Bermuda
|
2860
|
Not
Applicable
|
(State
or Other Jurisdiction
of
Incorporation or Organization)
|
(Primary
Standard Industrial
Classification
Code Number)
|
(I.R.S.
Employer Identification Number)
|
|
||
Av.
Juscelino Kubitschek, 1726 – 6th floor
São
Paulo, SP 04543-000, Brazil
(55)(11)
3897-9797
(Address,
including zip code, and telephone number, including area code,
of
registrant’s principal executive offices)
|
||
CT
Corporation System
111
Eighth Avenue
New
York, NY 10011
(800)
223-7564
|
||
(Name,
address, including zip code, and telephone number, including area
code, of
agent for service)
|
||
Copy
to:
|
||
Diane
G. Kerr
Manuel
Garciadiaz
Davis
Polk & Wardwell
450
Lexington Avenue
New
York, New York 10017
(212)
450-4000
|
CALCULATION
OF REGISTRATION FEE
|
||||
Title
of each class of securities to be registered
|
Amount
to be registered (1)
|
Proposed
maximum
offering
price per share(2)
|
Proposed
maximum
aggregate
offering price (2)
|
Amount
of
registration
fee (3)(4)
|
Class
A common shares, par value $0.01 and class B Series 2 common shares,
par
value $0.01
|
119,608,592
|
$13.0682
|
$1,563,069,001.97
|
$47,986.22
|
(1)
|
119,608,592
is the maximum number of Cosan Limited shares expected to be issued
to
security holders of Cosan S.A. Indústria e Comércio (“Cosan”)
pursuant to the exchange offer. Class B series 2 common shares
are convertible into class A common shares pursuant to their
terms.
|
(2)
|
Proposed
maximum aggregate offering price (estimated solely for the purpose
of
computing the amount of the registration fee pursuant to Rule 457(f)
under
the Securities Act) was calculated in accordance with the exchange
ratio
of one class A common share or one class B series 2 common share
to be
received for every one Cosan common share in the exchange offer
and based
on the market value of Cosan common shares, calculated pursuant
to Rule
457(c) by taking the average of the high and low prices of Cosan
common
shares as reported on the São Paulo Stock Exchange on January 28, 2008,
converted into U.S. dollars based on an exchange rate of R$1.7906
to
US$1.00, the exchange rate reported by the Central Bank of
Brazil on January 28, 2008.
|
(3)
|
Computed
in accordance with Rule 457(f) of the Securities Act by multiplying
the
proposed maximum aggregate offering price by
0.0000307.
|
(4)
|
$43,989.84
was previously paid.
|
The
information in this prospectus
is not complete and may be changed. We may not sell these securities
until
the registration statement filed with the Securities and Exchange Commission
is
effective. This prospectus
is not an offer to sell
these securities and it is not soliciting an offer to buy these
securities in any
state
or jurisdiction where the
offer or
sale is not
permitted.
|
Summary
|
1
|
Risk
Factors
|
15
|
Forward-Looking
Statements
|
32
|
Presentation
of Financial and Other Information
|
33
|
Market
Information
|
35
|
Exchange
Rates
|
40
|
The
Exchange Offer
|
42
|
Appraisal
Report
|
59
|
Selected
Financial and Other Data
|
65
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
68
|
Our
Industry
|
101
|
Business
|
113
|
Management
|
139
|
Principal
Shareholders
|
147
|
Related
Party Transactions
|
152
|
Description
of Share Capital
|
153
|
Comparison
of Shareholders’ Rights
|
162
|
Dividends
and Dividend Policy
|
172
|
Taxation
|
175
|
Expenses
|
179
|
Legal
Matters
|
180
|
Experts
|
181
|
Where
You Can Find More Information
|
182
|
Enforcement
of Civil Liabilities
|
183
|
Index
to financial statements
|
F-1
|
Annex
A – Appraisal Report
|
A-1
|
·
|
Sugarcane:
the largest grower and processor of sugarcane in the world, having
crushed
36.2 million tons in fiscal year 2007 and 27.9 million tons of
sugarcane
in fiscal year 2006 (planted on approximately 572,000 hectares,
of which
approximately 50% is leased by us, 40% is supplier owned and 10%
is
company owned);
|
·
|
Ethanol:
the largest ethanol producer in Brazil and the second largest in
the
world, having produced 326.7 million gallons (1.2 billion liters)
in
fiscal year 2007 and 241.7 million gallons (915.0 million liters)
in
fiscal year 2006, and the largest exporter of ethanol in the world,
having
exported 72.6 million gallons (274.7 million liters) in fiscal
year 2007
and 61.0 million gallons (230.9 million liters) in fiscal year
2006;
and
|
·
|
Sugar:
the largest sugar producer in Brazil and one of the three largest
sugar
producers in the world, having produced 3.2 million tons in fiscal
year
2007 and 2.3 million tons of sugar in fiscal year 2006, and the
largest
exporter of sugar in the world, having exported 2.8 million tons
in fiscal
year 2007 and 2.1 million tons in fiscal year
2006.
|
The
Exchange Offer
|
We
hereby offer to exchange one share of our class A
common shares for each outstanding Cosan common share that is not
owned by
us or one of our affiliates or, at the option of the holder, but
solely in
the case of a holder who is a July Cosan
Shareholder, one share of our
class B series 2 common shares. We also hereby offer to exchange
all of
the shares of any Holding Entity for the number of shares of our
class A
common shares that the Holding Entity would have received in the
exchange
offer if the Holding Entity had exchanged all of its Cosan shares
for our
class A common shares or, at the option of the tendering shareholder,
but
only in the case of a person tendering shares of a Holding Entity
that is
a July Cosan Shareholder, the number of shares of our class B series
2
common shares that the Holding Entity would have received in the
exchange
offer if it had elected to tender all of its Cosan shares in exchange
for
class B series 2 common shares.
|
Holders
of Cosan shares who are resident in Brazil or elsewhere outside
the United
States (other than holders of shares of a Holding Entity), who
may only
participate in the exchange offer in Brazil, using the separate
offering
materials being published in Brazil for such persons, have the
option of
receiving Brazilian Depositary Receipts representing our class
A common
shares at the same exchange ratio described above, in lieu of receiving
our class A common shares directly.
|
||
Conditions
|
The
exchange offer is not conditioned upon the tender of any minimum
number of
Qualifying Shares or upon receipt of any financing. However, our
obligation to exchange our shares for Qualifying Shares in the
exchange
offer is subject to the other conditions. See “The Exchange Offer –
Conditions to Completion of the Exchange Offer”.
|
|
Proration
|
Depending
on the number of Qualifying Shares tendered in the exchange offer,
Qualifying Shares properly tendered and not properly withdrawn
prior
to a.m., New York
time (1:00 p.m., São
Paulo time) on the Auction Date may be subject to
proration.
|
|
Expiration
|
The
Exchange Offer can be accepted
until p.m., New York time (6:00
p.m., São Paulo time) on , 2008 (the “Expiration
Date”). However, due to the time required in Brazil for the administrative
processing of the U.S. forms of acceptance and other offer documentation,
to validly tender Qualifying Shares in the exchange offer, a shareholder
must deliver such shareholder’s duly completed and signed U.S. form of
acceptance and other required documents to the Banco Santander
S.A. (“Intermediary
Institution”) by p.m.,
New York time (6:00 p.m., São Paulo time)
on
, 2008 (the “Submission Deadline”). If such
documentation is delivered to the Intermediary Institution in the
period
between the Submission Deadline and the Expiration Date, all reasonable
efforts will be made to process such shareholder’s tender of Qualifying
Shares prior to the Expiration Date, however no assurance can be
given
this will be possible and the Qualifying Shares tendered pursuant
to such
documentation may be excluded from the exchange offer. In accordance
with
applicable Brazilian regulations, the Cosan shares held under Resolution
2,689 to be exchanged in the exchange offer will be tendered and
exchanged
though the Auction currently scheduled to occur on the Auction
Date and
shares held by Law 4,131 Holders to be exchanged will be tendered
and
exchanged in the manner described in this prospectus.
|
|
Procedures
for Tendering
|
If
you hold your Cosan shares under Resolution 2,689, you may participate
in
the exchange offer by tendering your Cosan shares through Santander
Brasil
S.A. Corretora de Títulos
e
Valores Mobiliários,
the
Brazilian broker that we have appointed for purposes of the offer
(the
“Brazillian
Broker”)
or any
other broker authorized to conduct trades on the São Paulo Stock Exchange.
If you are a Law 4,131 Holder and you wish to participate in the
exchange
offer, you must tender your Cosan shares or Holding Entity shares
through
the Brazilian Broker. You should follow the instructions for
your
|
particular
circumstances set forth under “The Exchange Offer – Procedures for
Tendering”.
|
||
Withdrawal
|
You
may withdraw your tender of shares at any time prior to
a.m. New York time
( p.m. São Paulo time) on the
Auction Date. See “The Exchange Offer – Withdrawal
Rights”.
|
What
is the purpose of the exchange offer?
|
The
exchange offer is the third stage in a broader reorganization of
Cosan and
its controlling and controlled companies, designed to position
us to take
advantage of favorable global industry trends and opportunities
in the
ethanol and sugar markets through a global platform. See “The Exchange
Offer – Background to the Exchange Offer”.
|
|
What
shares are being sought in the exchange offer?
|
We
are offering to exchange common shares of our subsidiary Cosan
held by
shareholders other than ourselves and our affiliates, as well as
the
shares of any Holding Entity.
|
|
What
will I receive in the exchange offer?
|
For
every one Cosan common share you tender in the offer, you are entitled
to
receive either one share of our class A common shares or, if you
are a
July Cosan Shareholder, you may elect to instead receive
one share of our class B series 2 common shares for
every common share of Cosan tendered. Before electing to receive
class B
series 2 common shares, you should carefully consider the risk
factors
discussed under “Risk Factors – Risks Related to the Corporate
Restructuring and the Exchange Offer – There will be no market for our
class B series 2 common shares and you may be unable to sell the
Class A
common shares into which our class B series shares may
convert”.
Persons
who elect to tender the shares of a Holding Entity will receive
the same
number of our class A common shares or class B series 2 common
shares in
accordance with the exchange ratios described above that the Holding
Entity would have received if it had tendered its Cosan shares
directly in
the exchange offer.
|
|
Why
is the right to receive class B series 2 common shares limited
to
shareholders of record as of July 26, 2007?
|
July
26, 2007 was the day before we announced that we were going to
offer the
opportunity for holders of Cosan shares to elect to receive our
class B
series 2 common shares in the exchange offer.
|
|
What
is the difference between the class A common shares and the class
B series
2 common shares?
|
The
primary differences between our class A common shares and our class
B
series 2 common shares are:
· Holders
of our class A common shares have one vote per share, while holders
of our
class B series 2 common shares have ten votes per share. Holders
of our
class B series 1 common shares also have ten votes per share.
· Our
class A common shares are listed on the NYSE. Brazilian Depositary
Receipts representing our class A common shares are listed on the
BOVESPA.
The class B series 2 common shares
|
will
not be listed on the NYSE, the BOVESPA or any other securities
exchange.
· Our
class A common shares are not convertible and are freely transferable,
subject to applicable law.
· Each
of our class B series 2 common shares is convertible at any time
at the
option of the holder into one class A common share and automatically
converts into one class A common share (1) upon any transfer
of the class
B series 2 common share, (2) if our class B series 1 common shares
represent less than 45% of the voting power of the issued and
outstanding
share capital in our company, or (3) if all of our class B series
1 common
shares convert into class A common shares.
See
“Description of Share Capital” and “Risk Factors – Risks Related to the
Corporate Restructuring and the Exchange Offer – There will be no market
for our class B series 2 common shares and you may be unable
to sell the
class A common shares into which our class B series 2 common
shares may
convert”.
|
||
If
I tender my Cosan shares in the exchange offer, how will my rights
as a
shareholder change?
|
As
a
holder of Cosan shares your rights as a shareholder are governed
by
Brazilian law. Since we are a Bermuda company, if you tender your
shares
in the exchange offer, then your rights as a shareholder will be
governed
by Bermuda law. There are numerous differences between the rights
of a
shareholder in our company, as a Bermuda company, and the rights
of a
shareholder in Cosan, as a Brazilian company. See “Comparison of
Shareholders’ Rights”. Additionally, your rights will vary depending on
which class of our shares you elect to receive in exchange for
your
Qualifying Shares. Holders of class B common shares shall be entitled
to
10 votes per share as compared to one vote per share in the case
of class
A common shares. Currently, our controlling shareholder holds indirectly
all of our issued class B common shares, and thus holds 90.1% of
the
aggregate voting power in our company and 48.7% of our issued and
outstanding share capital and has the power to elect all of our
directors
and determine the outcome of substantially all matters submitted
to our
shareholders for a vote or other approval. Our controlling shareholder
will have its voting power and capital stock percentages reduced
if we
exchange shares under the exchange offer. The measurement of this
reduction will depend on the final results of the exchange offer.
However,
considering Cosan’s capital increase, duly approved during its general
shareholders meeting held on December 5, 2007, our controlling
shareholder
will have at least 47.8% of the aggregate voting power in our company
and
31.2% of our issued and outstanding share capital. If you exchange
Qualifying Shares in the exchange offer, you will become a minority
shareholder in a company controlled by our controlling
shareholder.
|
|
If
I decide not to tender, how will consummation of the exchange offer
affect
my Cosan shares?
|
The
exchange of Cosan shares in the exchange offer may reduce substantially
the number of shares publicly traded in Brazil, may reduce the
number of
holders of Cosan shares and may result in Cosan’s common shares being
delisted from the Novo Mercado segment of the BOVESPA. These
reductions would likely adversely affect the liquidity, marketability
and
market value of the Cosan shares. If, upon completion of the exchange
offer, more than two-thirds of the common shares held by existing
minority
shareholders of Cosan are validly tendered in the exchange offer,
we
intend to delist the Cosan shares from the Novo Mercado segment
of the BOVESPA, but Cosan will continue to be a publicly traded
company
listed on the BOVESPA.
|
Has
the board of directors of Cosan made
any recommendation to its shareholders in connection with the exchange
offer?
|
The
board of directors of Cosan, a majority of the members of which
are
representatives of the Company, has not made any recommendation
to
shareholders in connection with the exchange offer. Under U.S.
law, within
ten business days after the commencement of the exchange offer,
Cosan is
required to file with the SEC and distribute to its shareholders
a
statement indicating whether it recommends in favor of the exchange
offer,
recommends against the exchange offer or takes no position in connection
with the exchange offer. Cosan is a Brazilian company and Brazilian
law
governs the duties and obligations of Cosan’s board of directors and does
not impose any fiduciary or other duty on the Cosan board, or on
Cosan, to
approve or disapprove the exchange offer or to make any
recommendation in connection with the exchange offer. Accordingly,
we do
not expect the Cosan board to take a position on the exchange offer
and we
expect that the statement that Cosan files with the SEC and distributes
to
its shareholders will reflect this
fact.
|
How
many shares will you exchange?
|
We
will exchange any and all Qualifying Shares that are properly and
timely
tendered and not properly withdrawn, upon the terms and subject
to the
conditions of the exchange offer. However, depending on the number
of
shares tendered in the exchange offer, shares properly and timely
tendered
and not properly withdrawn may be subject to proration as described
below
and in “The Exchange Offer –Number of Shares Exchanged;
Proration”.
|
|
Is
there a minimum number of shares that must be tendered for you
to exchange
any shares?
|
No.
