M&A Announcement

Feb 8, 2021

Slides

Good afternoon, gentlemen. Ladies At this time, we would like to welcome everyone to Cozan's Conference Call. Today with us, we have Mr. Luizen Ity de Maran, Cozan's CEO Mr. Ricardo Musa, Coizen's CEO Ms. Paula Kovalski, Head of IR and ESG and Mr. Felipe Casari, IR Executive Manager. We would like to inform you that this event is being recorded and all participants will be in listen only mode during the company's presentation. After that, there will be a question and answer session for industry analysts. At that time, further instructions will be given. Today, we have a simultaneous webcast that may be accessed through the website at ir.casan.com.br. The slide presentation may be downloaded from that website as well. There will be a replay facility for this call on the website for a week. Before proceeding, let me mention that forward looking statements are based on the beliefs and assumptions of Fogo management and on information currently available to the company. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand the general economic conditions, industry conditions and other operating factors could also affect the future results of Cozen and could cause results to differ materially from those expressed in such forward looking statements. Now, I'll turn the conference over to Mr. Felipe Casari, who will begin the presentation. Mr. Felipe Casari, you may begin your conference. Hi, everyone. Thank you for joining us in this conference call where we have will the opportunity here to explain about the acquisition of BioCell that we just announced this morning. So we have today with us here Luis Enrique de Maranis, Cozzolan's CEO Ricardo Moussa, CEO of Raizen and Paulo Covarski, Head of IR and ESG. So I'll pass through the word here to Luis before Moussa to explain about the transaction. Hi, everyone. Good afternoon. Good to have you on this call. Over the last couple of weeks, have been talking to the market about some of the movements we are doing in the companies on the group Cozan manages, specifically on Gaspetro, refinery beads as well as Biocept. So today we're going to update on Biocept. But before passing to Moussa, I would just to give a couple of points to reinforce what we discussed in our calls regarding the capital discipline and that all these transactions would only happen if they had the structure that would allow us to have optimization as well as being on a price that we consider to be accretive to all the overall portfolio. And this is why a lot of these transactions would take time and have been take time and energy from the team in order to arrive at this point. And we only would do that if this would happen. And this is the case where over the last few days, Musa and the team have been able to arrive on a deal that we consider to be accretive to the company. And he will explain that. Regarding refiners, you have seen today the announcement of Petrobras that one of the refiners has been canceled the process because the price has not achieved the minimum price. And I think again, this is what we've been talking to you and to the market related to our discipline. We'll be prepared to engage in new processes if they come. But again, this won't happen in our side, the transaction if it will be at the right price with the right structure. So the message should be very clear that all this business will be done with the usual financial discipline and capital allocation discipline that Cosan has demonstrated over the last decades. So with that, I will pass to Musa, who is going to talk about transaction at the end, will be here to the Q and A. Marcelo is also with us, has joined us. So Marcelo Martin is also with us. So Marcelo, myself and Musa and Paula and Felipe will be available for the questions after Musa explain the details of the transaction and the value we see coming from this deal. Hussain? Thank you, Luis. I think we prepared here a very brief presentation, you should be seeing online, just to talk about why we are doing this transaction. And I'm going to go to a brief recap why first of all, why sugarcane and then why Raizen is investing sugarcane, then we'll talk about Biocept and go into the details of the transaction, okay. If you go to the first slide, you can show that why we're investing sugarcane. Sugarcane is one of the, if not the best plant to convert solar energy into biomass. As you can see on the slide here, that's the amount of sugarcane we get or tonnage of biomass per hectare. You compare sugarcane with corn for instance, if you have eight times more biomass per hectare. I know this is a very simple statement, but in the sugarcane area, we are not even reaching the potential of the plant. So this is a plant that has a great potential to grow and deliver even more. So when we look into the plant, we think it's the right plant. Also Brazil is the right place and also the right time to invest in bioenergy and raising the right company. So I mean that's the congregation what we have, the right time, the right plant, the right place in the right country, right. And more than that, if you take the portfolio that we are getting from sugarcane has been changing a lot. In the past, we only talked about sugar and ethanol. Now we are talking about biogas, we are talking second generation ethanol, pellets, chemicals. And especially in the past twelve months with the pandemic, we have seen the approach of the market for these type of products increased a lot the demand, the premium that we are getting higher and we are seeing a fantastic future for this. We still call that biorefineries. We see our place is positioning into biorefineries that a place that you can get very different types of product from the sugarcane itself. So that's the reasons behind why