 2013 to Selic (9.5%), IGP-M (4.4%), IPCA (4.5%) and GDP real grow th (4.0%) (2) Source: Economist Inteligence Unit, as of 4/29/2009. (3) Source: World Bank until 2010, as of 03/31/2009. Constant since then. From 2014 onwards, exchange rate forecasts assume maintenance of the purchasing power parity between the US and Brazilian currencies 33 |
5. Cosan's Appraisal 5.1. Discounted Cash Flow 34 |
Appraisal using discounted cash flow CS has evaluated Cosan according to the discounted cash flow (DCF) method Methodology O Unlevered cash flow method - Projection of unlevered cash flows - Cash flows are discounted based on Weighted Average Cost of Capital (WACC), in order to calculate its present value Projections O CS used, for evaluation purposes, the operational and financial projections provided by and/or discussed with Cosan's administrative teams, in nominal R$. Currency O Projections in nominal R$ O The unlevered cash flow is converted into US$ each year in order to be discounted Discounted Cash Flow O Base date: April 30th 2009; cash flows are converted to April 30th 2009 present value. O Projection Horizon: 2009/2010 to 2018/2019 O Considers that flows are generated throughout the year ("mid-year convention") O Discounted cash flow in nominal US$ 35 |
Economic value - discounted cash flow Based on the economic value criteria according to the discounted cash flow method, as of April 30th 2009, Cosan's stock prices ranged from R$25,75 to R$28,32. -------------------------------------------------------------------------------- Economic value per stock according to the discounted cash flow method -------------------------------------------------------------------------------- R$ million, except values per stock (R$ million) Equity value 8,876 Number of shares (thousands) 328,285 -4.75% +4.75% ------------------------------------------------------------------------------ Equity value 8,454 8,876 9,298 Price per share (R$) 25.75 27.04 28.32 ------------------------------------------------------------------------------ Source: CVM (SEC) Cosan's financial statements (as of Jan 30th 2009) and Credit Suisse. 36 |
Main Assumptions Used Macro-economics Macro-economic scenario of the Focus Report from Banco Central dated April 30th 2009 Cost of sold products According to projections by Cosan's Administration Operational Expenses According to projections by Cosan's Administration Working capital According to projections by Cosan's Administration for stock variations, accounts payable, receivables, other assets and other liabilities Terminal value Gordon growth model (in perpetuity)((1)), in 2018/19 Assumes a growth rate of 2.5% in US$ nominal terms in perpetuity Other Logistics negotiations are currently held in conjunction by Cosan and NovAmerica, with 71.2% and 28.8% participations, respectively. Cash flow from this business are weighted according to the percentage above for each Company. Discount rate Discount rate calculated based on: (i) median unlevered beta of the sector re-levered by the projected optimal capital structure, (ii) optimal capital structure based on comparable companies in the sector and discussions with Cosan's Administration, and (iii) country risk. Perpetuity = FCL(n) x (1+g) -------------- WACC - g (1) Estimated based on the free cash flow for the previous projection period and incremented by the growth expectation, using the Continuous Growth Model or Gordon Growth Model as shown in the equation: Where: "FCL(n)" is the projected free cash flow for the previous year, "g" is the continuous growth rate for the post-projected period and "WACC" is the average capital cost weighted by the optimal capital structure. 37 |
Main Projections Sugar and Ethanol Crushing Capacity [GRAPHIC OMITTED] Prices - Sugar [GRAPHIC OMITTED] Production Mix [GRAPHIC OMITTED] Prices- Ethanol [GRAPHIC OMITTED] 38 |
Main Projections (cont'd) Distribution [GRAPHIC OMITTED] 39 |
Main Projections (cont'd) Logistics -------------------------------------------------------------------------------- Volume [GRAPHIC OMITTED] -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Prices -------------------------------------------------------------------------------- 40 |
Main Projections (cont'd) Cogeneration -------------------------------------------------------------------------------- Installed Capacity [GRAPHIC OMITTED] -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Energy available for sale [GRAPHIC OMITTED] -------------------------------------------------------------------------------- 41 |
Main Projections (cont'd) Financial Results -------------------------------------------------------------------------------- Net Income [GRAPHIC OMITTED] -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- EBITDA [GRAPHIC OMITTED] -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- EBIT [GRAPHIC OMITTED] -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Investments [GRAPHIC OMITTED] -------------------------------------------------------------------------------- 42 |