The exchange offer is not conditioned on any minimum number of
shares
being tendered.
|
|
Will
tendered shares be subject to proration?
|
In
accordance with the rules of the Brazilian
Securities Commission (Comissão de Valores Mobiliários), or
“CVM”, if more than one-third but less than two-thirds of the
common shares held by existing minority shareholders of Cosan are
tendered
in the exchange offer, we will only exchange common shares representing
one-third of the Cosan shares held by existing minority shareholders,
on a
pro rata basis. However, if more than two-thirds of the common
shares held
by existing minority shareholders of Cosan are tendered in the
exchange
offer, we will accept for exchange all Cosan shares tendered. If
less than
one-third of the common shares held by existing minority shareholders
of
Cosan are tendered in the exchange offer, we will accept for exchange
all
Cosan shares tendered. For purposes of determining the number of
Cosan
shares tendered pursuant to the exchange offer and for purposes
of
determining proration, we will treat the tender of the shares of
a Holding
Entity as a tender by that Holding Entity of the total number of
Cosan
shares held by the Holding Entity.
|
|
Do
I have appraisal rights with respect to the exchange
offer?
|
There
are no appraisal or similar rights available in connection with
the
exchange offer. However, if upon completion of the exchange offer
more
than two-thirds of the common shares held by existing minority
shareholders of Cosan are tendered, we will be required by the
rules of
the CVM, for an additional three-month period, to provide non-tendering
Cosan minority shareholders another opportunity to tender their
common
shares at the exchange ratios established for the exchange offer,
as
discussed above and in “The Exchange Offer – Shareholder Put Right”. You
should note that tenders of Holding Entity
shares will not be accepted during the additional three-month
period.
|
Will
Cosan be delisted in Brazil following the completion of the exchange
offer?
|
If
more than two-thirds of the common shares held by existing minority
shareholders of Cosan are tendered in the exchange offer we intend
to
delist Cosan’s common shares from the Novo Mercado segment of the
BOVESPA, but Cosan will continue to be a publicly traded company
listed on
the stock exchange. In order to delist from the Novo Mercado,
Cosan will have to comply with specific requirements of the Novo
Mercado rules. After delisting from the Novo Mercado,
Cosan’s common shares would continue to be bound by the CVM rules and
we
will continue to be a publicly traded company listed on the stock
exchange.
|
|
Do
you require any approvals from your shareholders, any governmental
authorities, Cosan or any third parties in order to acquire Cosan
shares
to effect the exchange offer?
|
We
do not need any approval from our shareholders in order to complete
the
exchange offer. The exchange offer is subject to the condition
that all of
the approvals necessary in order for us to acquire Cosan shares
pursuant
to the exchange offer have been obtained and remain effective.
The request
for approval of the exchange offer from the CVM was filed on October
10,
2007. We also need certain other Brazilian governmental approvals,
including approvals from the Central Bank of Brazil with respect
to
foreign exchange transactions. We are not aware that any approvals,
other
than the Brazilian approvals, the effectiveness of the registration
statement of which this prospectus forms a part, and the approval
of the
listing on the NYSE of the class A common shares to be issued in
connection with the exchange offer, are required.
|
|
What
will be the accounting treatment for the exchange
offer?
|
In
connection with the exchange offer, we will conduct a capital increase,
corresponding to the number of new Cosan Limited shares that will
be
required to be issued in order to exchange all of the Qualifying
Shares
for our common shares. The exchange will be accounted for using
the
purchase method in accordance with SFAS 141 “Business Combinations” and
there will be no gain or loss recorded upon the retirement of the
Cosan
shares received. Goodwill will be recognized based on the excess
of Cosan
Limited’s acquisition cost over the fair value of net assets acquired and
liabilities assumed. Goodwill is subject to annual impairment
tests.
|
|
What
will my tax consequences be if I participate in the exchange
offer?
|
U.S.
Tax Considerations. The exchange offer is the third step in a series
of steps in our corporate restructuring which should be treated
as an
exchange of shares pursuant to a plan that qualifies as a tax-free
incorporation under Section 351 of the Code. Accordingly, if you
are a
“U.S. Holder” (as defined below under “Taxation – Material U.S. Federal
Income Tax Considerations”) who exchanges Qualifying Shares for our new
common shares pursuant to the exchange offer, you should not recognize
gain or loss. If the exchange offer were not treated as an exchange
of
shares pursuant to an overall plan governed by Section 351, however,
the
exchange of Qualifying Shares for our new common shares would be
taxable
to you if you are a U.S. Holder. For a discussion of certain other
U.S.
tax matters that may be relevant to U.S. Holders, see “Taxation – Material
U.S. Federal Income Tax Considerations”.
Brazilian
Tax Considerations. There is no settled jurisprudence with respect to
the tax treatment of the exchange offer and no agreement as to
the final
tax treatment has been entered into with the Brazilian tax authorities.
However, it is possible to argue that the exchange
offer
|
does
not result in taxable gain, as there is no amount realized by the
holders.
We note that this view of the exchange offer may not prevail and,
for this
reason, we recommend that shareholders consult their own tax advisors
on
all aspects of the exchange offer. For more details on the tax
consequences of the exchange offer, see “Taxation – Brazilian Tax
Consequences”.
Bermuda
Tax Considerations. At the present time there is no Bermuda income or
profits tax, withholding tax, capital gains tax, capital transfer
tax,
estate duty or inheritance tax payable by us or our shareholders
(other
than shareholders ordinarily resident in Bermuda) in respect of
our
shares. See “Taxation – Bermuda Tax Consequences”.
You
are urged to consult your own tax advisor with respect to your
personal
tax consequences of the exchange offer, which may vary for investors
in
different tax situations.
|
||
How
do I tender shares held under Resolution 2,689 in the exchange
offer?
|
If
you wish to tender Cosan shares held under Resolution 2,689 in
the
exchange offer, you must (i) contact and register with the Brazilian
Broker or with any other broker authorized to conduct trades on
the São
Paulo Stock Exchange, (ii) present certain required documentation,
including a U.S. form of acceptance, (iii) pay certain fees charged
by the
São Paulo Stock Exchange and CBLC, (iv) cause your shares to be
transferred to the respective accounts established by CBLC for
purposes of the exchange offer and (v) ask the broker to tender your
Cosan shares in the Auction on your behalf. To tender your Cosan
shares,
your broker must, no later than a.m. New
York time (1:00 p.m. São
Paulo
Time), on the Auction Date, register your shares through the São
Paulo
Stock Exchange electronic trading system.
If
you have invested in Cosan shares under Resolution 2,689, your
shares are
registered at CBLC and you should ask your Brazilian representative
for
purposes of Resolution 2,689 to contact your broker on your behalf.
If
your Cosan shares are held through Banco Itaú, Cosan’s custodian and
transfer agent, your shares are not registered at CBLC and you
should ask
your broker to request the transfer of your Cosan shares to the
custody of
CBLC in order to enable your broker to tender your Cosan shares
in the
Auction. It is your responsibility to contact and register with
the
Brazilian Broker or another Brazilian broker sufficiently in advance
of
the Submission Deadline to ensure that Banco Itaú can transfer your Cosan
shares to the custody of CBLC before the Auction Date.
Any
holder that does not know whether it holds Cosan shares through
CBLC or
Banco Itaú should ask its custodian, representative, broker or other
nominee.
|
A
beneficial owner of Cosan shares registered in the name of a broker,
dealer, commercial bank or other nominee must contact that entity
if that
beneficial owner decides to participate in the exchange
offer.
See
“The Exchange Offer – Procedures for Tendering – Tenders of Shares held
under Resolution 2,689.”
|
||
How
do I tender shares held under Brazilian law No. 4,131 in the exchange
offer?
|
Shares
tendered in the exchange offer by Law 4,131 Holders will not be
purchased
and exchanged through the Auction, but in a separate transaction
taking
place outside of the São Paulo Stock Exchange. Law 4,131 Holders wishing
to tender their shares in the exchange offer must (i) contact and
register
with the Brazilian Broker, (ii) present a U.S. form of
acceptance together
with all documentation required under applicable law to evidence
the
transfer to the Company of the Qualifying Shares being tendered and
any other documentation required by the U.S. form of acceptance and
(iv) ask the Brazilian Broker to tender their shares in the exchange
offer on their behalf.
See
“The Exchange Offer – Procedures for Tendering – Tenders of shares
held under Brazilian law No. 4,131.”
|
|
Can
I change my mind and decide not to participate in the exchange
offer after
I tender my shares?
|
Yes.
You may withdraw your tender of Qualifying Shares prior
to a.m. New York time
( p.m. São Paulo time) on the
Auction Date.
|
|
When
will I know whether you will continue to exchange Cosan shares
during the
three-month period following the Expiration Date?
|
We
will announce whether or not we will continue to exchange Cosan
shares
during the three-month period following the Expiration Date at
the same
time that we announce the results of the exchange
offer.
|
|
How
do I tender my shares during the additional three-month
period?
|
We
will announce the procedures applicable to tenders of shares during
the
additional three-month period at the same time that we announce
whether or
not this additional three-month period will be offered.
|
|
Will
the terms of the exchange offer be the same during the additional
three-
month period as during the offer period?
|
Yes,
except that there will be no right of withdrawal during this three-month
period.
|
|
Are
there any conditions to the obligation of the company to complete
the
exchange offer?
|
Yes.
The exchange offer is subject to a number of conditions,
including:
· the
absence of any legal restraints on the exchange offer;
· the
absence of material adverse changes relating to the business of
Cosan, or
in certain stock prices, or stock market indices;
· the
absence of any suspension in trading on certain stock exchanges;
and
|
· the
prior receipt of required governmental approvals, including obtaining
all
of the approvals necessary in order for us to acquire Cosan shares
pursuant to the exchange offer, receipt of foreign exchange transaction
approvals from the Central Bank and the approval for listing by
the NYSE
of our class A common shares to be issued in connection with the
exchange
offer, and such approvals remaining effective.
See
“The Exchange Offer – Conditions to Completion of the Exchange
Offer”.
|
||
Can
the exchange offer be extended and under what
circumstances?
|
Yes.
Subject to the applicable rules and regulations of the CVM, BOVESPA
and
the SEC, we may extend the exchange offer at any time and for any
reason,
including if, at the time the exchange offer is scheduled to expire
(including at the end of an earlier extension), any of the exchange
offer
conditions is not satisfied (or waived by us) or if we are required
to
extend the exchange offer by the rules of the CVM, BOVESPA or the
SEC.
During any extension of the exchange offer, all shares previously
tendered
and not withdrawn will remain subject to the terms of the exchange
offer,
including the right of a tendering holder to withdraw its shares
from the
exchange offer. An extension of the exchange offer will require
the
approval of the CVM and under Brazilian law, the period between
the
publication of the exchange offer and the Auction Date may not
exceed 45
days.
|
|
How
will you notify me if you extend the exchange
offer?
|
If
we decide to extend the period of time during which the exchange
offer is
open and thereby delay acceptance for exchange of tendered shares,
we will
make a public announcement no later than 9:00 a.m., New York time,
on the
next day after the previously scheduled Expiration
Date.
|
|
When
will I know the outcome of the exchange offer?
|
We
will issue a press release announcing the results of the exchange
offer
promptly after the Auction Date.
|
|
When
will I receive my new shares?
|
Assuming
the exchange offer is completed, we will deliver the class A common
shares
and class B series 2 common shares, as applicable, to be issued
in
exchange for properly tendered Qualifying Shares within five Brazilian
business days after the Auction Date.
|
|
Will
I have to pay brokerage commissions?
|
Each
holder that tenders Cosan shares held under Resolution 2,689 in
the
exchange offer must pay a combined fee to the São Paulo Stock Exchange and
CBLC in an amount equal to 0.035% of the value of the class A common
shares and class B series 2 common shares received by it. For purposes
of
calculating this fee each class A common share and each class B
series 2
common share will be valued at R$22.00. In addition, the broker
that
tenders shares on behalf of a Cosan shareholder may charge a fee
or
commission for doing so. Law 4,131 Holders will not be required
to pay the
fees described above.
Each
tendering shareholder should consult its broker or nominee to determine
what fees or commissions may apply.
We
will pay all fees and expenses associated with the issuance of
our class
A common shares and our class B series 2 common
shares.
|
Whom
may I contact if I have questions about the exchange
offer?
|
You
may contact the Intermediary Institution for information
regarding the exchange offer at the address and phone numbers listed
below:
Banco
Santander S.A.
c/o
Santander Investment Securities Inc.
45
East 53rd
Street
New
York, NY 10022
9th
Floor
Operations
Attention:
Neil Iorio, Vincent Valenza and Julio Toro
Ref:
Santander Brasil S/A Corretora de Títulos e Valores Mobiliários (Cosan
tender)
Telephone:
U.S.: (866) 215-3028
Brazil:
(55)(11)3012-6070
Telephone
hours of operation: a.m.
– a.m. New York time (9:00 a.m. –
12:00 p.m. São Paulo time)
and a.m.
– p.m. New York time (2:00 p.m. –
6:00 p.m. São Paulo time)
|
At
and for Six Months
Ended
October 31, (Unaudited)
|
At
and for Fiscal Year
Ended
April 30,
|
|||||||||||||||||||
Cosan
– Historical
|
2007
|
2006
|
2007
|
2006
|
2005
|
|||||||||||||||
(US$
thousands, except for share data)
|
||||||||||||||||||||
Net
income (loss)
|
16,035
|
190,880
|
346,471
|
(72,292 | ) |
22,700
|
||||||||||||||
Weighted
number of shares outstanding:
|
||||||||||||||||||||
Basic
|
188,886,360
|
187,753,653
|
188,254,660
|
156,037,234
|
105,312,115
|
|||||||||||||||
Diluted
|
191,752,152
|
190,455,129
|
191,059,957
|
158,404,884
|
—
|
|||||||||||||||
(US$/share)
|
||||||||||||||||||||
Income
(losses) per share:
|
||||||||||||||||||||
Basic
|
0.08
|
1.02
|
1.84
|
(0.47 | ) |
0.22
|
||||||||||||||
Diluted
|
0.08
|
1.00
|
1.81
|
(0.46 | ) |
—
|
||||||||||||||
Shareholders’
equity per share
|
5.85
|
4.06
|
4.92
|
3.07
|
1.59
|
|||||||||||||||
Dividends
declared per share
|
—
|
—
|
0.20
|
—
|
0.00
|
At
and for Six Months
Ended
October 31,
(Unaudited)
|
At
and for Fiscal Year
Ended
April 30,
|
|||||||
Cosan
Limited – Historical
|
2007
|
2007
|
||||||
(US$
thousands, except for share data)
|
||||||||
Net
income
|
18,948
|
176,700
|
||||||
Weighted
number of shares outstanding
|
140,752,618
|
96,745,329
|
||||||
Income
per share
|
0.13
|
1.83
|
||||||
Shareholders’
equity per share
|
8.14
|
—
|
||||||
Equivalent
pro forma shareholders’ equity per share(1)
|
8.92
|
—
|
||||||
Dividends
declared per share
|
—
|
—
|
||||||
Shareholders’
equity
|
1,692,243
|
—
|
||||||
Cosan
minority interest acquired(2)
|
990,100
|
—
|
||||||
Equivalent
pro forma shareholders’ equity
|
2,682,343
|
—
|
||||||
Equivalent
pro forma shares outstanding
|
300,564,360
|
—
|
||||||
·
|
our
class A common shares as reported on the
NYSE;
|
·
|
Cosan’s
common shares as reported on the BOVESPA;
and
|
·
|
Cosan’s
common shares as reported on the BOVESPA, on an equivalent per
share
basis, calculated by multiplying the closing price of our class
A common
shares on such date by the exchange ratio for the exchange
offer;
|
Company
Class A Common Shares
|
Cosan
Common Shares
|
Exchange
Rate
|
Cosan
Common Shares
|
Equivalent
Per Share Value of Cosan Common Shares exchanged for Company
Class A
Common Shares
|
||||||||||||||||
NYSE
(US$/share)
|
BOVESPA
(R$/share)
|
(R$/US$)
|
(US$/share)
|
(US$/share)
|
||||||||||||||||
June
22, 2007
|
—
|
35.61
|
1.9334
|
18.42
|
—
|
|||||||||||||||
January
28, 2008
|
13.56
|
23.99
|
1.7906
|
13.40
|
13.56
|
·
|
have
not discussed the exchange offer or negotiated the terms of the
exchange
offer with the directors of Cosan or with any other person acting
on their
behalf; and
|
·
|
do
not expect the board of directors of Cosan to request a fairness
opinion.
|
·
|
a
classified board of directors with staggered three-year
terms;
|
·
|
restrictions
on the time period in which directors may be
nominated;
|
·
|
the
affirmative vote of a majority of our directors in office and a
majority
of all votes attaching to all shares then in issue or, if not approved
by
a majority of the directors in office, at least 66- 2/3% of all
votes
attaching to all shares then in issue for amalgamation and other
business
combination transactions; and
|
·
|
the
tag-along rights described under “Description of Share Capital – Tag-along
Rights”.
|
·
|
fluctuations
in gasoline prices;
|
·
|
variances
in the production capacities of our competitors;
and
|
·
|
the
availability of substitute goods for the ethanol and sugar products
we
produce.
|
·
|
changes
in economic, political or regulatory
conditions;
|
·
|
difficulties
in managing geographically diverse
operations;
|
·
|
changes
in business regulation, including policies governing ethanol technological
standards;
|
·
|
effects
of foreign currency movements;
|
·
|
difficulties
in enforcing contracts; and
|
·
|
cultural
and language barriers.
|
·
|
the
generation, storage, handling, use and transportation of hazardous
materials;
|
·
|
the
emission and discharge of hazardous materials into the ground,
air or
water; and
|
·
|
the
health and safety of our employees.