selecting sugarcane in this scenario. If you go to the next slide, why we are using investment sugarcane? So we see the sector trend. We see the evolution of the portfolio. And we do have a business model that is quite unique. Are a company that the only company that is fully integrated. So we have a production of we lead the land, we produce our own sugarcane, we have the mills, we have distribution of fuels, we have the logistics, We have trading capabilities that we can commercialize our products globally. We have shareholders that have global reach to deliver our products. So we see the potential of the trained that we can be an integrated green energy ecosystem. That's what we see. And we see the rising model to be quite unique in this market. So we only see the increase of how much dollars you get per ton. It's only increasing over time. This has happened over the past year and we don't see this trend changing over time. On the next slide, the sector trends, we show a little bit of what I'm talking about here. So biomass, we are seeing new applications of the biomass. The biogas is one of them. I talked to the guys and show how much we are getting our waste that the Vines, we are producing 50% more electricity without needing to produce one single ton of sugarcane or increasing one single hectare of land. With the second generation ethanol, we can get 50% more production of ethanol with exactly the same amount of acreage in the same area. So those things show the potential of getting more efficiency into the sugarcane value chain. If you take the I highlighted here, one example is Bonsuco. People ask me about how this is evolving. Bonsuco has been a certificate that we invested of qualifying our supply chain over the past, I would say, nine years. And if you take four years ago, we didn't let us with huge margins or additional premium. And it was unbelievable what happened on the past year of how much premium we are getting for having a sustainable supply chain. In the past two years, we more than multiplied by 15 times the value of the Pong Sukho certificates in our portfolio. And that's an example how the market is changing and starting to pay a premium for sustainable product. So this again has been a very important piece of our strategy. Of course, our productivity, as I mentioned before, we are on a turnaround of the company of increasing productivity. We see the potential of that. It doesn't require much investment to be honest. People sometimes will make the relation about we need to invest a lot to get much higher productivity. We have seen especially the past two years that hasn't been the case. We are improving a lot of our productivity gains with just management skills and doing the right thing. On the sugar side, something that we've been talking a lot is how we are exploring more the value chain. I'll give a great example inside Raizen. Then on the ethanol side, 100% of ethanol we sell to the final customer. We do 100% of the logistics. We have our own tanks. Sugar on the other hand, if they three years ago that was not the case. We are not exploring the value chain of sugar the way we should and we are evolving on that. So we are getting huge volume already that we are delivering to final clients like Coca Cola, to Unilever, to other big corporations, not only in Brazil, but outside Brazil, and we are moving into the value chain of sugar. So this has a great potential to increase margins overall by doing a better commercialization, the same way we did with the ethanol side, okay. And of course, HENOTAVIEW is something that it started in the last year. It was success, the program, and we are excited to see the future of that. We see that reducing the volatility of the sugar sorry, the ethanol market and having a huge impact on sugar prices moving ahead, because Brazil will no longer be the cushion of the sugar market. Every time that the sugar price goes up, Brazil goes and produce more. With the Renova bill, what we will see is that when sugar price goes up in the future, the Renault Abil, the Seville's price will go up and Brazil will keep producing ethanol. So sugar prices will have to reach different levels, so Brazil can support the global demand. So these will create a lot of value to our system. The next slide here is just to show the products, something that we talked about briefly here. I'm going to focus more on E2G biogas. Those are products that we recently came into a point that we are ready to go. So we are ready to really boost the sales production of those products with very good results. Demand is there. I'll give you the example of biogas. The electricity that we produce with biogas has 100% discount on the transmission line in Brazil. It's a huge premium of almost BRL100 per megawatt compared to other ones. And this is just the beginning. So we did the largest the plant of South America last year. And now we have plans to increase that ethanol second generation. It's something else that we sold our production less crop season in ten days for the entire year. We see the demands getting stronger and stronger. And we have big plans for the second generation ethanol moving ahead. If you go to the final slide here before going to the Biocept transaction itself, we are talking about the commercialization of that has been one of the things that we want to explain more to the investor what we're doing. We do have a unique business model to be integrated from production into distribution gives us much more leverage of understanding the market trends, positioning ourselves better, getting always the arbitrage, also providing to our clients something unique that is service. So we can handle all the logistics. We have tanks that today we import diesel, the same tanks we are exporting ethanol. This