Main Projections (cont'd) Operational Cash flow -------------------------------------------------------------------------------- Cash flow for the company (R$ millions) -------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------------------------------------- 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 Perpetuity ---------------------------------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------------------------------------- Net Revenues 15,897,417 17,543,744 19,774,794 22,136,334 24,496,440 26,327,243 28,220,81330,310,536 32,592,853 34,985,685 35,277,084 ---------------------------------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------------------------------------- EBITDA 1,638,801 1,948,083 2,532,761 3,063,534 3,663,938 3,930,545 4,111,238 4,359,643 4,645,957 4,904,484 4,748,763 ---------------------------------------------------------------------------------------------------------------------------------------------------------- (-) Depreciation and (829,854) (958,282) (1,118,397)(1,060,847)(1,096,325) (1,124,551)(1,189,623)(1,240,000)(1,295,078)(1,337,920)(1,054,119) Amortization ---------------------------------------------------------------------------------------------------------------------------------------------------------- EBIT 808,947 989,801 1,414,364 2,002,687 2,567,613 2,805,994 2,921,616 3,119,643 3,350,879 3,566,564 3,694,644 ---------------------------------------------------------------------------------------------------------------------------------------------------------- (-) Taxes (270,392) (326,788) (467,173) (660,516) (848,049) (927,116) (964,235)(1,028,911)(1,104,569)(1,174,033)(1,278,283) ---------------------------------------------------------------------------------------------------------------------------------------------------------- Unlevered Net Income 538,556 663,013 947,191 1,342,172 1,719,564 1,878,878 1,957,381 2,090,732 2,246,310 2,392,531 2,317,099 ---------------------------------------------------------------------------------------------------------------------------------------------------------- (+) Depreciation and 829,854 958,282 1,118,397 1,060,847 1,096,325 1,124,551 1,189,623 1,240,000 1,295,078 1,337,920 1,054,119 Amortization (-) Investiments (1,412,307) (1,766,551) (2,017,437)(1,387,996) (954,045) (870,008) (894,138) (942,641) (979,262)(1,054,119)(1,054,119) (-) Working Capital Variation (88,123) (91,097) (158,651) (118,164) (148,543) (103,261) (113,657) (112,338) (121,305) (122,221) (122,221) ---------------------------------------------------------------------------------------------------------------------------------------------------------- Free Cash Flow to the Firm (132,021) (236,353) (110,500) 896,859 1,713,301 2,030,161 2,139,208 2,275,754 2,440,820 2,554,111 2,194,878 FCF (R$) ---------------------------------------------------------------------------------------------------------------------------------------------------------- Fx rate 2.23 2.22 2.22 2.24 2.29 2.35 2.40 2.46 2.52 2.58 2.58 ---------------------------------------------------------------------------------------------------------------------------------------------------------- Free Cash Flow to the Firm (59,114) (106,465) (49,700) 399,789 747,310 865,119 890,014 924,416 968,003 988,961 9,679,014 FCF (US$) ---------------------------------------------------------------------------------------------------------------------------------------------------------- US$ millions R$ millions ------------------------------------------------------------------------------------------- Enterprise Value $5,691 $12,397 Discounted Cash Flows - 2009/10 - 2018/19 $2,605 $5,674 Perpetuity $3,086 $6,723 Net Debt $3,521 Equity Value $8,876 ------------------------------------------------------------------------------------------- 43 |
5. Cosan's Appraisal 5.2. Economic Value - comparable companies' multiples 44 |
Eonomic Value - comparable companies' multiples Based on the economic value criteria by the comparable companies' multiples method, Cosan's value range per stock is demonstrated below: ----------------------------------------------------------------------------------------------------- Economic value by the comparable companies' multiples method ----------------------------------------------------------------------------------------------------- R$ millions, except values per stock (R$ million) 2009/10E 2010/11E EBITDA $1,638.8 $1,948.1 x EV/EBITDA((2)) 6.4x 5.8x = Enterprise Value 10,420.1 11,251.0 - Net debt $3,521.0 $3,521.0 = Equity Value 6,899.1 7,730.0 Number of shares (millions)((1)) 328.3 328.3 --------------------------------------------------------------------------------------------- low (-4.75%) R$ 20.02 R$ 22.43 R$/share average R$ 21.02 R$ 23.55 high (+4.75%) R$ 22.01 R$ 24.67 --------------------------------------------------------------------------------------------- Source: Cosan and Credit Suisse. (1) Considers average trade multiple of comparable companies as of April 30th 2009. (2) Source: CVM,(SEC) includes treasury stocks. 45 |
5. Cosan's Appraisal 5.3. Book value of shareholder's equity 46 |
Book value of shareholder's equity Based on book value of liquid net worth, Cosan's value per stock is R$11,26 ---------------------------------------------------------------------------------------------- Value of liquid net worth per share ---------------------------------------------------------------------------------------------- R$ millions, except values per stock (R$ million) 01/31/2009 Total assets R$ 11,039.4 (-) Total liabilities 7,311.3 (-) Minority interest 31.5 = Shareholder's equity 3,696.6 Number of shares (millions)((1)) 328.3 R$/share 11.26 ---------------------------------------------------------------------------------------------- Source: CVM (SEC), Cosan's financial statements (1) Includes treasury stock 47 |