|
·
|
expropriation
of the port concession in the public
interest;
|
·
|
default
by Cosan Portuária in the performance of its obligations under the port
concession agreement, including the payment of concession fees
or failure
to comply with other legal and regulatory
obligations;
|
·
|
Cosan
Portuária’s failure to comply with determinations by the granting
authority; or
|
·
|
bankruptcy
or dissolution of Cosan Portuária.
|
·
|
elect
a majority of our directors and appoint our executive officers,
set our
management policies and exercise overall control over our company
and
subsidiaries;
|
·
|
agree
to sell or otherwise transfer his controlling stake in our company;
and
|
·
|
determine
the outcome of substantially all actions requiring shareholder
approval,
including transactions with related parties, corporate reorganizations,
acquisitions and dispositions of assets, and
dividends.
|
·
|
exchange
rate movements;
|
·
|
exchange
control policies;
|
·
|
expansion
or contraction of the Brazilian economy, as measured by rates of
growth in
gross domestic product, or “GDP”;
|
·
|
inflation;
|
·
|
tax
policies;
|
·
|
other
economic, political, diplomatic and social developments in or affecting
Brazil;
|
·
|
interest
rates;
|
·
|
liquidity
of domestic capital and lending markets;
and
|
·
|
social
and political instability.
|
·
|
general
economic, political, demographic and business conditions in Brazil
and in
the world and the cyclicality affecting our selling
prices;
|
·
|
our
ability to implement our expansion strategy in other regions of
Brazil and
international markets through organic growth and
acquisitions;
|
·
|
competitive
developments in the ethanol and sugar
industries;
|
·
|
our
ability to implement our capital expenditure plan, including our
ability
to arrange financing when required and on reasonable
terms;
|
·
|
our
ability to compete and conduct our businesses in the
future;
|
·
|
changes
in customer demand;
|
·
|
changes
in our businesses;
|
·
|
technological
advances in the ethanol sector and advances in the development
of
alternatives to ethanol;
|
·
|
government
interventions and trade barriers, resulting in changes in the economy,
taxes, rates or regulatory
environment;
|
·
|
inflation,
depreciation and devaluation of the
real;
|
·
|
other
factors that may affect our financial condition, liquidity and
results of
our operations; and
|
·
|
other
risk factors discussed under “Risk
Factors”.
|
NYSE
(USD
per common share)
|
||||||||
High
|
Low
|
|||||||
Fiscal
Year(1)
|
||||||||
2008
(through January 28, 2008)
|
US$ |
13.94
|
US$ |
10.00
|
||||
Fiscal
Quarter
|
||||||||
First
Fiscal Quarter 2008
|
—
|
—
|
||||||
Second
Fiscal Quarter 2008
|
13.28
|
10.05
|
||||||
Third
Fiscal Quarter 2008 (through January 28, 2008)
|
13.94
|
10.00
|
||||||
Month
|
||||||||
August
2007
|
11.30
|
10.50
|
||||||
September
2007
|
12.93
|
10.05
|
||||||
October
2007
|
13.28
|
12.00
|
||||||
November
2007
|
12.61
|
10.00
|
||||||
December
2007
|
12.60
|
10.35
|
||||||
January
2008 (through January 28, 2008)
|
13.94
|
12.15
|
BOVESPA
(reais
per BDR)
|
||||||||
High
|
Low
|
|||||||
Fiscal
Year
|
||||||||
2008
(through January 28, 2008)
|
R$ 24.49
|
R$ 18.20
|
||||||
Fiscal
Quarter
|
||||||||
First
Fiscal Quarter 2008
|
—
|
—
|
||||||
Second
Fiscal Quarter 2008
|
24.12
|
19.90
|
||||||
Third
Fiscal Quarter 2008 (through January 28, 2008)
|
24.49
|
18.20
|
||||||
Month
|
||||||||
August
2007
|
22.29
|
20.65
|
||||||
September
2007
|
23.70
|
19.90
|
||||||
October
2007
|
24.12
|
21.52
|
||||||
November
2007
|
22.00
|
18.20
|
BOVESPA
(reais
per BDR)
|
||||||||
High
|
Low
|
|||||||
December
2007
|
20.85
|
18.60
|
||||||
January
2008 (through January 28, 2008)
|
24.49
|
21.20
|
NYSE
Average
Daily Trading Volume
|
|
Fiscal
Quarter
|
(in
millions of US$)
|
First
Fiscal Quarter 2008
|
—
|
Second
Fiscal Quarter 2008
|
11.87
|
Third
Fiscal Quarter 2008 (through January 28, 2008)
|
10.32
|
BOVESPA
Average
Daily Trading Volume
|
|
Fiscal
Quarter
|
(in
millions of R$)
|
First
Fiscal Quarter 2008
|
—
|
Second
Fiscal Quarter 2008
|
3.92
|
Third
Fiscal Quarter 2008 (through January 28, 2008)
|
1.17
|
BOVESPA
(reais
per common share)
|
||||||||
High
|
Low
|
|||||||
Fiscal
Year
|
||||||||
2007
|
R$ |
59.42
|
R$ |
27.46
|
||||
2008
(through January 28, 2008)
|
41.78
|
18.87
|
||||||
Fiscal
Quarter
|
||||||||
First
Fiscal Quarter 2007
|
59.42
|
38.35
|
||||||
Second
Fiscal Quarter 2007
|
48.09
|
27.46
|
||||||
Third
Fiscal Quarter 2007
|
46.57
|
35.26
|
||||||
Fourth
Fiscal Quarter 2007
|
43.46
|
35.93
|
||||||
First
Fiscal Quarter 2008
|
41.78
|
30.32
|
||||||
Second
Fiscal Quarter 2008
|
33.09
|
21.21
|
||||||
Third
Fiscal Quarter 2008 (through January 28, 2008)
|
26.66
|
18.87
|
||||||
Month
|
||||||||
April
2007
|
R$ |
43.46
|
R$ |
36.54
|
||||
May
2007
|
41.78
|
37.51
|
||||||
June
2007
|
39.17
|
30.63
|
||||||
July
2007
|
35.06
|
30.32
|
||||||
August
2007
|
33.09
|
21.80
|
||||||
September
2007
|
25.60
|
21.21
|
||||||
October
2007
|
28.40
|
25.21
|
||||||
November
2007
|
26.66
|
18.87
|
||||||
December
2007
|
21.50
|
20.50
|
||||||
January
2008 (through January 28, 2008)
|
25.00
|
20.90
|
Average
Daily Trading Volume
|
||||
Fiscal
Quarter
|
(in
millions of R$)
|
|||
First
Fiscal Quarter 2007
|
33.69
|
|||
Second
Fiscal Quarter 2007
|
31.05
|
|||
Third
Fiscal Quarter 2007
|
36.97
|
|||
Fourth
Fiscal Quarter 2007
|
37.07
|
|||
First
Fiscal Quarter 2008
|
48.49
|
|||
Second
Fiscal Quarter 2008
|
32.84
|
|||
Third
Fiscal Quarter 2008 (through January 28, 2008)
|
27.65
|
·
|
appoint
at least one representative in Brazil with powers to take actions
relating
to the investment;
|
·
|
appoint
an authorized custodian in Brazil for the investments, which must
be a
financial institution duly authorized by the Central Bank and the
CVM;
and
|
·
|
through
its representative, register itself as a foreign investor with
the CVM and
register the investment with the Central
Bank.
|
Period-end
|
Average
for
Period
|
Low
|
High
|
|||||||||||||
(reais
per U.S. dollar)
|
||||||||||||||||
Fiscal
Year Ended:
|
||||||||||||||||
April
30, 2002
|
R$ |
2.3625
|
R$ |
2.4522
|
R$ |
2.1957
|
R$ |
2.8007
|
||||||||
April
30, 2003
|
2.8898
|
3.2648
|
2.3770
|
3.9552
|
||||||||||||
April
30, 2004
|
2.9447
|
2.9108
|
2.8022
|
3.0740
|
||||||||||||
April
30, 2005
|
2.5313
|
2.8450
|
2.5195
|
3.2051
|
||||||||||||
April
30, 2006
|
2.0892
|
2.2841
|
2.0892
|
2.5146
|
||||||||||||
April
30, 2007
|
2.0339
|
2.1468
|
2.0231
|
2.3711
|
||||||||||||
Month
Ended:
|
||||||||||||||||
January
2007
|
2.1247
|
2.1385
|
2.1247
|
2.1556
|
||||||||||||
February
2007
|
2.1182
|
2.0963
|
2.0776
|
2.1182
|
||||||||||||
March
2007
|
2.0504
|
2.0887
|
2.0504
|
2.1388
|
||||||||||||
April
2007
|
2.0339
|
2.0320
|
2.023
1
|
2.0478
|
||||||||||||
May
2007
|
1.9289
|
1.9816
|
1.9289
|
2.0309
|
||||||||||||
June
2007
|
1.9262
|
1.9319
|
1.9047
|
1.9638
|
||||||||||||
July
2007
|
1.8776
|
1.8828
|
1.8448
|
1.9176
|
||||||||||||
August
2007
|
1.9620
|
1.9660
|
1.8729
|
2.1124
|
||||||||||||
September
2007
|
1.8389
|
1.8996
|
1.8389
|
1.9640
|
||||||||||||
October
2007
|
1.7440
|
1.8010
|
1.7440
|
1.8284
|
||||||||||||
November
2007
|
1.7837
|
1.7699
|
1.7325
|
1.8501
|
||||||||||||
December
2007
|
1.7713
|
1.7860
|
1.7616
|
1.8233
|
||||||||||||
January
2008 (through January 28, 2008)
|
1.7906
|
1.7746
|
1.7414
|
1.8301
|
·
|
Aguassanta
Participações S.A., or “Aguassanta” and Usina Costa Pinto S.A. Açúar e
Álcool, or “Costa Pinto”, controlling shareholders of Cosan and both
indirectly controlled by our chairman and chief executive officer,
Mr.
Rubens Ometto Silveira Mello, contributed their common shares of
Cosan to
us in exchange for 96,332,044 of our class B series 1 common shares.
The
common shares contributed to us by Aguassanta and Costa Pinto consist
of
96,332,044 common shares of Cosan, representing 51.0% of Cosan’s
outstanding common shares. The remaining outstanding common shares
in
Cosan continue to be held by the public;
and
|
·
|
Aguassanta
then contributed our class B series 1 common shares to Queluz Holdings
Limited, its newly created British Virgin Islands subsidiary, which
is
also indirectly controlled by our chairman and chief executive
officer,
Mr. Rubens Ometto Silveira Mello, in a manner that resulted in
Queluz
Holdings Limited and Costa Pinto being our direct shareholders.
We
currently own 96,332,044 common shares of Cosan, representing 51.0%
of
Cosan’s outstanding common shares.
|
(1)
|
Shares
held through Queluz Holdings Limited, a British Virgin Islands
company,
and Usina Costa Pinto S.A. Açúcar e Álcool, a Brazilian corporation, both
indirectly controlled by our controlling
shareholder.
|
(2)
|
Assuming
that all of Cosan’s shareholders exchange common shares issued by Cosan
for our class A common shares. If all of the Cosan shareholders
were to
exchange their shares for our class B series 2 common shares, instead
of
our class A common shares, 52.2% of the voting power of our share
capital
would be held by the public, with the remaining 47.8% held by Mr.
Rubens
Ometto Silveira Mello. Based on the facts and circumstances, this
would
not represent a change of control under U.S.
GAAP.
|
·
|
one share
of our class A common shares; or
|
·
|
at
the option of the tendering holder, but only if the tendering holder
was a
holder of record of the tendered Cosan shares as of the close of
trading
on July 26, 2007, as reflected in the books and records of Banco
Itaú, the
depositary for the Cosan shares, or CBLC (a “July Cosan
Shareholder”), one share of our class B series 2
common shares.
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·
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the
number of our class A common shares that the Holding Entity would
have
received in the exchange offer if it had elected to exchange all
of its
Cosan shares for our class A common shares;
or
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·
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at
the option of the tendering holder, but only if the tendering holder
is
tendering shares of a Holding Entity that is a July Cosan Shareholder,
the
number of our class B series 2 common shares that the Holding Entity
would
have received in the exchange offer if it had elected to exchange
all of
its Cosan shares for our class B series 2 common
shares.
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·
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if
fewer than one-third of the common shares held by existing minority
shareholders of Cosan are validly tendered in the exchange offer,
we will
accept for exchange all Qualifying Shares tendered. The minimum
free float
level required by the Novo Mercado listing rules will be
maintained, and Cosan will remain listed on the Novo Mercado
segment of the BOVESPA;
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if
more than one-third and fewer than two-thirds of the common shares
held by
existing minority shareholders of Cosan are validly tendered in
the
exchange offer, we will only be able to exchange Qualifying Shares
representing one-third of the Cosan shares held by existing minority
shareholders on a pro rata basis. The minimum free float level
required by
the Novo Mercado listing rules will be maintained, and Cosan will
remain listed on the Novo Mercado segment of the BOVESPA;
and
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if
more than two-thirds of the common shares held by existing minority
shareholders of Cosan are validly tendered in the exchange offer,
we will
be able to accept for exchange all Qualifying Shares tendered.
In that
case, however, we will, for an additional three-month period, agree
to
exchange Cosan shares (but not Holding Entity Shares) for class
A common
shares of Cosan Limited or,
solely for tendering
holders who are July Cosan Shareholders, class B
series 2 common
shares. If
more than two-thirds of
the common shares held by existing minority shareholders of Cosan
are
validly tendered in the exchange offer, we intend to delist Cosan’s common
shares from the Novo Mercado segment of the BOVESPA, but Cosan
will continue to be a publicly traded company listed on the BOVESPA.
In
order to delist from the Novo Mercado, Cosan will have to comply
with specific requirements of the Novo Mercado rules. After
delisting from the Novo Mercado, Cosan’s common shares would
continue to be bound by the CVM rules. In order to delist from
the
Novo Mercado, we would have to make a public cash tender offer
for the Cosan shares. The offer price is required to be at least
equal to
the economic value of the shares as determined by a specialized
valuation
prepared by a firm selected by a general meeting of shareholders
from
among at least three institutions presented by the board of directors.
The
Brazilian Corporate Law and the Novo Mercado rules do not foresee
the “price review” process, as such term is used in article 4 of the
Brazilian Corporate Law, in this kind of
offer.
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make
a material change in the terms of the exchange offer, other than
a change
in either of the exchange ratios;
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make
a material change in the information concerning the exchange offer;
or
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waive
a material condition of the exchange
offer.
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the
term “business day” means any day other than Saturday, Sunday or a U.S.
federal holiday and consists of the time period from 12:01 a.m.
through
12:00 midnight, New York time; and
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the
term “Brazilian business day” means any day other than Saturday, Sunday or
a Brazilian public holiday and consists of the time period from
12:01 a.m.
through 12:00 midnight, São Paulo
time.
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we
have not accepted for exchange Qualifying Shares;
and
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any
of the conditions listed under “Conditions to Completion of the Exchange
Offer” has not been satisfied.