gives us much more flexibility to have lower costs and also achieve the demand side. If Brazil needs to import ethanol, we can be there. If we need to export ethanol, we can be there. The same thing we expanded our storage of sugar, we can get better prices, we can offer to our clients more secure supply to deliver the sugar anytime that they want. And this is all guaranteeing that we will have a much better pricing at the end of the day, much better margins for our products and moving away from commodities and getting more premium for our products. I've given one good example is how we are performing our performance against New York eleven on sugar, just to show that once you are integrated company and knows what's happening on the sugar and ethanol market, you can be much more accurate on deciding when to hedge prices. So we are doing a very good job. And even now that we are seeing a soft commodity trend of growing price going up, we are keeping a discipline and knowing exactly how to do that, not only with sugar, but also with ethanol. So this again is the business model that. And why BioFats? So this is a deal that we've been talking about for quite some time inside the company. There is a strategic fit. We see what the potential of what we can do with our biomass. We have just seen that we are at the beginning of this new scenario that we can explore more of our biomass going to second generation ethanol, going to chemicals. So getting bio saving makes sense. Of course, see also the ethanol ecosystem that we can generate a lot of value even on the logistics by getting their plants and getting our footprint on ethanol. On the value chain itself, having more volume coming from Biocept to go to our final clients it's also very important. They have also very high grade type of products that have the high quality. So we can some of our clients today that we are not able to meet all their demand now with Biocept we can. So we see an upside of getting the renewable products for Biocept inside right. The quality of the asset, that's an important point. The market, I think, has been I don't know if how aware the market has been with the turnaround that Biocept did over the past years. We were really impressed on the when we were out there looking to the due diligence process of their assets, their sugarcane fields, their mills, very high quality. They are located in regions that has high potential for production, high productivity rates, low risk of climate and their meals on average are higher or bigger than ours. So they have a lower cost compared to us on the potential for what they can reach. They have much more flexibility. They have invested more in the past on flexibility to produce sugar and ethanol, the sugar mix and ethanol mix. So for instance, they can go 65% ethanol, we can only go 55 So it's a good tool when you have this flexibility. And of course, we are going to get major synergies on our SG and A. We are going to have major synergies on buying the feedstocks on the logistics side. So we are seeing these synergies to be over billion in ten years, that's the NPV of the synergies that we calculated. And of course, you see that relative valuation that BioSave is coming in, we have been very disciplined on selecting the deals. And that has been the case for BioSave. So it's a very high quality asset at the right price, at the right moment. And we are very, very confident that we are going to deliver the synergies and create even stronger company. And finally, the transaction itself before going the Q and A, you can see that we have 26 mills, have nine, eight operational mills, we have 23 operational mills. So we are going to get a crushing capacity over 105,000,000. We are going to crush, if take this past year, we're talking about almost 90,000,000, a little bit less than that. Big production of ethanol, big production of sugar, they have still potential to grow their power generation compared to us. We did a better job, I think, on getting the electricity from the biomass, but that's upside. And you can see the CapEx that's very similar on the size. So we don't see much risk on the antitrust, even though we are going to be very large, still around 15% of the Central South question. That's on the renewable side, it fits the portfolio that we have. And the financial strength that's going to be a very key element of synergies, because today BioSaf has a very large debt. So I think they are doing a good job on the operational side, but they have to deal with a huge debt structure. And this is going to be one of the main synergies when we reduce that debt. So Biostat will become a much higher cash generation. On the final slide, those are the highlights of the transaction. So we are talking about we have 3.5% stake that they are going to own on the final company plus 1.491.5%. The idea of that was creating if there is no liquidity event on the horizon, they will be entitled to additional dividends. So the way when we negotiated with Biocept was, okay, they are seeking for liquidity. But unless we give that liquidity to any liquidity event, until then, they will have additional dividends flow coming to that. That's why we have this 1.499, that is 1.5%. But equity really, it's 3.5%. This is all non voting. So we try to not to mess with the already the control structure between Cocen and Shell. So we make exactly the same. So there is no voting rights, but they have the dividends flow in a different form. There's going to be a 3,600,000.0 cash disbursement as soon as this transaction is concluded. Why 3,600,000.0 Again, the reason behind that was looking to the leverage. So we are looking to the last year EBITDA of Biocept at 1.8 We said we wanted to have a company inside Raizen that will not impact the leverage of the