5. Cosan's Appraisal 5.4. Weighted average price by stock's trade volume on BOVESPA 48 |
CSAN3 Weighted average price by stock's trade volume on BOVESPA Cosan stock price (CSAN3) on BOVESPA [GRAPHIC OMITTED] Source: Bloomberg, as of April 30th 2009. Cosan stocks are included in the Ibovespa index 49 |
Market value of stocks Based on the weighted average price by the trading volume of stocks issued by Cosan on BOVESPA, Cosan stock values are demonstrated below: Weighted average price by trading volume of stocks listed on BOVESPA Period of 12 months immediately preceding of the publication of the material fact ((1)) 11-mar-08 - 11-mar-09 R$ 18.99 Number of shares (millions) ((2)) 328.3 Equity Value (R$ millions) 6,234.3 Period of 90 days immediately preceding of the publication of the material fact ((1)) 11-dec-08 - 11-mar-09 R$ 10.68 Number of shares (millions) ((2)) 328.3 Equity Value (R$ millions) 3,505.7 Period between the date of publication of material fact and the date of the fairness opinion 12-mar-09 - 30-apr-09 R$ 12.05 Number of shares (millions) ((2)) 328.3 Equity Value (R$ millions) 3,956.1 Source: Bloomberg, as of April 30th (1) Relevant fact dated March 12th 2009 regarding NovAmerica's incorporation by Cosan. (2) Source: Cosan, Bloomberg and Economatica (includes treasury stock). 50 |
6. NovAmerica's Appraisal 6.1. Discounted Cash Flow 51 |
Discounted cash flow appraisal CS has appraised NovAmerica according to the discounted cash flow ("DCF") method Methodology o Unlevered cash flow method - Projection of unlevered cash flows - Cash flows are discounted based on Weighted Average Cost of Capital (WACC), in order to calculate its present value Projections o CS used, for evaluation purposes, the operational and financial projections provided by and/or discussed with NovAmerica's administrative teams, in nominal R$. o Projections consider NovAmerica's structure after corporate restructuring Currency o Projections in nominal R$ o The unlevered cash flow is converted into US$ each year in order to be discounted Discounted Cash Flow o Base date: April 30th of 2009; cash flows converted to April 30th of 2009 present value. o Projection horizon: 2009/2010 to 2018/2019 o Considers that flows are generated throughout the year ("mid-year convention") o Discounted cash flow in nominal US$ 52 |
Economic value - discounted cash flow Based on the economic value criteria according to the discounted cash flow method, as of April 30th 2009, NovAmecica stock prices ranged from R$3,433.98 to R$3,776.47 per stock ----------------------------------------------------------------------------------------------------- Economic value per stock according to the discounted cash flow method ----------------------------------------------------------------------------------------------------- R$ millions, except values per stock (R$ million) Equity value 1,205 Number of shares (thousands) 334 -4.75% +4.75% ------------------------------------------------------------------------------------- Equity value 1,148 1,205 1,262 Price per share (R$) 3,433.98 3,605.22 3,776.47 ------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- Source: CVM, (SEC) NovAmerica's financial statements (as of Jan 30th 2009) and Credit Suisse. 53 |
Main Assumptions Used Macro-economics Macro-economic scenario of the Focus Report from Banco Central dated April 30th 2009 Cost of sold products According to projections by NovAmerica's Administration Operational Expenses According to projections by NovAmerica's Administration Working capital According to projections by NovAmerica's Administration for stock variations, accounts payable, receivables, other assets and other liabilities Terminal value Gordon growth model (in perpetuity)((1)), in 2018/19 Assumes a growth rate of 2.5% in US$ nominal terms in perpetuity Other Logistics negotiations are currently held in conjunction by Cosan and NovAmerica, with 71.2% and 28.8% participations, respectively. Cash flow from this business are weighted according to the percentage above for each Company. Discount rate Discount rate calculated based on: (i) median unlevered beta of the sector re-levered by the projected optimal capital structure, (ii) optimal capital structure based on comparable companies in the sector and discussions with Cosan's Administration, and (iii) country risk. -------------------------------------------------------------------------------- (1) Estimated based on the free cash flow projected for the previous period and incremented by the growth expectation, using the Continuous Growth Model or Gordon Growth Model as shown in the equation: [equation omitted] Where: "FCL(n)" is the projected free cash flow for the previous year, "g" is the continuous growth rate for the post-projected period and "WACC" is the average capital cost weighted by the optimal capital structure. 54 |