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extend
the period of time during which the exchange offer is open;
or
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are
unable to accept for exchange or to exchange Qualifying Shares
under the
exchange offer for any reason.
|
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(1)
|
a
change in the business, conditions, income, operations or share
ownership
of the company, Cosan or any of their respective direct or indirect
subsidiaries that is materially adverse to the company, Cosan or
any of
their respective direct or indirect consolidated subsidiaries,
if such
change shall result from any of the following unforeseeable
events:
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the
issuance, by any federal, state or local Brazilian or U.S. governmental
authority of the Executive, Legislative or Judiciary branches,
of any
decree, order, judgment or act
that:
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questions,
restricts or limits our ability to carry out the exchange offer
for the
common shares of Cosan, to hold common shares of Cosan, to acquire
additional common shares of Cosan, or to exercise the rights inherent
therein or to receive distributions in respect
thereof;
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orders
the termination or amendment of the terms and conditions of any
license,
authorization or concession granted for the conduct of the business
of
Cosan or any of its direct or indirect
subsidiaries;
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orders
the expropriation, confiscation or limitation on the free disposal
of the
assets of Cosan or any of its direct or indirect subsidiaries;
or
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suspends,
restricts or limits transactions in the foreign exchange market
or the
flow of funds into or out of
Brazil;
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the
occurrence of war or grave civil or political unrest, provided that there
is a decrease of at least 5% regarding the BOVESPA index (“IBOVESPA”) on
the business day immediately after the announcement of such event;
or
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the
occurrence of a natural event (including, without limitation, an
earthquake, flood or other similar event) or any other external
factor
that causes significant damage to the assets of Cosan or any of
its direct
or indirect subsidiaries in a manner that affects the ordinary
course of
its business;
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(2)
|
a
suspension or material limitation in trading of securities in general
on
the NYSE or on the BOVESPA for more than 24 hours, provided that
such
event takes place on any of the five trading days which precede
the date
which is two Brazilian business days before the Auction
Date;
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(3)
|
at
the closing of any trading session, a decrease of the IBOVESPA
expressed
in U.S. dollars (converted at the average exchange rate for purchase
and
sale furnished by the Central Bank, Transaction PTAX800, Option
5,
purchasing price, published by the Brazilian Central Bank
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(4)
|
on
any date, a decrease (converted at the average exchange rate for
purchase
and sale furnished by the Central Bank, Transaction PTAX800, Option
5,
published by the SISBACEN at 6:00 p.m. on such date) in the value
of
reais in relation to the U.S. dollar by at least 20% compared
to
the exchange rate of July 27, 2007, the date of the statement of
material
fact announcing the exchange offer, which value was R$1.9069 per
U.S.
dollar;
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(5)
|
the
occurrence of any substantial change in the rules applicable to
the
Brazilian or U.S. capital markets or to exchange offers or other
transactions similar to the exchange offer, or an increase or change
in
tax rates or applicable taxes, that adversely affects or impedes
the
consummation of the exchange offer by us;
or
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(6)
|
any
governmental approvals or authorizations required to be obtained
before
completion of the exchange offer have not been obtained or, if
obtained,
do not remain in full force and effect including, but not limited
to:
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registration
of the exchange offer with the CVM;
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·
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all
approvals necessary in order for us to acquire Qualifying Shares
pursuant
to the exchange offer, including from the Central Bank concerning
foreign
exchange transactions;
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declaration
by the SEC of the effectiveness of the registration statement of
which
this prospectus is a part; and
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·
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the
approval for listing by the NYSE of our class A common shares to
be issued
in connection with the exchange
offer.
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no
later than p.m., New York time (6:00
p.m. São Paulo time) on , 2008 (the
Submission Deadline), deliver a duly completed and signed U.S.
form of
acceptance together with any documentation required by the U.S.
form of
acceptance to the Intermediary Institution at the address set
forth on the back cover of this prospectus;
and
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cause
their Cosan shares to be transferred to the respective accounts
established by CBLC for purposes of the exchange offer (#7104-8
in the
case of Cosan shares to be exchanged for our class A common shares
and
#7201-0 in the case of Cosan shares to be exchanged for our class
B series
2 common shares, together, the “CBLC offer accounts”), by no later
than p.m. New York time (6:00 p.m. São Paulo
time) on , 2008 (the day
prior to the Auction Date).
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irrevocable
instructions to have your Cosan shares withdrawn from your account
with
Banco Itaú or CBLC and transferred to the relevant CBLC offer account and
frozen, on the Auction Date upon commencement of the Auction for
trading
up to the date of settlement. In completing the U.S. form of acceptance,
you will be considered:
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to
have provided irrevocable instructions to the Intermediary Institution
and
CBLC to transfer the Cosan shares into the exchange offer on the
settlement date; and
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to
have allowed us, Cosan, or CBLC to inform the Intermediary Institution,
which will in turn inform the Central Bank and any other institution
involved in the exchange offer or the settlement of the exchange
offer,
the number of Cosan shares exchanged by you in the exchange offer
and any
other relevant information about
you;
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if
you hold your Cosan shares under Resolution 2,689, a power of attorney
granting powers to the Intermediary Institution to sign all documents
and
take any actions required to engage in any foreign exchange transactions
on your account, which may be required in connection with the settlement
of the exchange of your Cosan shares in the exchange
offer;
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if
you elect to receive our class A common shares in the exchange
offer, an
account number maintained directly or indirectly by you with a
member
of the NYSE at the Depositary Trust Company, or DTC, to
which such class A common shares may be delivered upon issuance
thereof,
as well as the contact information of such institution;
and
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if
you elect to receive our class B series 2 common shares in the
exchange
offer, authorization for the registrar of our class B series 2
common
shares to register your ownership of such shares in book entry
form and
that such entry be evidence of the settlement of the exchange
offer.
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A
shareholder that holds their shares under Resolution 2,689 must
present:
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·
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an
authenticated copy of the exhibit to Resolution 2,689 presented
to the
CVM, in its most recent and updated
version;
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the
power of attorney of the legal representative, if any;
and
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an
authenticated copy of the representation agreement or authorization
from
such shareholder granting powers to the representative to sign
in such
shareholder’s name.
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A
shareholder that holds their shares under Brazilian law No. 4,131
must
present:
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their
“Electronic Declaration Registry – Direct Foreign Investment”
(Registro Declaratório Eletrônico – Investimento Externo Direto,
or IED) number; and
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proof
of such shareholder’s investment in Cosan through the IED
screen.
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if
you are tendering Cosan shares, you accept the exchange offer
in respect
of such Cosan shares on the terms and subject to the conditions
set forth
in this prospectus and the U.S. form of acceptance and you will
execute
all other documents and take all other actions required to enable
us to
receive all rights to, and benefits of, these shares on these
terms and
conditions;
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if
you are tendering the shares of a Holding Entity, you accept
the exchange
offer in respect of all issued and outstanding shares of such
Holding
Entity on the terms and subject to the conditions set forth in
this
prospectus and the U.S. form of acceptance and you will execute
all other
documents and take all other actions required to enable us to
receive all
rights to, and benefits of, these shares on these terms and
conditions;
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subject
only to your right to withdraw your shares, your acceptance is
irrevocable;
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you
are exchanging your Qualifying Shares free and clear of all liens,
equities, charges and encumbrances and together with all rights
that they
now have or may acquire in the future, including all voting and
dividend
rights;
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unless
you withdraw your shares in accordance with the terms of the
exchange
offer, you are irrevocably appointing any of the Brazilian Broker,
the
Intermediary Institution, us and our directors and agents as
your
attorney-in-fact to:
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execute
and deliver, on your behalf, all forms of transfer and/or other
documents,
including documents of title, and
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take
all other actions as your attorney-in-fact considers necessary
or
expedient to vest in us or our nominees title to the Qualifying
Shares
that you tender or otherwise in connection with your acceptance
of the
exchange offer;
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you
or your agent holds title to the Qualifying Shares being tendered,
or if
you are tendering Qualifying Shares on behalf of another person,
the other
person holds title to the Qualifying Shares that you are
tendering;
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if
you are tendering Cosan shares, your Cosan shares being tendered
are or
will be prior to the Expiration Date, in the custody of CBLC
and in the
respective CBLC offer account in accordance with your election
as to which
class of our shares you wish to
receive;
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neither
you nor any of your agents nor any person on whose behalf you
are
tendering Qualifying Shares has granted to any person any right
to acquire
any of the Qualifying Shares that you are tendering or any other
right
with respect to these Qualifying
Shares;
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unless
you withdraw your shares in accordance with the terms of the
exchange
offer, you are irrevocably authorizing and
requesting:
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the
Brazilian Broker and the Intermediary Institution to procure
the
registration of the transfer of your shares pursuant to the exchange
offer
and the delivery of these shares to us or as we may
direct;
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the
Brazilian Broker and/or the Intermediary Institution to close
any
necessary foreign exchange contracts related to the exchange
offer;
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the
Brazilian Broker and/or the Intermediary Institution to represent
you
before the Central Bank of Brazil to request amendments to the
certificate
of registration issued by the Central Bank of Brazil evidencing
the
foreign investment in Cosan; and
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us
or our agents to record and act upon any instructions with respect
to
notices and payments relating to your shares which have been
recorded in
the books and records of Cosan; and
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you
are a U.S. resident or you are tendering the shares in a Holding
Entity;
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you
have full power and authority to tender, exchange, sell, assign
and
transfer the Qualifying Shares tendered hereby, and any and all
other
Qualifying Shares or other securities issued or issuable in respect
thereof;
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when
the Qualifying Shares are exchanged by us, we will acquire good
and
unencumbered title to the tendered shares, free and clear of
all liens,
restrictions, charges and encumbrances, together with all rights
now or
hereafter attaching to them, including voting rights and rights
to all
dividends, other distributions and payments hereafter declared,
made or
paid, and the same will not be subject to any adverse
claim;
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unless
you deliver a certificate of registration issued by the Central
Bank of
Brazil evidencing a direct foreign investment in Cosan, you are
not
required by applicable law to hold such a certificate to tender
your
shares in the exchange offer;
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you
will ratify each and every act which may be done or performed
by us or any
of our directors or agents or Cosan or any of their directors
or agents as
permitted under the terms of the exchange offer;
and
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if
you are tendering the shares of a Holding
Entity:
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the
total number of issued and outstanding shares of the Holding
Entity is as
set forth in your U.S. form of acceptance and the Holding Entity
shares
you are tendering represent 100% of the issued and outstanding
share
capital of the Holding Entity;
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the
Holding Entity owns, directly or indirectly, the number of Cosan
shares set forth in your U.S. form of
acceptance;
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the
Holding Entity is a corporation or similar entity duly organized,
validly
existing and in good standing under the laws of the jurisdiction
of its
incorporation and has all requisite corporate power and authority
required
to own its Cosan shares and the ownership by the Holding Entity
does not
violate any applicable law, regulation, rule, order, judgment,
decree,
injunction or any other requirement of any executive, judicial,
legislative or administrative body or
agency;
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there
are no outstanding (i) securities of the Holding Entity convertible
into
or exchangeable for shares of capital stock or voting securities
of such
Holding Entity or (ii) options or other rights to acquire from
the Holding
Entity, or other obligation of the Holding Entity to issue, any
capital
stock, voting securities or securities convertible into or exchangeable
for capital stock or voting securities of the Holding Entity
or any
subsidiary thereof (the items in (i) and (ii) being referred
to
collectively as the “Holding Entity Securities”). There are no outstanding
obligations of the Holding Entity to repurchase, redeem or otherwise
acquire any outstanding Holding Entity
Securities;
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the
Holding Entity was formed solely for the purpose of holding,
directly or
indirectly, Cosan shares and has engaged in no other business
activities;
and
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except
for the Cosan shares it holds, and shares of one or more other
companies
the sole assets of which are Cosan shares, the Holding Entity
does not
have, directly or indirectly, any assets or liabilities or obligations
of
any nature (whether known or unknown and whether absolute, accrued,
contingent, determined, determinable or
otherwise).
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we
will be entitled to direct the exercise of any votes attaching
to the
Qualifying Shares in respect of which the exchange offer has
been accepted
or is deemed to have been accepted and any other rights and privileges
attaching to the Qualifying Shares, including any right to call
a meeting
of shareholders; and
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the
execution and delivery of the U.S. form of acceptance will
constitute:
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an
authorization from you to send any notice, circular, document
or other
communications which may be required to be sent to you to us
at our
registered office;
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an
authorization to us to sign any consent to execute a form of
proxy for the
Qualifying Shares in respect of which the exchange offer has
been accepted
or is deemed to have been accepted appointing any person nominated
by us
to attend general meetings of shareholders of Cosan and to exercise
the
votes attaching to those shares on your
behalf;
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an
irrevocable authorization and appointment of the Brazilian Broker
and the
Intermediary Institution as your true and lawful agents and
attorneys-in-fact for these Qualifying Shares, and any such other
securities or rights, with full power of substitution, such power
of
attorney being deemed to be an irrevocable power coupled with
an interest,
to:
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deliver
these shares, and any such other securities or rights issued
or issuable
in respect of these shares, or transfer the ownership of these
shares, and
any such other securities or rights issued or issuable in respect
of these
shares on the account books maintained by Cosan, together, in
any such
case, with all accompanying evidences of transfer and authenticity,
to us;
and
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receive
all benefits and otherwise exercise all rights of beneficial
ownership of
these shares, and any such other securities or rights issued
or issuable
in respect of these shares, all in accordance with the terms
of the
exchange offer; and
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your
agreement not to exercise any of these rights without our consent
and your
irrevocable undertaking not to appoint a proxy for or to attend
general
meetings of shareholders.
|
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name
of the persons who tendered the Qualifying Shares to be
withdrawn;
|
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number
of Qualifying Shares to be withdrawn;
and
|
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name
of the registered holder of the Qualifying Shares, if different
from that
of the person who tendered the Qualifying
Shares.
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The
company urges you to read carefully the entire appraisal report,
which is
contained in Annex A of this prospectus and is incorporated by
reference
in this summary and which you can obtain as described in “Where You Can
Find More Information”. The description of Deloitte Consultores’
Valuations set forth below is qualified in its entirety by reference
to
the full text of the appraisal
report.
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Pursuant
to the requirements of CVM Instruction No. 361/02, the Valuations
evaluate
each of Cosan and the company within a range of minimum and maximum
values, the difference between which values does not exceed
10%.
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The
appraisal report is intended solely for the use of the management
of Cosan
and the company and the shareholders of Cosan in order for them
to
evaluate the exchange offer. The Valuations do not constitute
Deloitte
Consultores’ recommendation or opinion to the shareholders of Cosan with
respect to whether the exchange offer is advisable for any shareholder
or
the fairness of the exchange offer from a financial point of
view, and
should not be used as such. Furthermore, the Valuations do not
express any
judgment in relation to the distribution of economic value among
the
company’s different classes of shares. All shareholders should conduct
their own analysis of the exchange offer and should rely on their
own
financial, tax and legal advisors and not the Valuations in evaluating
the
exchange offer.
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the
business plan of Cosan for harvest years 2007/2008 through 2016/2017,
prepared by Cosan’s management;
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historical
operating and financial information of
Cosan;
|
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the
amounts of net indebtedness of Cosan as of October 31, 2007 and
its equity
stakes in other companies;
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public
information regarding the industry in which Cosan operates;
and
|
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information
related to the book value, number of shares and financial applications
provided by the company’s and Cosan’s
management.
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the
weighted average quotation price of Cosan’s shares traded on the BOVESPA
(1) in the twelve months immediately prior to the announcement
of the
exchange offer (June 25, 2007), (2) between the date of the announcement
of the exchange offer and the date of the appraisal report and
(3) between
the announcement of the capital increase of the company’s shares (November
19, 2007) and the date of the appraisal
report;
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the
weighted average quotation price of the company’s class A common shares
traded on the NYSE (1) from the initial public offering of the
company’s shares through the date of the appraisal report and (2) from
the
announcement of the capital increase of the company’s shares (November 19,
2007) through the date of the appraisal
report;
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book
value per share for the Cosan and company shares;
and
|
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economic
value per share for the Cosan shares, calculated on a discounted
cash flow
basis or on a multiple basis.
|
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|
Discounted
cash flow method with projections of operating results (debt-free
model),
adjusted by the non-operating assets and liabilities in nominal
reais.
|
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The
base date for the appraisal was October 31,
2007.
|
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The
projections were based on Cosan’s business plan for the period from the
harvest years 2007/2008 through 2016/2017. The macroeconomic
assumptions
and prices for VHP sugar quoted on the international market were
based on
the analysis of consultants from the sugar and alcohol segment
from
Deloitte Consultores.
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Perpetual
growth figures were calculated based on the Gordon Growth Model.
The
projected cash flow harvest year 2016/2017 was adjusted for income
tax and
social contribution resulting from an expectation for the reduction
in
depreciation, considering a perpetual estimated growth rate of
4.0%,
equivalent to the projected long-term
inflation.
|
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The
discount rate used was 12.14% in nominal
reais.
|
(1)
|
Economic
value per share after issuance of shares on November 19, 2007,
December 5,
2007 and December 11, 2007, based on the discounted cash flow
method, with
a minimum and maximum value range of 10%, pursuant to CVM Instruction
No.
361/02.
|
(2)
|
Market
value per share based on the weighted average price for shares
of:
|
|
(i)
|
R$39.49
per share in the 12 months prior to the announcement of the exchange
offer
(June 25, 2007).
|
|
(ii)
|
R$26.28
per share from the announcement of the exchange offer (June 25,
2007)
through the date of the appraisal report (December 19,
2007).
|
|
(iii)
|
R$20.66
per share from the announcement on November 19, 2007 of the Cosan
share
issue through the date of the appraisal report (December 19,
2007).
|
(3)
|
Book
value per share as of October 31, 2007, adjusted after issuance
of shares
on November 19, 2007, December 5, 2007 and December 11, 2007,
resulting
in 272,548,032 shares.
|
(1)
|
Economic
value per share based on the assets approach, with the investment
in Cosan
estimated on a discounted cash flow basis, with a minimum and
maximum
value range of 10%, pursuant to CVM Instruction No.