company. That's why we reached this number. So we are getting the company without any debt and we are going to put $3,600,000 give that to BioCell $1,000,000,000 sorry. And this is how the transaction is structured. Other things for you to take into account, we there is an earn out structure. The earn out structure is depending on sugar and ethanol prices. If sugar and ethanol prices are higher in the next years, we grant BioSat or EBITDA, the remaining shareholders, the potential share of that up to a cap of BRL350 million. What's the rationale behind that is that at the time that we're doing the transaction, prices are moving up. And instead of changing the price that we have already agreed upon, we said if price of sugar and ethanol remain high in the next years and we do not have any liquidity event, they will be granted additional money, right? Of course, if you look into my perspective, would love to pay this earn out because it means that the prices are much higher than we expect. So this is a positive thing in the end of the day. And these earn outs similar to the redeemable shares, they stop to exist if there is any liquidity event, okay. There is also a call option and a put option. So the call option here, we have the option to buy them out on year 6.5%. And if we do not exercise that option, they have the put option against us with a 20% discount against market value on year 9.5%. Of course, if there is a liquidity event, all these put and fall options is to exist, okay. Of course, there is some conditions precedent and antitrust, they have to we have to approve that with CABD. This is already in place, already moving forward. And results of the they need to finalize their restructure of the debt and all the minority shareholders issue that Biocept probably going to talk to the investors on the end of the week. But those that's what we have right now for to share with you guys. Very excited about the transaction. And let's go into the Q and A and open for questions. Our first question is coming from Isabella Simonato of Bank of America. Isabella, your line is open. You may proceed. Thank you. Good afternoon, everyone. Congratulations on the deal. Lucia, if you could explore a little bit the synergies, eventually break them down between what you see in terms of operational or commercial synergies because I understand a great part of it eventually might come from the pricing and commercialization strategy, right? So if you could explore a little bit that BRL6 billion, it could be quite helpful. And when we think of further investments down the road, right, and the quality of the assets that you said was quite impressive to you. And if we think about CapEx on a per ton basis or any other metric compared to Raizin, how can we what can we anticipate going forward? It's going to do you think we can see an increase, at least for the very short term or no? CapEx could be could remain in line with what we're seeing for rising at this point, just these two topics? Thank you. No. Thank you, Dara. Very good questions. The first one, the synergies, that's not very difficult Of course, we on the commercial side, we cannot talk much. But there are synergies there, of course. One of the biggest ones, if you look at the finance side, they have huge debt of almost $8.76 I think if I'm wrong, with a very high debt rate. And if inside Raizen, we are going to have of course a much lower debt. Just so give an example, if you take Biocept as a standalone operation, they would have a $3,600,000,000 of that compared to $7,700,000,000 They have average, I don't know, average cost of that is almost 9% or 9% in U. S. Dollars terms per year, are going to have less than half of that. So on the financial side alone, we are talking about almost $900,000,000 a year on upside on that. If you take the operational side, we can easily reach if you take SG and A and acquiring the feedstocks that we have above 200,000,000 to $300,000,000 alone. So that's when you go into the safe side. So this is we didn't put we're not very aggressive on that. I'm just very simple math to reach that you can see on that sense. We're not putting here for instance reduction on sugarcane acquisition. We are not putting that in our much more operational someone. I'll give another good example Isabella. If you take the past three years because of covenants and the financial structure, a lot of times Biocept was not doing the right decision on starting the crop. They were anticipating the start of the crop because they needed the cash to conclude the year. And now with a new capital structure, you don't need to make those decisions, you make the right decision and you can start the crop at the right time. This what we call also synergy, because we have more than that's an example. If you take a very simple math about not starting the crop early March and starting the crop April, this already delivers 40,000,000 of synergies only on the bio cycle operation. If take how much money we're spending on leasing machines and we compare to them, that's another way to get additional 30,000,000. So there is we have done a very detailed map of where we're going to get that. That's why we're very, I would say, confident on those numbers. And that's very easy to get into. To your second question, I had a stake if you talk to me two years ago, I had the same perception. Of course, Biocept was going to a struggling a little bit on the financials. So that was our perception. When you see what we found, they are doing a turnaround for the past three years, quite impressive turnaround. They are located in regions where the conditions for them are better on average. So if you take to the region of Hibera Antreto, great land. So if you look into the numbers that they are getting on productivity