Main Projections Sugar and Ethanol -------------------------------------------------------------------------------- Crushing Capacity [GRAPHIC OMITTED] -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Production mix [GRAPHIC OMITTED] -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Prices - Sugar [GRAPHIC OMITTED] -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Prices - Ethanol [GRAPHIC OMITTED] -------------------------------------------------------------------------------- 55 |
Main projections (cont'd) Logistics -------------------------------------------------------------------------------- Sales [GRAPHIC OMITTED] -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Prices [GRAPHIC OMITTED] -------------------------------------------------------------------------------- 56 |
Main projections (cont'd) Cogeneration -------------------------------------------------------------------------------- Energy available for sale -------------------------------------------------------------------------------- [GRAPHIC OMITTED] -------------------------------------------------------------------------------- 57 |
Main Projections (cont'd) Financial results -------------------------------------------------------------------------------- Net Income [GRAPHIC OMITTED] -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Gross Profit [GRAPHIC OMITTED] -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- EBITDA [GRAPHIC OMITTED] -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Investments [GRAPHIC OMITTED] -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Production mix [GRAPHIC OMITTED] -------------------------------------------------------------------------------- 58 |
Main projections (cont'd) -------------------------------------------------------------------------------- Cash flow for the company (R$ millions) -------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------------------------------------------- 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 Perpetuity ---------------------------------------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------------------------------------------- Net Revenues 1,491,274 1,564,033 1,771,749 1,833,770 1,925,372 2,013,247 2,101,053 2,192,861 2,288,793 2,390,286 2,455,976 ---------------------------------------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------------------------------------------- EBITDA 377,763 413,879 475,684 498,578 544,060 573,300 600,239 628,020 657,193 688,489 687,304 ---------------------------------------------------------------------------------------------------------------------------------------------------------------- (-) Depreciation and (123,261) (132,623) (115,496) (123,901) (93,173) (93,938) (104,874) (116,159) (127,834) (139,809) (135,645) Amortization ---------------------------------------------------------------------------------------------------------------------------------------------------------------- EBIT 254,502 281,256 360,188 374,677 450,888 479,362 495,365 511,861 529,359 548,680 551,659 ---------------------------------------------------------------------------------------------------------------------------------------------------------------- (-) Taxes (84,977) (94,030) (120,800) (125,650) (151,502) (161,109) (166,456) (171,971) (177,824) (184,418) (185,303) ---------------------------------------------------------------------------------------------------------------------------------------------------------------- Unlevered Net Income 169,525 187,226 239,388 249,026 299,385 318,253 328,909 339,890 351,535 364,262 364,123 ---------------------------------------------------------------------------------------------------------------------------------------------------------------- (+) Depreciation and 123,261 132,623 115,496 123,901 93,173 93,938 104,874 116,159 127,834 139,809 135,645 Amortization (-) Investiments (198,055) (220,338) (110,351) (95,066) (96,108) (109,151) (110,862) (115,984) (121,112) (135,645) (135,645) (-) Working Capital Variation (83,365) (7,461) (27,222) (7,590) (4,274) (11,600) (13,672) (14,332) (14,911) (15,322) (15,322) ---------------------------------------------------------------------------------------------------------------------------------------------------------------- Free Cash Flow to the Firm 11,366 92,050 217,311 270,271 292,177 291,441 309,249 325,733 343,347 353,104 348,802 FCF (R$) ---------------------------------------------------------------------------------------------------------------------------------------------------------------- Fx rate 2.23 2.22 2.22 2.24 2.29 2.35 2.40 2.46 2.52 2.58 2.58 ---------------------------------------------------------------------------------------------------------------------------------------------------------------- Free Cash Flow to the Firm 5,089 41,464 97,741 120,478 127,442 124,193 128,662 132,313 136,168 136,723 1,538,151 FCF (US$) ---------------------------------------------------------------------------------------------------------------------------------------------------------------- US$ millionsR$ millions -------------------------------------------------------------------------------- Enterprise Value $1,058$2,305 Discounted Cash Flows - 2009/10 - 2018/19 $568$1,236 Perpetuity $490$1,068 Net Debt $1,100 Equity Value $1,205 -------------------------------------------------------------------------------- 59 |
6. NovAmerica's Appraisal 6.2. Economic value - comparable companies' multiples 60 |