361/02.
|
(2)
|
Assets
approach with the investment in Cosan being estimated based on
the
weighted average price for shares in Cosan
of:
|
(i)
|
R$35.11
per share, for the weighted average value of R$39.49 per share
in Cosan in
the 12 months prior to the announcement of the exchange offer
(June 25,
2007).
|
(ii)
|
R$23.74
per share, for the weighted average value of R$26.28 per share
in Cosan
from the announcement of the exchange offer (June 25, 2007) through
the
date of the appraisal report (December 19,
2007).
|
(iii)
|
R$18.91
per share, for the weighted average value of R$20.66 per share
in Cosan
from the announcement on November 19, 2007 of the Cosan share
issue
through the date of the appraisal report (December 19,
2007).
|
(3)
|
Market
value per share traded on the NYSE, based on the weighted average
price
per share (i) 21.68 per share, from the date of the initial
public
offering of the company’s shares (August 16, 2007) through the date of the
appraisal report and; (ii) 19.12 per share, from the announcement
on
November 19, 2007 of the share issue of Cosan through the date
of the
appraisal report (December 19,
2007).
|
(4)
|
Book
Value per class A common share, based on 208,010,044 shares
as of October
31, 2007.
|
·
|
its
professionals involved in preparing the appraisal report do not
own any
shares in either the company or Cosan, nor do they conduct discretionary
management services with respect to such
shares;
|
·
|
there
is no conflict of interest that could decrease the independence
required
in order for it to perform its functions as an independent appraisal
firm;
|
·
|
the
cost to prepare the appraisal report was R$350,000, net of
taxes;
|
·
|
besides
the amount received mentioned above, in the past twelve months
it has
received R$1,179,016.49 relating to (1) advisory services in
negotiating
Cosan’s payroll, (2) preparation of an economic-financial appraisal
report, as well as evaluation of its property and organization
of fixed
assets and (3) tax planning; and
|
·
|
notwithstanding
the relationship described above, it does not have any other
commercial
and credit information of any kind with respect to Cosan and
the company
that might impact the appraisal
report.
|
·
|
it
and its affiliates may also provide consulting services to each
of the
Cosan companies and their affiliates in the future. In connection
with
these services, compensation may be received;
and
|
·
|
in
its opinion, notwithstanding any statement made herein, neither
the
controlling shareholders nor the management of the company or
Cosan
directed, limited, complicated or practiced any act that have
or could
have compromised the access, utilization or understanding of
information,
assets, documents or work methodologies relevant for the quality
of the
Valuations.
|
For
Six Months Ended October 31, (Unaudited)
|
For
Fiscal Year Ended April 30,
|
|||||||||||||||||||
2007
|
2006
|
2007
|
2006
|
2005
|
||||||||||||||||
(in
millions of US$)
|
Statement
of Operations Data:
|
||||||||||||||||||||
Net
sales
|
US$ |
629.3
|
US$ |
887.8
|
US$ |
1,679.1
|
US$ |
1,096.6
|
US$ |
644.4
|
||||||||||
Sugar
|
385.7
|
574.6
|
1,031.7
|
660.5
|
415.8
|
|||||||||||||||
Ethanol
|
177.4
|
282.2
|
551.5
|
378.4
|
178.4
|
|||||||||||||||
Other
products and services
|
66.1
|
31.0
|
95.8
|
57.8
|
50.1
|
|||||||||||||||
Cost
of goods sold
|
(583.7 | ) | (593.8 | ) | (1,191.3 | ) | (796.3 | ) | (456.6 | ) | ||||||||||
Gross
profit
|
45.6
|
294.0
|
487.8
|
300.3
|
187.8
|
|||||||||||||||
Selling
expenses
|
(82.1 | ) | (63.2 | ) | (133.8 | ) | (97.8 | ) | (57.8 | ) | ||||||||||
General
and administrative expenses
|
(54.5 | ) | (46.0 | ) | (121.1 | ) | (72.0 | ) | (40.0 | ) | ||||||||||
Operating
income (loss)
|
(91.0 | ) |
184.8
|
232.9
|
130.5
|
90.0
|
||||||||||||||
Other
income (expenses):
|
||||||||||||||||||||
Financial
income
|
307.7
|
295.4
|
555.6
|
186.5
|
76.8
|
|||||||||||||||
Financial
expenses
|
(178.4 | ) | (206.1 | ) | (266.2 | ) | (413.1 | ) | (115.9 | ) | ||||||||||
Other
income (expenses)
|
(0.4 | ) |
18.4
|
16.3
|
(5.5 | ) | (16.4 | ) | ||||||||||||
Income
(loss) before income taxes, equity in income of affiliates and
minority
interest
|
37.9
|
292.5
|
538.5
|
(101.6 | ) |
34.5
|
||||||||||||||
Income
taxes (expense)/benefit
|
(9.8 | ) | (100.0 | ) | (188.8 | ) |
29.7
|
(14.9 | ) | |||||||||||
Income
(loss) before equity in income of affiliates and minority
interest
|
28.0
|
192.4
|
349.7
|
(71.8 | ) |
19.6
|
||||||||||||||
Equity
in income (loss) of affiliates
|
(2.0 | ) |
0.2
|
(0.0 | ) |
1.6
|
3.4
|
|||||||||||||
Minority
interest in (net income) loss of subsidiaries
|
(7.1 | ) | (95.3 | ) | (173.0 | ) |
33.1
|
(11.5 | ) | |||||||||||
Net
income (loss)
|
US$ |
18.9
|
US$ |
97.4
|
US$ |
176.7
|
US$ | (37.1 | ) | US$ |
11.6
|
|||||||||
Balance
Sheet Data:
|
||||||||||||||||||||
Cash
and cash equivalents
|
US$ |
77.0
|
US$ |
26.5
|
US$ |
316.5
|
US$ |
29.2
|
US$ |
13.2
|
||||||||||
Marketable
securities
|
1,131.6
|
161.3
|
281.9
|
368.8
|
2.0
|
|||||||||||||||
Inventories
|
677.0
|
569.9
|
247.5
|
187.2
|
122.2
|
|||||||||||||||
Property,
plant, and equipment, net
|
1,405.1
|
952.4
|
1,194.1
|
1,008.1
|
401.8
|
|||||||||||||||
Goodwill
|
562.7
|
476.4
|
491.9
|
497.9
|
166.6
|
|||||||||||||||
Total
assets
|
4,684.8
|
2,620.0
|
3,253.4
|
2,691.8
|
960.2
|
|||||||||||||||
Current
liabilities
|
422.0
|
395.0
|
274.2
|
397.1
|
207.8
|
|||||||||||||||
Estimated
liability for legal proceedings and labor claims
|
459.8
|
348.3
|
379.2
|
462.2
|
101.7
|
|||||||||||||||
Long-term
debt
|
1,226.2
|
931.7
|
1,342.5
|
941.7
|
314.7
|
|||||||||||||||
Minority
interest in consolidated subsidiaries
|
550.0
|
6.6
|
463.6
|
287.6
|
93.7
|
|||||||||||||||
Total
shareholders equity
|
US$ |
1,692.2
|
US$ |
761.7
|
US$ |
473.6
|
US$ |
294.3
|
US$ |
97.1
|
For
Six Months Ended October 31, (Unaudited)
|
For
Fiscal Year Ended April 30,
|
|||||||||||||||||||
2007
|
2006
|
2007
|
2006
|
2005
|
||||||||||||||||
(in
millions of US$)
|
Other
Financial and Operating Data:
|
||||||||||||||||||||
Depreciation
and amortization
|
US$ |
159.0
|
US$ |
83.1
|
US$ |
187.4
|
US$ |
98.6
|
US$ |
41.7
|
||||||||||
Net
debt(1)
|
(40.5 | ) |
711.4
|
697.9
|
517.4
|
287.0
|
||||||||||||||
Working
capital(2)
|
1,790.8
|
692.4
|
865.3
|
563.2
|
84.7
|
|||||||||||||||
Cash
flow provided by (used in):
|
||||||||||||||||||||
Operating
activities
|
(197.8 | ) | (148.5 | ) |
284.0
|
86.0
|
7.6
|
|||||||||||||
Investing
activities
|
(959.0 | ) |
207.0
|
(251.6 | ) | (825.5 | ) | (62.7 | ) | |||||||||||
Financing
activities
|
US$ |
858.0
|
US$ | (70.3 | ) | US$ |
222.8
|
US$ |
725.9
|
US$ |
33.6
|
|||||||||
Crushed
sugarcane (in million tons)
|
32.4
|
32.5
|
36.2
|
27.9
|
24.3
|
|||||||||||||||
Own
sugarcane (in million tons)
|
17.4
|
18.4
|
21.6
|
17.2
|
15.0
|
|||||||||||||||
Growers
sugarcane (in million tons)
|
15.0
|
14.1
|
14.5
|
10.7
|
9.3
|
|||||||||||||||
Sugar
production (in thousand tons)
|
2,687.1
|
2,901.0
|
3,182.3
|
2,328.4
|
2,121.5
|
|||||||||||||||
Ethanol
production (in million liters)
|
1,170.6
|
1,086.8
|
1,236.6
|
915.0
|
741.3
|
(1)
|
Net
debt consists of current and non-current long-term debt, net
of cash and
cash equivalents, marketable securities and CTNs (Brazilian Treasury
bills) recorded in the financial statements as other non-current
assets.
Net debt is not a U.S. GAAP
measurement.
|
(2)
|
Working
capital consists of current assets less current
liabilities.
|
For
Fiscal Year Ended April 30,
|
||||||||||||||||||||||||
2007
|
2007(4)
|
2006(4)
|
2005(4)
|
2004(4)
|
2003(4)
|
|||||||||||||||||||
(in
millions
of
US$)(1)
|
(in
millions of R$)
|
|||||||||||||||||||||||
Statement
of Operations Data:
|
||||||||||||||||||||||||
Net
operating revenue
|
US$ |
1,772.4
|
R$ |
3,605.1
|
R$ |
2,477.9
|
R$ |
1,900.4
|
R$ |
1,586.1
|
R$ |
1,409.6
|
||||||||||||
Cost
of goods sold and services rendered
|
(1,219.9 | ) | (2,481.1 | ) | (1,721.3 | ) | (1,338.5 | ) | (1,078.9 | ) | (873.3 | ) | ||||||||||||
Gross
profit
|
552.6
|
1,123.9
|
756.6
|
561.8
|
507.1
|
536.3
|
||||||||||||||||||
Operating
(expenses) income:
|
||||||||||||||||||||||||
Selling
expenses
|
(138.7 | ) | (282.0 | ) | (217.1 | ) | (171.7 | ) | (144.3 | ) | (113.7 | ) | ||||||||||||
General
and administrative expenses(2)
|
(121.0 | ) | (246.2 | ) | (150.0 | ) | (121.9 | ) | (111.7 | ) | (100.0 | ) | ||||||||||||
Financial
expenses, net
|
77.7
|
158.0
|
(245.2 | ) | (102.0 | ) | (132.1 | ) | (170.9 | ) | ||||||||||||||
Earnings
on equity investments
|
(0.0 | ) | (0.1 | ) |
0.6
|
—
|
7.9
|
16.8
|
||||||||||||||||
Goodwill
amortization
|
(110.0 | ) | (223.7 | ) | (142.8 | ) | (93.2 | ) | (140.6 | ) | (30.0 | ) | ||||||||||||
Other
operating income (expenses), net
|
17.4
|
35.3
|
(11.8 | ) | (39.7 | ) |
2.3
|
(24.4 | ) | |||||||||||||||
Expenses
from placement of shares
|
—
|
—
|
(52.8 | ) |
—
|
—
|
—
|
|||||||||||||||||
Operating
income (loss)
|
277.9
|
565.3
|
(62.5 | ) |
33.3
|
(11.4 | ) |
114.1
|
||||||||||||||||
Non-operating
result
|
1.0
|
2.0
|
(1.0 | ) |
2.7
|
52.6
|
(23.5 | ) | ||||||||||||||||
Income
(loss) before income and social contribution taxes
|
278.9
|
567.3
|
(63.5 | ) |
36.0
|
41.2
|
90.6
|
|||||||||||||||||
Income
and social contribution taxes
|
(100.2 | ) | (203.9 | ) |
5.8
|
(22.2 | ) | (7.8 | ) | (80.9 | ) | |||||||||||||
Income
(loss) before minority interest
|
178.7
|
363.4
|
(57.7 | ) |
13.8
|
33.4
|
9.7
|
|||||||||||||||||
Minority
shareholders interest
|
(3.0 | ) | (6.2 | ) | (6.9 | ) |
3.3
|
(1.0 | ) |
15.8
|
||||||||||||||
Net
income (loss)
|
US$ |
175.7
|
R$ |
357.3
|
R$ | (64.6 | ) | R$ |
17.1
|
R$ |
32.3
|
R$ |
25.5
|
At
April 30,
|
||||||||||||||||||||||||
2007
|
2007(4)
|
2006(4)
|
2005(4)
|
2004(4)
|
2003(4)
|
|||||||||||||||||||
(in
millions
of
US$)(1)
|
(in
millions of R$)
|
|||||||||||||||||||||||
Balance
Sheet Data:
|
||||||||||||||||||||||||
Cash
and cash equivalents
|
US$ |
316.5
|
R$ |
643.8
|
R$ |
61.0
|
R$ |
35.2
|
R$ |
68.0
|
R$ |
52.3
|
||||||||||||
Marketable
securities
|
281.9
|
573.3
|
770.5
|
3.9
|
30.9
|
13.8
|
||||||||||||||||||
Inventories
|
247.5
|
503.4
|
390.8
|
339.8
|
287.0
|
251.2
|
||||||||||||||||||
Property,
plant and equipment, net
|
989.8
|
2,013.1
|
1,656.4
|
1,481.6
|
1,321.6
|
954.9
|
||||||||||||||||||
Goodwill
|
557.1
|
1,133.2
|
1,353.0
|
357.6
|
354.0
|
396.4
|
||||||||||||||||||
Total
assets
|
3,079.5
|
6,263.4
|
5,604.8
|
2,684.8
|
2,473.3
|
2,131.1
|
||||||||||||||||||
Current
liabilities
|
290.9
|
591.7
|
670.0
|
494.1
|
973.1
|
846.5
|
||||||||||||||||||
Provision
for contingencies
|
357.9
|
728.0
|
907.4
|
245.9
|
168.2
|
127.0
|
||||||||||||||||||
Long-term
debt(3)
|
1,389.2
|
2,825.5
|
2,070.5
|
846.5
|
385.2
|
419.1
|
||||||||||||||||||
Minority
interest
|
9.9
|
20.2
|
14.0
|
3.5
|
33.3
|
(8.2 | ) | |||||||||||||||||
Shareholders
equity
|
US$ |
804.9
|
R$ |
1,631.0
|
R$ |
1,355.4
|
R$ |
762.9
|
R$ |
601.0
|
R$ |
375.1
|
(1)
|
Translated
for convenience only using the selling rate as reported by the
Central
Bank at April 30, 2007 for reais into U.S. dollars of R$2.0339 to
US$1.00.
|
(2)
|
Includes
amounts disclosed in the Brazilian GAAP consolidated financial
statements
as management fees.
|
(3)
|
Includes
amounts disclosed in the Brazilian GAAP consolidated financial
statements
as loans and financings, promissory notes and debentures
payable.
|
(4)
|
Any
comparisons among fiscal years 2003, 2004, 2005, 2006 and 2007
are
necessarily affected by acquisitions and other transactions in
these
years. See “Business – Acquisitions, Partnerships and
Restructurings”.
|
·
|
Sugarcane:
the largest grower and processor of sugarcane in the world, having
crushed
36.2 million tons in fiscal year 2007 and 27.9 million tons in
fiscal year
2006 (planted on approximately 572,000 hectares, of which approximately
50% is leased by us, 40% is supplier owned and 10% is company
owned);
|
·
|
Ethanol:
the largest ethanol producer in Brazil and the second largest
in the
world, having produced 326.7 million gallons (1.2 billion liters)
in
fiscal year 2007 and 241.7 million gallons (915.0 million liters)
in
fiscal year 2006, and the largest exporter of ethanol in the
world, having
exported 72.6 million gallons (274.7 million liters) in fiscal
year 2007
and 61.0 million gallons (230.9 million liters) in fiscal year
2006;
and
|
·
|
Sugar:
the largest sugar producer in Brazil and one of the three largest
sugar
producers in the world, having produced 3.2 million tons in fiscal
year
2007 and 2.3 million tons of sugar in fiscal year 2006, and the
largest
exporter of sugar in the world, having exported 2.8 million tons
in fiscal
year 2007 and 2.1 million tons in fiscal year
2006.
|
·
|
In
December 2004, Cosan acquired, through FBA—Franco Brasileira S.A. Açúcar e
Álcool, or “FBA”, controlling interests in the Destivale Group (which
consists of Destilaria Vale do Tietê, or “Destivale”, Destiagro Destivale
Agropecuária Ltda., or “Destiagro”, Agrícola Destivale Ltda., or “Agrícola
Destivale”, and Auto Posto Destivale Ltda., or “Auto Posto Destivale”) for
an aggregate purchase price of US$36.7 million. The Destivale
Group has
1.0 million tons of sugarcane crushing capacity. In March 2006,
Destivale
and Destiagro were merged into Açucareira Corona S.A., or
“Corona”.
|
·
|
In
May 2005, Cosan acquired from Tereos do Brasil Participações Ltda. and
Sucden Investimentos S.A., for US$100.9 million the remaining
52.5% of the
outstanding shares of FBA, generating goodwill in the amount
of US$32.9
million.
|
·
|
In
July 2005, Cosan transferred all of its ownership interest in
Amaralina to
Cosan’s shareholders, valued at US$118.6
million.
|
·
|
In
December 2005, Cosan indirectly acquired 100% of the common shares
of
Mundial Açúcar e Álcool S.A., or “Mundial”, and of Alcomira S.A. The
purchase price was US$29.2 million in cash plus the assumption
of certain
existing liabilities of Mundial in an amount of US$23.0 million.