today, it's impressive compared to even to compare to our numbers. So we don't see a big investment that needs to be done. If you compare to other acquisitions like Tonon, being very blunt and very straightforward. Tonon was an acquisition that we did on a company that was in Chapter 11. We couldn't start the operation on the right timing and had no control. Now we are talking about a company that is up and running. It's moving on the right direction. They have a great team of people inside the company. We intend to keep that great team on the agricultural side, on the industrial side. And we are going to do this on the right way. So we are not going to do a transaction that's going to be in the middle of the crop. It's going to be at the beginning of the crop. We found our structure to protect everything that they have done and to protect the investments that they have been So the numbers are really good. The conditions of the new results were very impressive compared to us. There are potentials to make investments, for instance, to produce more specialty. So I see I anticipate increasing some CapEx, but very short term returns. So produce specialties on ethanol that give sometimes one year return, It's something now that we can do and BioCell was not doing because of lack of capital that they had. So I do see increase, nothing major compared to what we already have in Raizen. There is not something that we require a huge amount of capital to put their seats in place on the contract. They do have a great operation and a turnaround moving on. That's very clear. Thank you. Our next question is coming from Thiago Duarte of BTG Pectol. Thiago, you may proceed. Your line is open. Hello, everybody. Hello, Luis. It's Mosa Paulo, EVP. Thanks for the call. I have two questions, actually. The first one, you've already mentioned that you're not transferring the debt from Biocept into Aizen. There's going to be a corporate restructuring on the Biocept side and so on. Can you detail a little bit more on the other assets and liabilities that may or may not be transferred to Raizen? I'm particularly keen to hear about accumulated fiscal losses, provisions or any other liability that we can find when you go through Biocept's financial statements. Just if you could comment a little bit on those would be interesting. And also on the asset side, you mentioned that you're not going to be taking the terminal, right, by Agri and Cristal said. Can you give us a sense of the contribution that these assets have in terms of EBITDA, for instance, just so you can clean up the reports, the financial statements from Biocept, that would be interesting. So that will be the first question. And the second question, I remember, I think last year during the Corsair Day, you guys, and especially you, Musa, you sort of started stating by, okay, there's part of the job that needed to be done in terms of improving cane availability at Raizen that wasn't done. And so that you guys said that you will be investing in improving sugarcane productivity. We will see a higher CapEx as a result of that and so on and so forth. When we look at BioCell, in many ways, it looks like there is somehow the same challenges apply, right, in terms of sugarcane productivity, sugarcane availability and so on and so on. So can you discuss a little bit in terms of you mentioned in the previous question that there's a little bit of a CapEx, but there are some very encouraging signs of improvement in synergy and so on. But can you provide us with, let's say, a number, like how much CapEx you would expect to invest so you can take productivity for the whole new company into higher levels? Because in many ways, it looks like you're doubling down on a challenge that was already present, right? So it would be nice to hear your thoughts on that as well. Thank you. So, Thiago, let's start with your first questions. The other they are coming together with the company. So they have an NOL, if I'm not wrong, it's almost $10,000,000,000 of non operating losses coming. So this can be potential assets for us to use in the future. So it's coming together with the company of the acquisition. So the only thing that is not coming is their debt, their current debt. So the second question about the contribution of Christophe said, the TAG, it was not part of the deal. We do have in fact a contract, a long term contract with the Tiag to support the growth. It was part of our strategy of not going after these assets of because we already have a great logistics, we already have in place what we need, what we did with them was securing the TIA deal. If you look into the numbers, how much TIAK that generates on EBITDA, I would say roughly million would be a good number. So that's if you want to do our math of excluding that, I think that was your question. That's the number. And your final question about the challenges that I think one of the best questions. I'm very confident of what we did in Raizen over the past two years. We are already on a different level. We are going to see what the results that we are getting are really, really impressive how we are moving on the right direction. So we will never be doing this transaction if we did not have the confidence of where we are. I think that's something Thiago. That's one of the key elements for me is to guarantee that these will not derail what Raizen is doing. And on the other hand, is we're only going to enhance talking to the team of BioSet, talking to the group of people that is there on the agricultural side. If you give my two minutes thought on this. I think the on the agricultural side, I would say they are a little bit ahead on their turnaround compared to us. So we are going to even benefit from BioCell on agricultural side. And on the industrial side, on