Economic Value - comparable companies' multiples Based on the criteria of economic value by the comparable companies' multiples method, the range of value per share of NovAmerica is as follows: ---------------------------------------------------------------------------------------------------- :Economic value per share by the comparable companies' multiples method ---------------------------------------------------------------------------------------------------- (R$ million) 2009/10E 2010/11E EBITDA $377.8 $413.9 x EV/EBITDA((2)) 6.4x 5.8x = Enterprise Value 2,402.0 2,390.3 - Net debt $1,100.1 $1,100.1 = Equity Value 1,301.9 1,290.3 Number of shares (millions)((1)) 0.3 0.3 ---------------------------------------------------------------------------------------------------- low (-4.75%) R$ 3,710.79 R$ 3,677.65 R$/share average R$ 3,895.85 R$ 3,861.05 high (+4.75%) R$ 4,080.90 R$ 4,044.45 ---------------------------------------------------------------------------------------------------- Source NovAmerica and Credit Suisse. (1) As of April 30th 2009. (2) Considers average trading of comparable companiies as of April 30th 2009. 61 |
6. NovAmerica Appraisal 6.3. Book value of shareholder's equity 62 |
Book value of shareholder's equity Based on the criteria of liquid net worth, the value per NovAmerica share is R$1,000.00 per share ---------------------------------------------------------------------------------------------- Book value of liquid net worth per share ---------------------------------------------------------------------------------------------- R$ millions, except values per share (R$ million) 3/30/2009 Total assets R$ 1,815.7 (-) Total liabilities 1,481.5 (-) Minority interest 0.0 = Shareholder's equity 334.2 Number of shares (millions)((1)) 0.3 R$/share 1,000.0 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- Source: NovAmerica financial statements (1) As of April 30th 2009. 63 |
7. Analysis of the relationship of substitution 64 |
Analysis of the relationship of substitution based on DCF [GRAPHIC OMITTED] o Based on the methodology and assumptions presented, the estimated Value of Shares for Cosan is between R$8.454M and R$9.298M, or a value per share between R$25,75 and R$28,32 o Based on the methodology and assumptions presented, the estimated Value of Shares for NovAmerica is between R$1.148M and R$1.262M, or a value per share between R$3.433,98 and R$3.776,47 o The range of the substitution relationship between Cosan and NovAmerica shares is between 121.2492x and 146.6415x, based on comparison of the indicative values per share calculated for both Companies o The implicit substitution relationship agreed between Cosan and NovAmerica in the Memorandum is equivalent to 132.5676x -------------------------------------------------------------------------------- Source: CVM (SEC) Cosan financial statements (as of 31/1/2009) and NovAmerica (as of 31/1/2009 and 30/4/2009) and Credit Suisse. 65 |
Analysis of the relationship of substitution based on Multiples [GRAPHIC OMITTED] o Based on the methodology and premises presented the estimated Value of Shares for Cosan is between R$6.967M and R$7.662M, or a value per share between R$21,22 and R$23,34 o Based on the methodology and premises presented the estimated Value of Shares for NovAmerica is between R$1.235M and R$1.358M, or a value per share between R$3.694,22 and R$4.062,68 o The range of the substitution relationship between Cosan and NovAmerica shares is between 158.2819x and 191.4297x. based on comparison of the indicative values per share calculated for both Companies o The implicit substitution relationship agreed between Cosan and NovAmerica in the Memorandum is equivalent to 132.5676x -------------------------------------------------------------------------------- Source: CVM (SEC) Cosan financial statements (as of 31/1/2009) and NovAmerica (as of 31/1/2009 and 30/4/2009) and Credit Suisse. (1) Value of Shares equivalent to average value between/based on multiples EV/EBITDA 2009/10E and EV/EBITDA 2010/11E 66 |
Appendix A. Companies' Weighted Average Cost of Capital (WACC) 67 |
Weighted Average Cost of Capital (WACC) Debt / Leverage Taxes Beta Beta S.Equity Factor Unlevered Assumptions Comparable Companies (B)(4) (4) (5) (6) --------------------------------------------------------------------------------------------------------------------------------- Sao Martinho 0.958 70.8% 1.47 34.0% 0.65 Taxes -Brasil 34.00% Acucar Guarani 1.277 100.0% 1.66 34.0% 0.77 USA risk free rate (Rf)(1) 2.97% Agrana Beteiligungs AG 0.356 100.0% 1.75 25.0% 0.20 Market Risk Premium (Rm) (2) 7.07% Associated British Foods PLC 0.886 15.9% 1.11 30.0% 0.80 Country Risk Premium (CRP) (3) 3.86% CSR Ltd. 1.494 81.1% 1.57 30.0% 0.95 ------------------------------------------- Danisco A/S 0.965 95.5% 1.69 28.0% 0.57 Ebro Puleva S.A. 0.566 84.8% 1.57 32.5% 0.36 Greencore Group PLC 1.394 100.0% 1.88 12.5% 0.74 Illovo Sugar Ltd. 0.750 41.8% 1.26 36.9% 0.59 Suedzucker AG 0.679 69.7% 1.43 38.4% 0.48 Tate & Lyle PLC 0.959 79.4% 1.56 30.0% 0.62 Tongaat-Hulett Ltd. 1.024 27.8% 1.18 36.9% 0.87 Bajaj Hindustan Ltd. 1.571 100.0% 1.66 34.0% 0.95 Balrampur Chini Mills Ltd. 1.496 91.8% 1.61 34.0% 0.93 Shree Renuka Sugars Ltd. 1.367 57.8% 1.38 34.0% 0.99 Average 1.05 74.4% 31.3% 0.70 Median 