Cosan
recorded US$52.2 million in goodwill related to this acquisition.
At the
time of the acquisition, Mundial was located in Mirandópolis, São Paulo,
and had an annual sugarcane crushing capacity of approximately
1.3 million
tons of sugarcane.
|
·
|
In
February 2006, Cosan purchased all of the equity capital of Corona
from
Aguassanta Comercial Exportadora e Importadora S.A., or “Aguassanta
Comercial” (a company indirectly controlled by our chairman and chief
executive officer), S.A. Fluxo Comércio e Assessoria Internacional, or
“Fluxo” and certain individuals, for US$180.6 million (generating goodwill
in an aggregate amount of US$196.4 million, due to liabilities
assumed in
an aggregate amount of US$15.9 million). Corona owns approximately
14,500
hectares of land located in the Ribeirão Preto region in the State of São
Paulo and two mills (Bonfim and Tamoio) with a total annual sugarcane
crushing capacity of approximately 6.0 million
tons.
|
·
|
In
March 2006, Cosan merged Usina da Barra S.A.—Açúcar e Álcool, and FBA,
among other subsidiaries, into Corona and changed Corona’s name to Usina
da Barra S.A.—Açúcar e Álcool, or “Usina da
Barra”.
|
·
|
In
April 2006, Cosan acquired controlling interests in Usina Açucareira Bom
Retiro S.A., or “Bom Retiro” for an aggregate purchase price of US$51.1
million (generating goodwill in an aggregate amount of US$16.4
million).
At the time of the acquisition, Bom Retiro owned one mill (Bom
Retiro)
with an annual sugarcane crushing capacity of 1.2 million
tons.
|
·
|
In
October 2006, Mundial and Bom Retiro, among other subsidiaries,
merged
into Cosan.
|
·
|
In
February 2007, Usina da Barra merged into Danco Participações S.A., having
its corporate name changed to Usina da Barra S.A. - Açúcar e
Álcool.
|
·
|
In
April 2007, Cosan, together with São Martinho S.A. and Santa Cruz S.A.
Açúcar e Álcool acquired Usina Santa Luiza and Agropecuária Aquidaban
Ltda. for an aggregate purchase price of US$112.0 million, of
which
US$39.4 million was paid by Cosan. The acquisition was carried
out through
Etanol Participações S.A., a holding company formed by Usina São Martinho
S.A. (a wholly-owned subsidiary of São Martinho S.A.), Cosan and Santa
Cruz S.A. Açúcar e Álcool, with respective interests of 41.67%, 33.33% and
25.00%, and which will be managed on a joint basis, with representatives
of each shareholder on the board of directors and the executive
board.
Usina Santa Luiza is located in the City of Motuca, in the State
of São
Paulo.
|
·
|
In
August 2007:
|
·
|
Aguassanta
Participações S.A., or “Aguassanta” and Usina Costa Pinto S.A. Açúcar e
Álcool, or “Costa Pinto”, controlling shareholders of Cosan and both
indirectly controlled by our chairman and chief executive officer,
Mr.
Rubens Ometto Silveira Mello, contributed their common shares
of Cosan to
us in exchange for 96,332,044 of our class B series 1 common
shares. The
common shares contributed to us by Aguassanta and Costa Pinto
consist of
96,332,044 common shares of Cosan, representing 51.0% of Cosan’s
outstanding common shares; and
|
·
|
Aguassanta
then contributed our class B series 1 common shares to Queluz
Holdings
Limited, its newly created British Virgin Islands subsidiary,
which is
also indirectly controlled by our chairman and chief executive
officer,
Mr. Rubens Ometto Silveira Mello, in a manner that resulted in
Queluz
Holdings Limited and Costa Pinto being our direct shareholders.
As a
result we currently own 96,332,044 common shares of Cosan, representing
51.0% of Cosan’s outstanding common
shares.
|
·
|
On
August 22, 2007, Cosan Limited completed its initial public offering
and
listed its class A common shares on the NYSE. Cosan Limited received
US$1.1 billion in aggregate
proceeds.
|
·
|
Cosan
acquired Açucareira Corona S.A., Mundial Açúcar e Álcool S.A, Alcomira
S.A. and Usina Açucareira Bom Retiro S.A. during fiscal year 2006;
and
|
·
|
Cosan
increased its ownership in FBA—Franco Brasileira S.A. Açúcar e Álcool from
47.5% to 99.9% in fiscal year 2006.
|
Sugar
NY11 (US$/lb)
|
||||||||||||||||||||||||
Fiscal
Year Ended April 30,
|
For
Six Months Ended
October
31,
|
|||||||||||||||||||||||
2007
|
2006
|
2005
|
2004
|
2007
|
2006
|
|||||||||||||||||||
Initial
quote
|
0.1713
|
0.0861
|
0.0658
|
0.0720
|
0.0924
|
0.1713
|
||||||||||||||||||
Closing
quote
|
0.0924
|
0.1713
|
0.0861
|
0.0658
|
0.0998
|
0.1155
|
||||||||||||||||||
Daily
average quote
|
0.1247
|
0.1269
|
0.0827
|
0.0633
|
0.0950
|
0.1402
|
||||||||||||||||||
Monthly
average quote
|
0.1249
|
0.1275
|
0.0824
|
0.0638
|
0.0957
|
0.1388
|
||||||||||||||||||
High
quote
|
0.1791
|
0.1930
|
0.0932
|
0.0735
|
0.1033
|
0.1791
|
||||||||||||||||||
Low
quote
|
0.0924
|
0.0823
|
0.0629
|
0.0536
|
0.0845
|
0.0975
|
Sugar
LIFE (US$/ton)
|
||||||||||||||||||||||||
Fiscal
Year Ended April 30,
|
For
Six Months Ended
October
31,
|
|||||||||||||||||||||||
2007
|
2006
|
2005
|
2004
|
2007
|
2006
|
|||||||||||||||||||
Initial
quote
|
470.00
|
247.80
|
228.30
|
213.10
|
308.00
|
470.00
|
||||||||||||||||||
Closing
quote
|
308.00
|
470.00
|
247.80
|
228.30
|
283.60
|
400.00
|
||||||||||||||||||
Daily
average quote
|
386.26
|
336.65
|
244.30
|
197.63
|
299.45
|
426.46
|
||||||||||||||||||
Monthly
average quote
|
383.52
|
341.05
|
245.98
|
200.21
|
302.89
|
423.40
|
||||||||||||||||||
High
quote
|
489.00
|
479.20
|
275.50
|
232.20
|
341.90
|
489.00
|
||||||||||||||||||
Low
quote
|
300.40
|
238.50
|
211.70
|
173.50
|
259.50
|
362.00
|
Hydrous
Ethanol Esalq
(US$/thousand
liters)
|
||||||||||||||||||||||||
Fiscal
Year Ended April 30,
|
For
Six Months Ended
October
31,
|
|||||||||||||||||||||||
2007
|
2006
|
2005
|
2004
|
2007
|
2006
|
|||||||||||||||||||
Initial
quote
|
433.59
|
270.26
|
136.72
|
281.69
|
451.53
|
433.59
|
||||||||||||||||||
Closing
quote
|
451.53
|
433.59
|
270.26
|
136.72
|
330.13
|
354.55
|
||||||||||||||||||
Daily
average quote
|
386.90
|
377.92
|
248.46
|
183.46
|
316.49
|
378.14
|
||||||||||||||||||
Monthly
average quote
|
394.59
|
369.98
|
243.80
|
183.71
|
330.78
|
384.04
|
||||||||||||||||||
High
quote
|
475.19
|
579.86
|
304.48
|
282.14
|
428.15
|
415.83
|
||||||||||||||||||
Low
quote
|
337.12
|
231.83
|
134.21
|
106.64
|
283.10
|
337.12
|
Anhydrous
Ethanol Esalq
(US$/thousand
liters)
|
||||||||||||||||||||||||
Fiscal
Year Ended April 30,
|
For
Six Months Ended
October
31,
|
|||||||||||||||||||||||
2007
|
2006
|
2005
|
2004
|
2007
|
2006
|
|||||||||||||||||||
Initial
quote
|
498.36
|
308.54
|
154.62
|
329.04
|
528.96
|
498.36
|
||||||||||||||||||
Closing
quote
|
528.96
|
498.36
|
308.54
|
154.62
|
376.59
|
405.26
|
||||||||||||||||||
Daily
average quote
|
432.22
|
413.33
|
287.26
|
212.53
|
369.23
|
435.72
|
||||||||||||||||||
Monthly
average quote
|
443.02
|
406.45
|
281.23
|
212.18
|
384.35
|
442.96
|
||||||||||||||||||
High
quote
|
537.59
|
569.90
|
356.03
|
337.06
|
524.69
|
478.06
|
||||||||||||||||||
Low
quote
|
370.03
|
265.57
|
154.98
|
125.78
|
325.32
|
391.63
|
·
|
reducing
our real-denominated net sales as a result of the translation
of
those results into U.S. dollars for consolidation
purposes;
|
·
|
reducing
our real-denominated costs of goods sold, selling, general
and
administrative expenses, as well as other real-denominated
operating costs as a result of the translation of those amounts
for
consolidation purposes into U.S.
dollars;
|
·
|
generating
foreign exchange transaction gains on U.S. dollar-denominated
monetary
assets and foreign exchange liabilities on U.S. dollar-denominated
liabilities of our Brazilian subsidiaries, which are reflected
in our
consolidated statement of
operations;
|
·
|
generating
financial losses based on changes in market value of our financial
derivatives; and
|
·
|
indirectly
affecting the international market price of
sugar.
|
·
|
hedging
transactions (as discussed under “Hedging Transactions and
Exposures”);
|
·
|
trade
barriers in U.S., European and other markets that currently limit
access
to their domestic sugar industry through quotas, subsidies and
restrictions on imports;
|
·
|
the
evolving use of ethanol as an alternative to oil derivatives
and as a
cleaner-burning fuel, derived from renewable
sources;
|
·
|
movements
in oil price levels;
|
·
|
the
growth rate of the global economy and its resulting corresponding
growth
in worldwide sugar consumption;
|
·
|
the
growth rate of Brazil’s gross domestic product, which impacts the demand
for our products and, consequently, our sales volume in Brazil;
and
|
·
|
the
tax policies adopted by the Brazilian federal government and
the
governments of the Brazilian states in which we operate, and
our resulting
tax obligations.
|
For
Six-month Period Ended October 31,
|
||||||||||||
2007
|
2006
|
%
Variation
|
||||||||||
(in
millions of US$, except percentages)
|
||||||||||||
Statement
of Operations:
|
||||||||||||
Net
sales:
|
US$ |
629.3
|
US$ |
887.7
|
(29.1 | )% | ||||||
Sugar
|
385.7
|
574.6
|
(32.7 | ) | ||||||||
Ethanol
|
177.4
|
282.2
|
(37.5 | ) | ||||||||
Other
products and services
|
66.1
|
31.0
|
113.2
|
|||||||||
Cost
of goods sold
|
(583.7 | ) | (593.8 | ) | (1.7 | ) | ||||||
Gross
profit
|
45.6
|
294.0
|
(84.5 | ) | ||||||||
Selling
expenses
|
(82.1 | ) | (63.2 | ) |
30.0
|
|||||||
General
and administrative expenses
|
(54.5 | ) | (46.0 | ) |
18.4
|
|||||||
Operating
income (loss)
|
(91.0 | ) |
184.8
|
*
|
||||||||
Other
income (expenses):
|
||||||||||||
Financial
income, net
|
129.3
|
89.3
|
44.8
|
|||||||||
Other
income (expenses), net
|
(0.4 | ) |
18.4
|
*
|
||||||||
Income
before income taxes, equity in income of affiliates and minority
interest
|
37.9
|
292.5
|
(87.1 | ) | ||||||||
Income
taxes expense
|
(9.8 | ) | (100.0 | ) | (90.2 | ) | ||||||
Income
before equity in income of affiliates and minority
interest
|
28.0
|
192.4
|
(85.4 | ) | ||||||||
Equity
in income (loss) of affiliates
|
(2.0 | ) |
0.2
|
*
|
||||||||
Minority
interest in net income of subsidiaries
|
(7.1 | ) | (95.3 | ) | (92.6 | )% | ||||||
Net
income
|
US$ |
18.9
|
US$ |
97.4
|
(80.5 | )% |
·
|
ICMS
taxes. ICMS is a state value-added tax assessed on our gross
sales in
the Brazilian market at a rate that vary by state and
product.
|
·
|
PIS
and COFINS taxes. PIS and the COFINS taxes are federal social
contribution taxes assessed on our gross sales in the Brazilian
market at
rates that vary by product.
|
·
|
IPI
taxes. IPI is a federal value-added tax assessed on our gross
sales
in the Brazilian market at rates that vary by
product.
|
·
|
INSS
taxes. INSS taxes are federal social contribution taxes assessed
on
our gross sales in the Brazilian market at a rate of
2.85%.
|
·
|
a
32.2% decrease in market daily average prices for raw sugar as
measured by
contract number 11 of NYBOT, to US$0.0950 per pound in the six-month
period ended October 31, 2007 from US$0.1402 per pound in the
six-month
period ended October 31, 2006; 29.8% decrease in market daily
average
prices for white refined sugar as measured by contract number
5 of LIFFE,
to US$299.45 per ton in the six-month period ended October 31,
2007 from
US$426.46 per ton in the six-month period ended October 31, 2006;
35.3%
decrease in market daily average prices for Brazilian Crystal
sugar as
measured by ESALQ/CEPEA, to US$13.27 per 50 kilogram bag in the
six-month
period ended October 31, 2007, from US$20.50 per 50 kilogram
bag in the
six-month period ended October 31, 2006; 16.3% decrease in market
weekly
average prices for Brazilian hydrous ethanol as measured by ESALQ/CEPEA,
to US$0.3165 per liter in the six-month period ended October
31, 2007 from
US$0.3781 per liter in the six-month period ended October 31,
|
2006; 15.3% decrease in market weekly average prices for Brazilian unhydrous ethanol as measured by ESALQ/CEPEA, to US$0.3692 per liter in the six-month period ended October 31, 2007 from US$0.4357 per liter in the six-month period ended October 31, 2006; and |
·
|
a
14.5% decrease in our ethanol sales volumes, to142.1 million
gallons
(537.7 million liters) in the six-month period ended October
31, 2007 from
166.1 million gallons (628.7 million liters) in the six-month
period ended
October 31, 2006, and a 3.6% decrease in our sugar sales volumes,
to
1,647.8 thousand tons in the six month period ended October 31,
2007, from
1,708.5 thousand tons in the six-month period ended October 31,
2006.
|
·
|
a
30.4% decrease in the average realized price per ton (including
all of the
types of sugar that we produce) to US$234.1 per ton in the six-month
period ended October 31, 2007 from US$336.3 per ton in the six-month
period ended October 31, 2006; and
|
·
|
a
3.6% decrease in our sugar sales volume to 1,647.8 thousand tons
in the
six-month period ended October 31, 2007 from 1,708.5 thousand
tons in the
six-month period ended October 31,
2006.