the other hand, I think we are a little bit ahead of where they are. And that's the beauty of this transaction. It's keeping the people, keeping the employees there to make sure that we deliver the synergies. And one of the synergies sharing best practice that both companies have. But again, do have very high level confidence that we are already on the more than halfway go through the turnaround of the rise in productivity. And these I can give you numbers. Of course, we are still on the silent period, but on the next present day, can share with you Thiago how this has been evolved. We do a math comparing first harvesting, the first harvest of sugarcane with our suppliers, for instance. So if you take in the past, we were really below our suppliers on productivity. If you take the first crop what we planted two years ago, this year what we harvest was already in line with our suppliers. This means that we fixed, of course, this is going to take some time to appear in our P and L, but the numbers are already showing improvement, already showing that we're going to be there. And I have no just on your specific question, we cannot share the projections right now. We are the silent period about that. On the right timing, we are going to share that channel. Thank you, Musso. Our next question comes from Luis Carvalho of UBS BB. Luis, your line is open. You may proceed. Thanks, everyone. Just like to, I don't know, maybe taking the opportunity to have Marcelo and Luisa here as well. On the IPO plan, how do you say this transaction would change or reinforce, let's say, this path? I understand that, of course, the IPO is not changing at all. Would your transaction accelerate? Would you wait, for example, for the CAFD approval in order to maybe pursue the IPO or there's no correlation about it? So that's the first one. The second one, it's about the buyback. And just would like to try to understand a bit better if you'd say the transaction changes anything on this front, but the buyback that you announced on Friday, I just would like to hear your thoughts in terms of the strategy on this front as well. Thank you. Thank you, Luis. Quick answer. It doesn't change anything on both. We will continue to pursue our plan. There's no impact on that. Okay. Thank you. Our next question comes from Andre Hachin of Itau. Andre, your line is open. You may proceed. Hi, guys. Thank you for taking my questions. I basically have two questions here. So firstly, congratulations on M and A. So two questions on my side. Looking at this from a sustainable angle, we're seeing a lot of demand for green bonds. You just mentioned that there is this there's the reprofiling of BioSite's debt. So what do you see the room for green bond emissions? What is your, let's say, your schedule in terms of deleveraging the company? The second program my second question is in regards to the and all of your programs with The U. Could you comment how do you assess tax up to raising current emissions and how you're seeing the development of this market? Thanks. Thank you, Andre. The first one, we already course, for the the disbursement of the cash is going to be done when all the conditions present are done and we already fixed that. So we already have these arranged, negotiated. So it's not going to be a green bond. Paula can even answer a little bit more about that. But all the capital structure for this transaction is already aligned and in place as soon as we have the green light to conclude the transaction. And yours the second question was the Renault review. I think BioCellis, they have the quality of their assets and their value chain or their supply chain. It's similar to us. We do have more certificates of Bonsuco than they do. But in our due diligence, it's easy to reach very similar levels. So they are going to improve our production of Sebils. It's going to be very, very similar to what we have today on Raizen production side. They are we are more focused on exports than they are. So that's the only difference. Here, Andre, for me, the great point is that there is very small investments to grow into specialties on the ethanol in particular that we do have a great client base that's going to deliver a higher return. They're talking about one year payback return investments in Biocept that we can then do for that. And these also correlate to Seville the production of course, these all reduce the carbon footprint and increase the value of Seville. But if you need to do some math on your side, you can do very similar Seville's production compared to Raizen. We do have a little bit better than them, but very is marginal, okay, it can be the same. Yes, maybe quickly to the point of the green bond. I think one important comment about Raizen and the way we're dealing with the whole ESG agenda there is that if it is a green bond or a transition bond or whatever source of financing, I think the most important thing is to make sure the metrics are clear. And this is something that Raizen is doing a very good job. And I mean, they mentioned the Bonsucro in the presentation. So this is something that is there, and there's a framework and there's a road map for us to be in the utmost sustainable way of producing the sugarcane and the soda sugar and the ethanol. And also, there's targets related to the carbon footprint, there's targets related to water. So I think we're very prepared to leverage on increasing liquidity for renewables related or cleaner energy related sources of funding. And this is I think it's more important to think about it from the standpoint of how much Raizen has in terms of a framework to get there and how much more we can do by enlarging the portfolio of cleaner products. Thank you. Very clear. Again, congratulations on the deal. Our next question is