0.97 81.1% 34.0% 0.74 --------------------------------------------------------------------------------------------------------------------------------------------------- Cost of debt before taxes 9.5% 10.0% 10.5% 11.0% 11.5% 12.0% Cost of debt after taxes 6.3% 6.6% 6.9% 7.3% 7.6% 7.9% ----------------------------------------------- Total Debt/ Total Debt/ Unlev. Beta Leverage Levered Cost of Debt/ Total Cap((7)) S. Equity Average Factor Beta(8) Equity(9) Total C. WACC -------------------------------------------------- 20.0% 25.0% 0.74 1.17 0.87 13.0% 20.0% -------------------------------------------------- 11.6% 11.7% 11.7% 11.8% 11.9% 11.9% 25.0% 33.3% 0.74 1.22 0.91 13.2% 25.0% 11.5% 11.6% 11.7% 11.7% 11.8% 11.9% ----------------------------- 30.0% 42.9% 0.74 1.28 0.95 13.6% 30.0% 11.4% 11.5% 11.6% 11.7% 11.8% 11.9% 35.0% 53.8% 0.74 1.36 1.01 14.0% 35.0% 11.3% 11.4% 11.5% 11.6% 11.7% 11.8% 40.0% 66.7% 0.74 1.44 1.07 14.4% 40.0% 11.1% 11.3% 11.4% 11.5% 11.7% 11.8% ----------------------------- 45.0% 81.8% 0.74 1.54 1.14 14.9% 45.0% 11.0% 11.2% 11.3% 11.5% 11.6% 11.8% 50.0% 100.0% 0.74 1.66 1.23 15.6% 50.0% 10.9% 11.1% 11.2% 11.4% 11.6% 11.7% -------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------------------------------- (1) Risk Free Rate for USA calculated by the Credit SuisseFinancial Strategies Group (2) Stock market risk premium calculated by the Credit Suisse Financial Strategies Group (3) Brazil risk premium calculated by the Credit Suisse Financial Strategies Group (4) Barra Beta, as of 04/30/2009. (5) Leverage Factor: 1+ (1- tax rate) x (Debt/ Total Capital). (6) Unlevered Beta: Beta / Leverage Factor. (7) Total Capital = Debt + Shareholder's Equity. (8) Levered Beta x Leverage Factor (9) Custo do Capital Proprio: Rf + B x (Rm - Rf). WACC (Weighted Average Cost of Capital) calculated in nominal dollars of 11% to 12% p.a. 68 |
Appendix B. Market multiples of comparable companies 69 |
Market multiples of comparable companies (in local currency, in millions) Company Average Daily Net Value of alue of Trading Volume (1) Debt Shares ompany EV / EBITDA 2010E EV / EBITDA 2011E Companies Selected -------------------------------------------------------------------------------------------------------------------------------------------- Brazil Sao Martinho((1)) 0.73 918 1,436 2,354 6.5x 6.0x Acucar Guarani((1)) 1.42 744 363 1,107 2.9x 1.8x Average 4.7x 3.9x Median 4.7x 3.9x Foreign Agrana Beteiligungs AG((2)) 0.51 656 689 1,345 7.5x 7.0x Associated British Foods PLC((3)) 39.36 1,143 5,293 6,436 6.0x 5.6x CSR Ltd.((4)) 12.98 1,340 1,669 3,009 5.8x 4.8x Danisco A/S((1)) 13.99 10,400 8,367 18,767 9.7x 8.9x Ebro Puleva S.A.((5)) 9.23 1,165 1,427 2,593 8.4x 7.9x Greencore Group PLC((3)) 0.88 283 166 449 4.3x 4.1x Illovo Sugar Ltd.((4)) 2.60 3,240 9,261 12,501 6.2x 5.5x Suedzucker AG((2)) 112.31 1,709 2,849 4,558 6.6x 6.3x Tate & Lyle PLC((4)) 159.64 1,128 1,248 2,376 5.2x 5.4x Tongaat-Hulett Ltd.((5)) 5.60 2,356 7,363 9,719 6.1x 5.5x Bajaj Hindustan Ltd.((3)) 125.63 36,635 9,529 46,164 7.5x 6.6x Balrampur Chini Mills Ltd.((3)) 101.49 13,155 16,997 30,153 6.6x 6.1x Average 6.7x 6.1x Median 6.4x 5.9x Total Average 6.4x 5.8x Total Median 6.4x 5.8x -------------------------------------------------------------------------------------------------------------------------------------------- (1) Fiscal year from May to April (2) Fiscal year from March to February (3) Fiscal year from October to September (4) Fiscal year from April to March (5) Fiscal Year from January to December Source: Reports from companies and Bloomberg as of 30th April 2009. 70 |
Description of comparable countries To evaluate NovAmerica and Cosan based on market multiples of comparable companies, listed companies from the sugar and ethanol sectors in Brazil and worldwide were employed. Sao Martinho: A producer of sugar and ethanol in Brazil founded in 1938. Acucar Guarani: Company from the Brazilian sugar-alcohol sector since 1976 which converts sugar cane into sugar, ethanol and electricity. Agrana Beteiligungs AG: Austrian Holding in the sugar, pulp and fruit sector. Associated British Foods PLC: International foodstuffs retailer which operates in four business segments: Sugar&agriculture, retail, groceries e ingredients. CSR Ltd.: Australian companies also with operations in New Zealand. Operates in construction and sugar segments. Danisco A/S: Company based in Denmark, works in the development, manufacture and trade if food ingredients, sugar etc. Ebro Puleva S.A.: Spanish company focused on the food sector with sugar-based, dieting products etc. Greencore Group PLC: Irish company specialized in producing foodstuff products. Illovo Sugar Ltd.: Global sugar and ethanol producer, producing around 5.7 million tons of sugar cane on its plantations in South Africa, Malawi, Zambia, Tanzania, Mozambique and Swaziland. Illovo Sugar Ltd.: Global sugar and ethanol producer, producing around 5.7 million tons of sugar cane on its plantations in South Africa, Malawi, Zambia, Tanzania, Mozambique and Swaziland. 71 |