|
·
|
a
14.5% decrease in our ethanol sales volume to 142.1 million gallons
(537.7
million liters) in the six-month period ended October 31, 2007
from 166.1
million gallons (628.7 million liters) in the six-month period
ended
October 31, 2006, mainly as a result of reduction in the sales
effort in
order to avoid market low prices;
and
|
·
|
a
26.5% decrease in our average realized unit price to US$1.2491
per gallon
(US$330.0 per thousand liters) in the six-month period ended
October 31,
2007 from US$1.6987 per gallon (US$448.8 per thousand liters)
in the
six-month period ended October 31, 2006, due to the decreased
average
price in the Brazilian and international
markets.
|
·
|
the
net effect of foreign exchange variation on the dollar-denominated
debt,
which represented financial income of US$144.1 million in the
six-month
period ended October 31, 2007, compared to financial expense
of US$19.8
million in the six-month period ended October 31, 2006;
and
|
·
|
a
69.9% increase in earnings from marketable securities to US$34.2
million
in the six-month period ended October 31, 2007, from US$20.1
million in
the six-month period ended October 31, 2006, mainly due to the
interest
applicable on the marketable securities held by Cosan Limited
from its IPO
proceeds;
|
·
|
a
US$17.3 million premium paid in connection with the tender offer
for the
2009 bonds issued by Cosan S.A. for a total consideration of
US$178.2
million;
|
·
|
a
67.5% decrease in financial income from derivative transactions
to US$38.4
million in the six-month period ended October 31, 2007, as a
result of the
mark-to-market method of accounting for derivative transactions
related to
sugar prices and currency exchange rates fluctuations, from US$118.1
million in the six-month period ended October 31,
2006;
|
·
|
one-time
financial income from discounts obtained in the six-month period
ended
October 31, 2006, primarily comprising: (a) US$11.6 million resulting
from
renegotiation of promissory notes issued in connection with our
acquisition of Usina da Barra and; (b) US$32.2 million related
to
discounts on São Paulo VAT penalty and interest amounts following a tax
amnesty granted by the state authorities for 90% of penalty amounts
and
50% of interest on VAT amounts owed to the state of São Paulo consisting
of: (i) US$20.7 million related to a discount granted to our
subsidiary Da
Barra for prepaying taxes recorded under taxes payable as Special
State
Tax Payment Program (State REFIS) in the amount of US$37.4 million
and
taxes payable in the amount of US$8.4 million; and (ii) US$11.5
million
resulting from the settlement for US$68.3 million in cash of
US$99.9
million in tax debts recorded under estimated liability for legal
proceedings and labor claims; and
|
·
|
one-time
financial income of US$19.8 million in the six-month period ended
October
31, 2006 in connection with the partial reversal of amounts related
to
inflation adjustments and interest on provisions recorded in
connection
with the IAA litigation. Such financial income was recorded as
a deduction
to tax debts recorded under the caption estimated liability for
legal
proceedings and labor claims. See “Business – Legal Proceedings – Tax
Proceedings”. Da Barra is a party to several federal tax proceedings
deriving from the default by Açucareira Nova Tamoio S.A. (which was
subsequently merged into Da Barra) on payments under cross-border
loans
guaranteed by the Brazilian federal
government.
|
For
Fiscal Year Ended April 30,
|
||||||||||||
2007
|
2006
|
%Variation
|
||||||||||
(in
millions of US$, except percentages)
|
||||||||||||
Statement
of Operations:
|
||||||||||||
Net
sales:
|
US$ |
1,679.1
|
US$ |
1,096.6
|
53.1 | % | ||||||
Sugar
|
1,031.7
|
660.5
|
56.2
|
|||||||||
Ethanol
|
551.5
|
378.4
|
45.8
|
|||||||||
Other
products and services
|
95.8
|
57.8
|
65.8
|
|||||||||
Cost
of goods sold
|
(1,191.3 | ) | (796.3 | ) |
49.6
|
|||||||
Gross
profit
|
487.8
|
300.3
|
62.4
|
|||||||||
Selling
expenses
|
(133.8 | ) | (97.8 | ) |
36.7
|
|||||||
General
and administrative expenses
|
(121.1 | ) | (72.0 | ) |
68.2
|
|||||||
Operating
income
|
232.9
|
130.5
|
78.5
|
|||||||||
Other
income (expenses):
|
||||||||||||
Financial
income (expenses), net
|
289.4
|
(226.6 | ) |
*
|
||||||||
Other
income (expenses)
|
16.3
|
(5.5 | ) |
*
|
||||||||
Income
(loss) before income taxes, equity in income of affiliates and
minority
interest
|
538.5
|
(101.6 | ) |
*
|
||||||||
Income
taxes (expense) benefit
|
(188.8 | ) |
29.7
|
*
|
||||||||
Income
(loss) before equity in income of affiliates and minority
interest
|
349.7
|
(71.8 | ) |
*
|
||||||||
Equity
in income of affiliates
|
—
|
1.6
|
*
|
|||||||||
Minority
interest in (net income) loss of subsidiaries
|
(173.0 | ) |
33.1
|
*
|
||||||||
Net
income (loss)
|
US$ |
176.7
|
US$ | (37.1 | ) |
*
|
·
|
ICMS
taxes. ICMS is a state value-added tax assessed on our gross
sales in
the Brazilian market at a rate that vary by state and
product.
|
·
|
PIS
and COFINS taxes. PIS and the COFINS taxes are federal social
contribution taxes assessed on our gross sales in the Brazilian
market at
rates that vary by product.
|
·
|
IPI
taxes. IPI is a federal value-added tax assessed on our gross
sales
in the Brazilian market at rates that vary by
product.
|
·
|
INSS
taxes. INSS taxes are federal social contribution taxes assessed
on
our gross sales in the Brazilian market at a rate of
2.85%.
|
·
|
30.1%
and 31.2% increases in our ethanol and sugar sales volumes, respectively,
to 349.3 million gallons (1,322.1 million liters) and 3,240.5
thousand
tons, respectively, in fiscal year 2007 from 268.4 million gallons
(1,016.0 million liters) and 2,469.5 thousand tons, respectively,
in
fiscal year 2006, primarily as a result of the impact of the
acquisition
of Corona, Mundial and Bom Retiro, which contributed to 18.4%
of the total
sugarcane crushed in fiscal year 2007;
and
|
·
|
4.6%
and 2.4% increases in average Brazilian ethanol anhydrous and
hydrous
prices, respectively, to US$1.6361 per gallon (US$432.22 per
thousand
liters) and US$1.4646 per gallon (US$386.90 per thousand liters),
respectively, as quoted by the ESALQ/CEPEA in fiscal year 2007
from
US$1.5646 per gallon (US$413.33 per thousand liters) and US$1.4306
per
gallon (US$377.92 per thousand liters), respectively, in the
previous
fiscal year.
|
·
|
a
31.2% increase in our sugar sales volume to 3,240.5 thousand
tons in
fiscal year 2007 from 2,469.5 thousand tons in fiscal year 2006,
in
connection with the 27% increased crushing capacity due to the
acquisitions of Mundial, Corona and Bom Retiro at the end of
fiscal year
2006; and
|
·
|
a
19.0% increase in the average realized price per ton (including
all of the
types of sugar that we produce) to US$318.4 in fiscal year 2007
from
US$267.4 in fiscal year 2006.
|
·
|
a
30.1% increase in our ethanol sales volume to 349.3 million gallons
(1,322.1 million liters) in fiscal year 2007 from 268.4 million
gallons
(1,016.0 million liters) in fiscal year 2006, mainly as a result
of the
above-mentioned 27% increased crushing capacity due to the acquisitions
of
Mundial, Corona and Bom Retiro; and
|
·
|
a
12.0% increase in our average realized unit price to US$1.5790
per gallon
(US$417.1 per thousand liters) in fiscal year 2007 from US$1.4098
per
gallon (US$372.4 per thousand liters) in fiscal year 2006, due
to the
increased average price in the Brazilian market and the higher
prices for
the ethanol exported to the United
States.
|
·
|
financial
income of US$190.6 million resulting from derivative transactions
in
fiscal year 2007, compared to a US$209.4 million financial expense
from
derivative transactions in fiscal year 2006 as a result of the
mark-to-market method of accounting for derivative transactions
related to
sugar prices and currency exchange rates
fluctuations;
|
·
|
financial
income of US$149.1 million resulting from monetary adjustment
of, and
interest on, the original amount of the damages sought by one
of our
subsidiaries against the Brazilian federal government for setting
prices
for its products below the established price control guidelines,
which was
recorded as accounts receivable from the federal government in
the fourth
quarter of fiscal year 2007. Brazilian courts reached a final
decision
favorable to us in the third quarter of fiscal year
2007;
|
·
|
financial
income of US$32.2 million related to discounts on São Paulo VAT penalty
and interest amounts following a tax amnesty granted by the state
authorities for 90% of penalty amounts and 50% of interest on
VAT amounts
owed to the state of São Paulo consisting of: (i) US$20.7 million related
to a discount granted to our subsidiary Da Barra for prepaying
taxes
recorded under taxes payable as Special State Tax Payment Program
(State
REFIS) in the amount of US$37.4 million and taxes payable in
the amount of
US$8.4 million; and (ii) US$11.5 million resulting from the settlement
for
US$68.3 million in cash of US$99.9 million in tax debts recorded
under
estimated liability for legal proceedings and labor
claims;
|
·
|
financial
income of US$19.8 million in connection with the partial reversal
of
amounts related to inflation adjustments and interest on provisions
recorded in connection with the IAA litigation. Such financial
income was
recorded as a deduction to tax debts recorded under the caption
estimated
liability for legal proceedings and labor claims. See “Business – Legal
Proceedings – Tax Proceedings”. Da Barra is a party to several federal tax
proceedings deriving from the default by Açucareira Nova Tamoio S.A.
(which was subsequently merged into Da Barra) on payments under
cross-border loans guaranteed by the Brazilian federal government;
and
|
·
|
financial
income of US$11.6 million resulting from renegotiation of promissory
notes
issued in connection with our acquisition of Usina da
Barra.
|
·
|
the
net effect of foreign exchange variation on the dollar-denominated
debt,
which represented financial income of US$19.4 million in fiscal
year 2007,
compared to financial income of US$72.6 million in fiscal year
2006.
|
For
Fiscal Year Ended April 30,
|
||||||||||||
2006
|
2005
|
%Variation
|
||||||||||
(in
millions of US$, except percentages)
|
||||||||||||
Statement
of Operations:
|
||||||||||||
Net
sales:
|
US$ |
1,096.6
|
US$ |
644.4
|
70.2 | % | ||||||
Sugar
|
660.5
|
415.8
|
58.8
|
|||||||||
Ethanol
|
378.4
|
178.4
|
112.1
|
|||||||||
Other
products and services
|
57.8
|
50.1
|
15.3
|
|||||||||
Cost
of goods sold
|
(796.3 | ) | (456.6 | ) |
74.4
|
|||||||
Gross
profit
|
300.3
|
187.8
|
59.9
|
|||||||||
Selling
expenses
|
(97.8 | ) | (57.8 | ) |
69.3
|
|||||||
General
and administrative expenses
|
(72.0 | ) | (40.0 | ) |
80.1
|
|||||||
Operating
income
|
130.5
|
90.0
|
44.9
|
|||||||||
Other
income (expenses):
|
||||||||||||
Financial
expenses, net
|
(226.6 | ) | (39.2 | ) |
478.6
|
|||||||
Other
income (expenses)
|
(5.5 | ) | (16.4 | ) | (66.7 | ) | ||||||
(Loss)
income before income taxes, equity in income of affiliates and
minority
interest
|
(101.6 | ) |
34.5
|
*
|
||||||||
Income
taxes benefit (expense)
|
29.7
|
(14.9 | ) |
*
|
||||||||
(Loss)
income before equity in income of affiliates and minority
interest
|
(71.8 | ) |
19.6
|
*
|
||||||||
Equity
in income of affiliates
|
1.6
|
3.4
|
(53.7 | ) | ||||||||
Minority
interest in net (income) loss of subsidiaries
|
33.1
|
(11.5 | ) |
*
|
||||||||
Net
(loss) income
|
US$ | (37.1 | ) | US$ |
11.6
|
*
|
·
|
39.1%
and 7.3% increases in the annual volume of ethanol and sugar
sold to 268.4
million gallons (1,016.0 million liters) and 2,469.5 thousand
tons of
sugar in fiscal year 2006 from 193.0 million gallons (730.6 million
liters) and 2,302.4 thousand tons of sugar in fiscal year 2005,
mainly
related to the acquisition and consolidation of FBA and Destivale,
which
together added 27% increase in crushing capacity;
and
|
·
|
a
53.6% increase in average international raw sugar prices to US$0.1269
per
pound as quoted by the NY11 on the New York Board of Trade’s Coffee, Sugar
and Cocoa Exchange in fiscal year 2006 from US$0.0827 per pound
for fiscal
year 2005.
|
·
|
a
7.3% increase in the annual volume sold to 2,469.5 thousand tons
of sugar
in fiscal year 2006 from 2,302.4 thousand tons of sugar in fiscal
year
2005, primarily as a result of our acquisition of 52.5% of the
remaining
capital stock of FBA and 100% of the share capital of the Destivale
Group,
which together added a 27% increase in the existing crushing
capacity;
and
|
·
|
a
48.1% increase in our average realized unit price per ton of
sugar
(including all of the types of sugar that we produce) to US$267.4
per ton
in fiscal year 2006 from US$180.6 in the previous fiscal year,
following
the 53.6% increase in average international raw sugar prices
as quoted by
the NY11 as mentioned above.
|
·
|
a
39.1% increase in the volume sold in fiscal year 2006 to 268.4
million
gallons (1,016.0 million liters) from 193.0 million gallons (730.6
million
liters) in fiscal year 2005, resulting principally from the consolidation
of FBA and Destivale; and
|
·
|
a
52.5% increase in ethanol prices, with an average realized unit
price of
US$1.4098 per gallon (US$372.4 per thousand liters) in fiscal
year 2006,
from US$0.9244 per gallon (US$244.2 per thousand liters) in fiscal
year
2005.
|
·
|
financial
expense of US$209.4 million in fiscal year 2006 as a consequence
of the
mark-to market of derivative transactions related to sugar prices
and
exchange rates fluctuations, compared to financial expense of
US$27.5
million in fiscal year 2005; and
|
·
|
a
53.9% increase in net monetary variation and net interest expenses
net of
earnings from marketable securities as a result of our assumption
of net
indebtedness and other liabilities in connection with Cosan’s acquisition
of FBA, Destivale Group, Mundial and
Corona;
|
·
|
the
net effect of foreign exchange variation on the dollar-denominated
debt,
which represented US$72.6 million financial income in fiscal
year 2006
compared to US$44.6 million in financial income in fiscal year
2005, due
to the 21.2% appreciation of the real against the U.S. dollar in
fiscal year 2006.
|
·
|
our
ability to generate cash flow from our
operations;
|
·
|
the
level of our outstanding indebtedness and related accrued interest,
which
affects our net financial expenses;
|
·
|
prevailing
Brazilian and international interest rates, which affects our
debt service
requirements;
|
·
|
our
ability to continue to borrow funds from Brazilian and international
financial institutions and to obtain pre-export financing from
certain of
our customers; and
|
·
|
our
capital expenditure requirements, which consist primarily of
investments
in crop planting and the purchase of
equipment.
|
·
|
an
increase in marketable securities of US$791.8 million in the
six-month
period ended October 31, 2007, with the net proceeds the Cosan
Limited’s
IPO, compared to a decrease in marketable securities of US$198.3
million
in the six-month period ended October 31,
2006;
|
·
|
a
261.5% increase in capital expenditures, to US$184.9 million
in the
six-month period ended October 31, 2007 from US$51.1 million
in the
six-month period ended October 31, 2006;
and
|
·
|
a
68.6% decrease in funds from restricted cash, to US$18.8 million
in the
six-month period ended October 31, 2007, from US$59.9 million
in the
six-month period ended October 31,
2006.
|
·
|
a
decrease in restricted cash and marketable securities, from US$429.4
million used in fiscal year 2006, to US$144.0 million provided
by in
fiscal year 2007; and
|
·
|
a
decrease in the level of acquisitions, from US$260.9 million,
disbursed
for the acquisition of Mundial, Corona and Bom Retiro in fiscal
year 2006,
to US$39.4 million, disbursed in 2007 for the acquisition of
a 33.3% stake
of Etanol Participações S.A., which controls Santa
Luiza;
|
·
|
a
163.5% increase in capital expenditures, to US$356.2 million
in fiscal
year 2007 from US$135.2 million in fiscal year
2006.