coming from Lukas Fajeira of JPMorgan. Lukas, your line is open. You may proceed. Hi, good afternoon, everybody. Thanks for the opportunity. My first question is a follow-up on the accumulated losses, which is which amount to almost BRL 8,000,000,000 to Biocept. Is this included in potential tax benefits that maybe you guys want to be, let's say, in the sugarcanechnical business, I would say, ten, fifteen years from here. Because the model that you guys used to do this transaction, correct me if I'm wrong, but it's very replicable. I mean I can think about other companies that have high leverage, would love to have Raizen shares and more liquidity, etcetera. So would you do you guys also think that this could be a model for future growth of Raizen? Or you think you're good with the size of 100,000,000 tons, 105,000,000 tons? So how to think about future growth and future renewals in Raizen in Asia previously? Thank you. Okay. Good question. The first one, the NOL, it's not in our synergies number. So it's not there. So we took a very cautious approach, but this is we have to analyze how to utilize that. But again, it's coming with the acquisition, but it's not in the numbers that we presented. The second question on Riccardo Bromado. First of all, it's a major acquisition for us. So it's no time to talk about not a time to talk about new acquisitions or anything like that. I think the beauty of that model was something that we are protecting the leverage of the company, being very disciplined on capital allocation, only doing things that make sense financially and strategically. So I think that's the answer. But really, it's a very sizable transaction. We have focus into that before talking out anything going further, okay. But I think that's a short answer. Thanks, Muzha. Our next question is coming from Regis Cardoso from Credit Suisse. Hi, guys. Muzo, Ruiz, Paulo, Felipe. Thanks for hosting the call and taking the question. I got a few follow ups. First one on the assets you are acquiring and working capital. Two questions. What price adjustments are there? Meaning, are you buying their balance sheet as it was at any specific date? Any changes in working capital around the harvest will become adjustments to the price? Or I mean how should I think about the price adjustments related to working capital because we know that this is quite important in the sugar and ethanol that we're the group in the harvest. And still related to the working capital, I believe Biochem had significant payables with related parties with trade, with the trading related to sort of presales of their volumes. I wanted to understand if that structure still exists, if you treat it as debt or is this just part of the payables that you are getting together with the company the way it is? So this is related to working capital. If I may just look more related to the synergies you commented on the NPV. So I wanted to understand if you could maybe break down those synergies in sort of categories like I'm not sure if it's more small part of this is investments on increasing the prices because you then sell to industrial clients or if the investments to improve the agricultural yields or if the synergies are overhead costs? I believe you already commented that it's not related to accumulated losses or goodwill. So if you could maybe break between those categories and talk about the timing. So that BRL10 billion in value is at most sort of low that is it more down the road in terms of time? And maybe just a real quick one, in terms of governance holding structure would remain in place after if there is a liquidity event or if you convert to global account? So let's see if I it's a lot of questions, Regis. Let me try answer one by one. On the working capital, what we're doing is, of course, there's going to be price adjustments on closing. And it's a normalized working capital for the past three years. So what we did for both companies, we looked what the historical working capital they have been going in initiating the crop for both sides, then we agreed on a formula to do that. So we will of course, once we start this new venture, we are going to improve the working capital lines. But a short answer here, it's what has been over the past three years, a normalized working capital, okay. There is zero intercompany transactions coming with this. So there is no related party with LDCIDRIX. This is all out. So we are not assuming any of that. So we are buying a company without any related party transactions with LDC. Of course, we do they are a trading company of sugar. We do have relationship with them. So all commercial relationship, but nothing here that is related to the deal. On the synergy side, the same thing I answered to Isabella, you can we cannot share all the numbers yet. We are on even for BioSav. But if you take the big numbers, you can see the finance side. They have a huge debt for very high cost, just reducing that generate more than it's $405,100 depends on how you see that a year on benefit for the company. There is a lot of operational synergies, G and A synergies because we have a service center, they do have a service center overlaps that is going to always have on both. But to be honest, they already did a good job on streamlining their costs. But that's good, but it's always synergies on the operational side. Commercial synergies that I cannot talk much, that's a huge one. As I was explaining, our customers that today we don't have some sort of products or volumes that they can supply to us, going to have on the liquid sugar, especially ethanol like neutral that one mill that we can invest $20,000,000 we can put a new neutral plant. So those commercial things are very exciting. That's what my team was reading to. But I don't have the numbers