Description of comparable countries (cont'd) To evaluate NovAmerica and Cosan based on market multiples of comparable companies, listed companies from the sugar and ethanol sectors in Brazil and worldwide were employed. Suedzucker AG: German company focused on production of supplies for the food industry, operating sugar production units in several European companies. Tate & Lyle PLC: English company specialized in development, manufacture and trading of food stuffs and industrial supplies from sustainable sources. Operates an dedicated sugar and Sucralose division. Tongaat-Hulett Ltd.: South African company from the agricultural sector, owns sugar plants in South Africa, Mozambique, Zimbabwe and Swaziland, derived from sugar cane and manioc plantations. Bajaj Hindustan Ltd.: Indian company focused on sugar and ethanol manufacture, has 10 plants located in the North of India. Balrampur Chini Mills Ltd.: Indian company manufacturer of sugar and ethanol. 72 |
Appendix C. Description of the applied evaluation methodologies 73 |
A. Discounted Cash Flow CS assessed NovAmerica and Cosan using the discounted cash flow method ("DCF") Methodology o Unlevered cash flow method - Projection of unleveraged cash flows - The cash flows are discounted by the weighted average cost of capital (WACC), to calculate their current value Projections o CS has employed, for evaluation purposes, the operational and financial projections provided and/or discussed with the administrative teams of NovAmerica and Cosan in nominal R$ Currency o Projections in nominal R$ o The unlevered cash flow is converted each year to US$ in order to be discounted Discounted Cash Flow o Base date: April 30th 2009; cash flows are converted to current value of April 30th 2009 o Projection Horizon: 2009/2010 to 2018/2019 o Assumes flows are generated throughout the year ("mid-year convention") o Discounted cash flow in nominal US$ 74 |
A. Discounted Cash Flow for the company ("DCF") [GRAPHIC OMITTED] 75 |
A. WACC Calculation The WACC was calculated based on the combined cost of own capital (Ke) and the cost of debt (Kd) estimated for the companies analyzed, considering a target capital structure. o Ke was estimated by the appraiser based on the CAPM model - Capital Asset Pricing Model, adjusted for country risk o Kd was estimated by the appraiser considering credit risk and the debt market situation [GRAPHIC OMITTED] 76 |
B. Market multiples of comparable companies Assesses the enterprise based on market multiples of other public companies with similar operational and financial characteristics o After selecting the universe of comparable companies, the implicit value of the firm and of the share of the enterprise being evaluated is calculated by multiplying its metrics (e.g.: net profit, EBITDA) by the respective multiples of the universe of comparables o The value of the comparable companies typically does not incorporate "control" premiums reflected in mergers and acquisition transactions involving comparable companies o The key element in the analysis of comparable companies is identifying those of greatest comparability and relevance - A good comparable company is that which has operational and financial characteristics which are similar to the company under evaluation - Examples of operational characteristics include: Sector of activity, products, markets, clients, seasonality and cyclicality - Examples of financial characteristics: Size, leveraging, shareholder base, growth and margins [GRAPHIC OMITTED][GRAPHIC OMITTED] 77 |
Appendix D. Terms and definitions used in the appraisal report 78 |
Terms and definitions used in the evaluation report Capex: capital expenditures, or investments in maintaining and/or expanding capacity. EBIT: earnings before interest and taxes, means, pertaining to a given period, the sum of operating profits before deducting financial and tax costs. EBITDA: earnings before interest, taxes, depreciation and amortization, means, pertaining to a given period, the sum of operating profits before deducting financial, tax, depreciation and amortization costs. Greenfield: term referring to projects run in locales which have no such activities or operations. LTW: last twelve months. USDA: United States Department of Agriculture. VHP: very high polarization, refers to raw sugar, which can be transformed into different types of sugar, being used as raw material for manufacturing processes. WACC: weighted average cost of capital. 79 |
BANCO DE INVESTIMENTOS CREDIT SUISSE (BRASIL) S.A. Avenida Brigadeiro Faria Lima, 3064 -14 no andar 01451-000 Sao Paulo, SP +55 11 3841 6000 www.credit-suisse.com 80 |
Curupay
S.A. - Participações
Accounting
Appraisal Report for Purposes of
Merger
of Curupay S.A. - Participações by
Cosan
S.A. Indústria
e Comércio
May
28, 2009
|
Deloitte
Touche Tohmatsu Auditores
Independentes
|
Deloitte
Touche Tohmatsu
Av. Dr. José
Bonifácio Coutinho
Nogueira, 150
- 5° - Sala 502
13091-611 -
Campinas - SP Brazil
Phone: +55 (19) 3707-3000
Fax: +55 (19) 3707-3001
www.deloitte.com.br
|
I.
|
INTRODUCTION
|
Deloitte
Touche Tohmatsu Auditores Independentes, a simple private society,
headquartered in the city and state of São Paulo, at Rua José Guerra, 127,
Chácara Santo Antonio, Regional Accounting Council of the State of São
Paulo register no. 2 SP 011.609/O-8 and at the Brazilian Securities and
Exchange Commission no. CVM00385/9, and with a branch in the City of
Campinas, State of São Paulo, at Av. José Bonifácio Coutinho Nogueira,
nº.
150, 5o
andar - Sala 502 - Fazenda São Quirino, Corporate Taxpayer ID (CNPJ) no.