or I cannot share the numbers yet line by line. I think that's it, right? Any final questions on the I think that was all right, Regis. Or you had any question. Did I reply to all? Just a final one on the governance of the non working shares and the liquidity events, whether it would be moving this time. Okay. It's not applicable because we the debts are going to be restructured on Biocept side. It's a condition precedent that the company is transferred to us without any debt. So this is a condition precedent. They are going to renegotiate that with their bank with the creditors and they are going to give the company clean. And if you're not talking shares for high yielding, sorry, I think I wasn't clear. If Haiyun would have non voting shares whenever they come to the market or if Haiyun would do CDI geo and moving stock? No, they only I don't know if I of course, I cannot comment on future NOVEMERCADO IPO, this is not part of the call today. But there they have it's a long voting share, they have zero rights on when it comes to voting, of course, they are my non shareholders. And that's the way we structure that. So we are not it's a preferred share, right? But when it comes deep, it comes a time of liquidity event, then it's a different discussion. But the way we structured this deal, it's a non voting shares, but of course, they have the protection of a minority shareholder how it should be, okay. Our next question comes from Rodrigo Almeida of Santander. Rodrigo, your line is open. You may proceed. Hi, Luis, Paul and Felipe. Thank you for holding this call. I have a couple of questions here from our side. Basically, the first one is, I wanted to understand a little bit better how much exposure more or less do you expect to have from these non commoditized products in the future, meaning those products there are not sugar and regular ethanol. I think it would be great maybe to have some color just to see how the operation is going to be looking like in the coming years. And the second question is what can we expect of the combined company going forward in terms of operations? Meaning, you expect any of the mills to be shut down in order to optimize the operations? Or are there any plans to reduce crushing to optimize the sugarcane, own sugarcane? Just wanted to get some color on this side as well, it may be helpful. Good questions. On the first one, the other products, right, where you call specialty, it has been a mantra inside, And of course, for commercial reasons, we cannot share exactly those numbers. But today, it's already a large share on the ethanol side. It's already the majority of what we sell already specialties and that's the path. When we see the BioSaf portfolio, there is a huge potential to move exactly into the direction what Raizen did. And what I call special products, have to do all the way, you have to have the tanks, have the logistics, deliver to our client on the final destination, guarantee the quality and that has been our strength all over when we combine the operation of Shell, Exxon and Cozon in the past. So this is a no brainer. We're going to speed this process inside Biocept. But I cannot share today for commercial purposes how much it is today. What I what you can have is that it's more than it's the majority of our ethanol, it's not the majority of bioethanol, bioethanol. And on sugar, we are still on the early stages, but moving quickly into that direction. The second question, what we expect, there is no if you're looking today on the shutting down the mills, no, we don't see that happening. Everything that we had to do, we hibernated some mills. We don't know if we're going to reopen them yet because it depends on market conditions. If market goes into our direction and productivity also, there is this potential. But today, we are not seeing that any mills being shut down, having synergies on that sense, okay? On the crushing, what I must say, they have a different type of operation on agricultural side. I think we have something to learn with them on the agriculture, and we do have a lot to teach BioCell on the industrial side. That's how I see that happening today. But it's a good benchmark all over all the benchmark on the commercial team, the SG and A, but especially industrial team and agricultural team, that's the beauty of having these. When we had the transactions in the past, bringing Shell, bringing Cocen, bringing Exxon, the people was a key element and not going to be different this time with MayoSen. Okay. Thank you. Thank you. Very clear and congratulations for the introduction. This concludes the question and answer session. At this time, I would like to turn the floor back to Mr. Luizen Hickey for any closing remarks. No, thanks. And thanks everyone for attending this conference. This was an important movement from Raizen. As you know, we've been working hard on the team has been working very hard on these last few weeks and months. So we're now ready for execution, ready for the point that need to be taken as Musa has taken about CATI approval and the precedent conditions, but preparing a strong integration plan, we can surely can deliver the promise on the synergies. The name of the game on this business is about efficiency. It is about differentiation on product portfolio and the evolution of our business model. So we are, as shareholders of the company, very excited about what the management has done and very confident that the integration of the strong team coming from BioCell will be even better for the next crops to come. So thanks a lot and we keep you guys posted on the progress of these and the other things we are working on. Have a good afternoon. Thank you. This does conclude today's presentation. You may disconnect your line at this time and have a nice day.