49.928.567/0011-93, and its consolidated articles of incorporation
registered on the 3rd
Civil Registry of Legal Entities of São Paulo, on December 28, 1977, and
further amendments registered in the same Civil Registry, the last of
which registered under no. 573008, on September 16, 2008, herein
represented by the partner Helio Wellichen, Brazilian, judicially
separated, accountant, bearer of the Brazilian Identity Card (RG) no.
7.529.506 SSP-SP, Individual Taxpayer’s Register (CPF) no. 838.978.288-04
and Regional Accounting Council of the State of São Paulo no. 1SP130
122/O-0, business address in the City of Campinas, State of São Paulo, at
Av. Dr. José Bonifácio Coutinho Nogueira, 150 - 5º.
Andar - Sala 502 - Fazenda São Quirino, CEP 13091-611, specialized
company, hired as an expert by the shareholders of Curupay S.A. -
Participações, closed joint-stock company, located in the city of Tarumã,
State of São Paulo, at Fazenda Nova América, s/no,
Bairro Água da Aldeia, Rodovia Miguel Jubran, SP 333, Tarumã/Assis way, Km
418 + 500 meters, at the right at Rodovia Antonio Maia, Frutal do Campo
way, + 8 Km, Zona Rural, CEP 19820-000, Corporate Taxpayer ID (CNPJ/ME)
no. 09.460.704/0001-11, with the last amendment of its Articles of
Incorporation carried out at the Annual and Extraordinary General Meeting
held on April 30, 2009, with its registry in process, receipt no.
0.429.502/09-6 at the Trade Board of the State of São Paulo, dated May 28,
2009, to proceed with the assessment, in compliance with article 8, Law
6,404, of December 15, 1976, amended by Law 10,303, of October 31, 2001
and Law 11,638, of December 28, 2007, at book values, of values attributed
to its equity, for purposes of merger with Cosan S.A. Indústria e
Comércio, publicly held joint-stock company, located in the City of
Pirabicaba, State of São Paulo, at the Cosan Administrative Building,
Bairro Costa Pinto, s/no,
Corporate Taxpayer ID (CNPJ/ME) no. 50.746.577/0001-15 and
Corporate Registry ID (NIRE) no. 35300177045, with the last amendment to
its Articles of Incorporation carried out at the Extraordinary General
Meeting held on January 30, 2009, registered at the Trade Board of the
State of São Paulo no. 48.860/09-8, dated February 9, 2009, presents below
the result of its works.
|
|
II.
|
OBJECTIVE
|
The
objective of this appraisal report of the accounting balances of the
values attributed to the net assets of Curupay S.A. Participações on April
30, 2009, is the merger with Cosan S.A. Indústria e
Comércio.
|
III.
|
WORK
SCOPE
|
The
accounting appraisal report is being issued together with the examination
of the balance sheet of Curupay S.A. – Participações, examined on April
30, 2009, and prepared under the responsibility of the Company’s
Management.
|
|
Our
examination was carried out in accordance with the auditing procedures
applicable in Brazil and included: (a) planning the works, taking into
consideration the relevance of balances, the volume of transactions and
the accounting and internal control systems of the Company; (b) the
verification, based on tests, of the evidences and records supporting the
accounting values and information which were made available; and (c) the
appraisal of the most substantial accounting practices and estimates
adopted by the Management of the Company.
|
|
IV.
|
CONCLUSION
|
Based
on the works performed, we conclude that the book balance of the values
attributed to the net assets of Curupay S.A. Participações, summarized in
Attachment I, is three hundred thirty-four million, one hundred
seventy-two thousand Reais (RS334,172,000.00) on April 30, 2009, and are
recorded on the accounting books, in accordance with the accounting
practices adopted in Brazil.
|
|
V.
|
INEXISTENCE
OF CONFLICT OF INTEREST AND LIMITATIONS
|
According
to Article 5 CVM Rule 319, of December 3, 1999, we confirm
that:
|
a)
|
Pursuant
to the Professional rules established by Resolution 821/97 of the Federal
Accounting Council (CFC), we are not aware of any direct or indirect
conflict of interest referring to Curupay S.A. - Participações or the
services described above; we have no direct or indirect interest in the
abovementioned companies or any company related to
them.
|
b)
|
We
are not aware of any action by the controlling shareholder or by the
managers of the Company aiming to guide, limit or hinder, or practice any
acts which have or may have compromised the access, the utilization or
knowledge of information, assets, documents or work methodology relevant
to the quality of the respective
conclusion.
|
DELOITTE
TOUCHE TOHMATSU
|
Helio
Wellichen
|
Auditores
Independentes
|
Accountant
|
CRC
2 SP 011609/0-8
|
CRC
1 SP 130122/0-0
|
Curupay S.A.
- Participações
|
ATTACHMENT
1
|
ASSETS
|
R$
|
|||
CURRENT
ASSETS
|
||||
Cash
and banks
|
100,270.38 | |||
NON-CURRENT
ASSETS
|
||||
Permanent:
|
||||
Investments
|
334,071,729.62 | |||
Total
non-current assets
|
334,071,729.62 | |||
TOTAL
ASSETS
|
334,172,000.00 | |||
ACCOUNTING
NET ASSETS
|
334,172,000.00 |