|
·
|
investments
of US$429.4 million in restricted cash and marketable securities
in fiscal
year 2006, compared to US$14.6 million provided in fiscal year
2005;
|
·
|
investments
of US$260.9 million, in the acquisition of Mundial, Corona and
Bom Retiro
in fiscal year 2006, compared to investments of US$8.5 million,
in the
acquisitions of Destivale group and the 32.0% stake at TEAS port
facility
in fiscal year 2005; and
|
·
|
an
increase in the level of capital expenditures, to US$135.2 million
in
fiscal year 2006 from US$68.8 million in fiscal year
2005.
|
·
|
a
decrease in proceeds from issuance of common stock, from US$383.1
million
in fiscal year 2006 in connection with Cosan’s initial public offering to
US$3.2 million in fiscal year 2007 in connection with the exercise
of the
stock-options issued by Cosan; and
|
·
|
a
decrease in the net proceeds of debt issuance (net of debt repayment),
from US$342.8 million in fiscal year 2006 (when we issued US$450
million
of perpetual notes) to US$219.6 million in fiscal year 2007 (when
we
issued US$400 million of senior notes payable on
2017).
|
·
|
US$383.1
million in net proceeds from the issuance of common stock in
connection
with Cosan’s initial public offering in fiscal year 2006, compared to
US$23.3 million in proceeds from three capital increases occurred
in
fiscal year 2005; and
|
·
|
an
increase in the net proceeds of debt issuance (net of debt repayment),
to
US$342.8 million in fiscal year 2006, from US$10.9 million in
fiscal year
2005, mainly due to the proceeds from the issuance of US$450.0
million in
perpetual notes in fiscal year
2006.
|
·
|
a
US$610.2 million increase in cash, cash equivalents and marketable
securities balances, related to cash investments from the net
proceeds of
the IPO of Cosan Limited; and
|
·
|
a
US$429.5 million increase in inventories, in line with the crop
seasonality and the stockpiling strategy of the
Group;
|
·
|
a
US$156.1 million increase in trade payables, related to partial
funding of
the inventory formation and capital
expenditures.
|
·
|
a
US$200.4 million increase in cash, cash equivalents and marketable
securities balances;
|
·
|
a
US$172.1 million increase in derivative financial instruments,
related to
the change from negative to positive fair market value of the
existing
portfolio at the end of the fiscal years;
and
|
·
|
a
US$60.3 million increase in inventories, mainly related to increased
annual maintenance cost of growing crops in order to recover
agricultural
productivity;
|
·
|
a
US$78.4 million decrease in deferred income
taxes;
|
·
|
a
US$46.6 million decrease in trade accounts receivable, due to
less sales
at the end of fiscal year 2007, compared to sales at the end
of fiscal
year 2006; and
|
·
|
a
US$45.3 million decrease in restricted cash, used at the end
of fiscal
year 2006 to cover margin calls in connection with the negative
fair
market value of our derivatives
portfolio.
|
·
|
a
US$382.9 million increase in cash and cash equivalents balances,
in
connection with net proceeds from the issuance of US$450.0 million
perpetual notes;
|
·
|
a
US$65.0 million increase in inventories, mainly related to annual
maintenance cost of growing crops in the acquired units of Mundial,
Corona
and Bom Retiro; and
|
·
|
a
US$62.6 million increase in restricted cash, used to cover margin
calls
for the negative mark-to market procedure in our derivatives
portfolio at
the end of fiscal year 2006;
|
·
|
a
US$88.7 million decrease in derivative financial instruments,
net, due to
the negative mark-to market procedure mentioned
above;
|
·
|
a
US$63.0 million increase in trade accounts payable balance in
connection
with the final crop adjustments in the TSR price measured by
the CONSECANA
methodology, reflected in the cost of goods sold of fiscal year
2006;
and
|
·
|
a
US$38.9 million increase in current portion of long-term debt,
in
accordance with the maturity schedule of our
debt.
|
·
|
US$72.2
million at Costa Pinto;
|
·
|
US$45.5
million at Rafard; and
|
·
|
US$62.2
million at Bonfim.
|
Total
|
Less
than 1 year
|
1
to 3 years
|
3
to 5 years
|
More
than 5 years
|
||||||||||||||||
(in
millions of US dollars)
|
||||||||||||||||||||
Long-term
debt obligations(1)
|
US$ |
1,378.6
|
US$ |
36.1
|
US$ |
216.4
|
US$ |
13.5
|
US$ |
1,112.6
|
||||||||||
Operating
lease obligations
|
611.7
|
56.0
|
110.4
|
105.4
|
339.8
|
|||||||||||||||
Purchase
obligations(2)
|
595.2
|
134.0
|
242.2
|
118.2
|
80.5
|
|||||||||||||||
Advances
from customers
|
48.6
|
24.3
|
24.3
|
—
|
—
|
|||||||||||||||
Total
|
US$ |
2,634.0
|
US$ |
250.3
|
US$ |
593.3
|
US$ |
257.5
|
US$ |
1,532.9
|
(1)
|
Less
than 1 year amounts include accrued interest over the existing
debt;
long-term installments do not include any
interest.
|
(2)
|
Purchase
obligations were valued at the amount of sugarcane committed
by a TSR of
147.5kg per ton, at a price of US$158.2 per ton as defined by
CONSECANA
for April 2007.
|
·
|
US$450
million perpetual notes with call option for Cosan beginning
on February
2011;
|
·
|
US$400
million senior notes due February
2017;
|
·
|
US$200
million senior notes due November
2009;
|
·
|
US$216.7
million PESA debt due between 2018 and 2020, payable against
CTN
credits;
|
·
|
US$50.0
million IFC A Loan with 12 semi-annually equal installments starting
on
July 2007; and
|
·
|
US$15.0
million IFC C Loan due January 2013 with call option for
Cosan.
|
Fair
Value –
Net
Sales
|
Sales
Volume
|
Market
Risk – 10% Price Decrease
|
||||||||||
(in
millions of US$)
|
(thousand
tons of sugar or thousand liters of ethanol)
|
(in
millions of US$)
|
||||||||||
Sugar
sales volumes in fiscal year 2007
|
US$ |
1,031.7
|
3,240.5
|
US$ |
61.2
|
|||||||
Hedged
sugar position at April 30, 2007
|
419.4
|
1,317.3
|
—
|
|||||||||
VHP
sugar
|
381.1
|
1,196.9
|
—
|
|||||||||
White
sugar
|
38.3
|
120.4
|
—
|
|||||||||
Unhedged
sugar position at April 30, 2007
|
612.3
|
1,923.2
|
61.2
|
|||||||||
Ethanol
sales volumes (unhedged) in fiscal year 2007
|
551.5
|
1,322.1
|
55.1
|
|||||||||
Total
unhedged position at April 30, 2007
|
US$ |
1,163.8
|
US$ |
116.4
|
Fair
Value –
Net
Sales
|
Market
Risk – 10% Price Decrease
|
|||||||
(in
millions of US$)
|
||||||||
Total
unhedged position at April 30, 2007
|
US$ |
1,163.8
|
US$ |
116.4
|
||||
Sugarcane
paid to growers in fiscal year 2007
|
(381.5 | ) | (38.1 | ) | ||||
Sugarcane
from leased land in fiscal year 2007
|
(99.4 | ) | (9.9 | ) | ||||
Net
unhedged position at April 30, 2007
|
US$ |
682.9
|
US$ |
68.3
|
Fair
Value –
Net
Sales
|
Foreign
Exchange Volume
|
Foreign
Exchange
Risk –
10%
Decrease
|
||||||||||
(in
millions of US$)
|
(in
millions of US$)
|
(in
millions of US$)
|
||||||||||
Hedged
export net sales at April 30, 2007
|
US$ |
191.0
|
US$ |
191.0
|
US$ |
—
|
||||||
Unhedged
export net sales at April 30, 2007
|
823.8
|
823.8
|
82.4
|
|||||||||
Total
export net sales in fiscal year 2007
|
US$ |
1,014.8
|
US$ |
1,014.8
|
US$ |
82.4
|
Debt
at
April
30, 2007
|
Market
Risk on Net Financial Expenses
|
|||||||
(in
millions of US$)
|
||||||||
U.S.
dollar-denominated debt
|
US$ |
1,134.0
|
US$ |
113.4
|
||||
U.S.
dollar-denominated advances from customers
|
48.6
|
4.9
|
||||||
U.S.
dollar-denominated cash and cash equivalents
|
(300.3 | ) | (30.0 | ) | ||||
U.S.
dollar-denominated derivative financial instruments (net)
|
(55.4 | ) | (5.5 | ) | ||||
U.S.
dollar-denominated trade accounts receivable
|
(16.3 | ) | (1.6 | ) | ||||
Total
U.S. dollar-denominated exposure
|
US$ |
810.5
|
US$ |
81.1
|
Sugarcane
Production Regional Breakdown—2006/2007 harvest (in million metric
tons)
|
||
·
|
Emission
reduction. As a result of its high oxygen content, when burned,
carbon monoxide emissions when vehicles used a 10% blend of ethanol
were
found to be between 25% and 30% lower relative to gasoline, according
to
the tests carried out at the National Center for Vehicle Emissions
Control
and Safety at Colorado State University. Ethanol blends also
reduce
emissions of hydrocarbons, a major contributor to
|
·
|
Relevant
blending component. As gasoline consumption grows, blending of
ethanol can contribute to preservation of non-renewable fossil
fuel
sources as well as help to overcome refining capacity
constraints.
|
·
|
Octane
enhancer. Ethanol has an octane rating of 113 whereas the regular
and
premium unleaded gasoline sold in the United States have average
octane
ratings of 87 and 93, respectively. When added to gasoline, ethanol
increases the octane rating of sub-octane fuel for production
of regular
grade gasoline or to upgrade regular gasoline to premium
grades.
|
Brazil
|
Gasoline
is required to include 20-25% ethanol (currently at 25%). In
2008,
gasoline will be required to include 2% biodiesel, increasing
to 5% in
2013.
|
United
States
|
Government
energy policies will create a market for approximately 7 billion
gallons
of renewable fuel through 2012. In January 2007, President Bush
announced
a target of 35 billion gallons by 2017.
|
European
Union
|
2%
of fuel must be renewable, increasing to 5.75% in 2010.
|
Thailand
|
10%
of gasoline is required to be ethanol in all gas stations in
Bangkok.
|
China
|
Five
districts require the addition of 10% ethanol to
gasoline.
|
Japan
|
Requires
that gasoline be 3% of ethanol, increasing to 10% in
2010.
|
India
|
Requires
that gasoline be 5% ethanol.
|
Argentina
|
By
2010, 5% of gasoline will be required to be ethanol.
|
Colombia
|
Requires
that gasoline by 10% ethanol in large cities.
|
Australia
|
Up
to 10% ethanol may be added to
gasoline.
|
Raw
Material
|
Production/Hectare
|
Quantity
of Feedstock/Liter of Ethanol
|
Quantity
of Ethanol/Hectare
|
|||
Sugarcane
|
85,000kg
|
12.0kg
|
7,080
liter
|
|||
Corn
|
10,000kg
|
2.8kg
|
3,570
liter
|
(1)
|
Numbers
refer to 2006/2007 U.S. per capita consumption, including the
total
consumption of sugar and corn glucose, divided by the U.S. population,
as
reported by the Food and Agriculture
Organization.
|
(1)
|
Cosan
production and exports refer to the fiscal year 2006. Sugar production
includes 3.18 million tons of sugar and 2.06 million tons of
sugar-equivalent ethanol.
|
Regions
|
||||||||||||
2006/2007
|
Center-South
|
North-Northeast
|
Brazil
|
|||||||||
Number
of mills
|
251
|
74
|
325
|
|||||||||
Area
to be harvested (millions hectares)
|
4,513.7
|
854.8
|
5,368.5
|
|||||||||
Cultivated
area (million hectares)
|
5,310.2
|
1,005.7
|
6,315.9
|
|||||||||
Sugarcane
offer (million tons)
|
372.4
|
53.0
|
425.4
|
|||||||||
Yield
(tons/hectares)
|
82.5
|
62.0
|
79.2
|
|||||||||
Sugar
production (million tons)
|
25.8
|
4.0
|
29.8
|
|||||||||
Ethanol
production (thousand m3)
|
16.0
|
1.7
|
17.7
|
|||||||||
Production
in TSR-product (million tons)
|
54.7
|
7.1
|
61.8
|
|||||||||
TSR/ton
of sugarcane
|
146.9
|
134.7
|
145.4
|
|||||||||
Production
mix (%):
|
||||||||||||
Sugar
|
49.51 | % | 58.80 | % | 50.58 | % | ||||||
Ethanol
|
50.49 | % | 41.20 | % | 49.42 | % | ||||||
Average
crushing capacity (million tons)
|
1,483.6
|
716.2
|
1,308.9
|
|||||||||
Export
market:
|
||||||||||||
Sugar
(million tons)
|
17.0
|
2.6
|
19.6
|
|||||||||
Ethanol
(billion liters)
|
3.2
|
0.4
|
3.6
|
|||||||||
Domestic
market:
|
||||||||||||
Sugar
(million tons)
|
8.5
|
1.5
|
10.0
|
|||||||||
Ethanol
(billion liters)
|
13.0
|
1.0
|
14.0
|
|||||||||
Production
destination (%)
|
||||||||||||
Sugar
|
57.28 | % | 52.11 | % | 56.68 | % | ||||||
Ethanol
|
42.72 | % | 47.89 | % | 43.32 | % |
·
|
Sugarcane:
the largest grower and processor of sugarcane in the world, having
crushed
36.2 million tons in fiscal year 2007 and 27.9 million tons of
sugarcane
in fiscal year 2006 (planted on approximately 572,000 hectares,
of which
approximately 50% is leased by us, 40% is supplier owned and
10% is
company owned);
|
·
|
Ethanol:
the largest ethanol producer in Brazil and the second largest
in the
world, having produced 326.7 million gallons (1.2 billion liters)
in
fiscal year 2007 and 241.7 million gallons (915.0 million liters)
in
fiscal year 2006, and the largest exporter of ethanol in the
world, having
exported 72.6 million gallons (274.7 million liters) in fiscal
year 2007
and 61.0 million gallons (230.9 million liters) in fiscal year
2006;
and
|
·
|
Sugar:
the largest sugar producer in Brazil and one of the three largest
sugar
producers in the world, having produced 3.2 million tons in fiscal
year
2007 and 2.3 million tons of sugar in fiscal year 2006, and the
largest
exporter of sugar in the world, having exported 2.8 million tons
in fiscal
year 2007 and 2.1 million tons in fiscal year
2006.
|
For
Years Ended April 30,
|
For
Six Months Ended
October
31,
|
|||||||||||||||||||||||||||||||||||||||
2007
|
%
|
2006
|
%
|
2005
|
%
|
2007
|
%
|
2006
|
%
|
|||||||||||||||||||||||||||||||
(In
millions of tons, except percentages)
|
||||||||||||||||||||||||||||||||||||||||
Sugarcane
harvested from owned/leased land
|
21.6
|
59.8
|
17.2
|
61.7
|
15.0
|
61.7
|
17.4
|
53.7
|
18.4
|
56.7
|
||||||||||||||||||||||||||||||
Sugarcane
purchased from third parties
|
14.5
|
40.2
|
10.7
|
38.3
|
9.3
|
38.3
|
15.0
|
46.3
|
14.1
|
43.3
|
||||||||||||||||||||||||||||||
Total
|
36.2
|
100.0
|
27.9
|
100.0
|
24.3
|
100.0
|
32.4
|
100.0
|
32.5
|
100.0
|
·
|
Preparation
of the juice. The fermentation is fed with a juice composed by
approximately 20% of sugar, which is prepared with juice (from
the
treatment), molasses (from sugar production) and water. This
juice must be
cooled to approximately 30°C.
|
·
|
Fermentation.
The fermentation of the juice is the result of the action of
yeast, which
firstly inverts the sucrose to glucose and fructose (monosaccharide),
and
then converts the monosaccharide into ethanol and carbon dioxide.
This
reaction occurs in a fermenter, which is fed with juice and
yeast.
|
·
|
Centrifuging.
After the fermentation, the resulting product is carried to centrifuges
that separates the yeast from the beer, a solution of approximately
9%v/v
(oGL) of ethanol.
|
·
|
Treatment
of the yeast. The yeast that comes from the centrifuges is treated
with sulfuric acid and return to the fermenter tank to be utilized
again.
|
·
|
Distillation.
The beer is distillated in a sequence of distillation columns,
which
separate the water from the ethanol. This process occurs basically
due to
the differences of ethanol’s and water’s ebullition temperatures. In order
to produce hydrous ethanol, two columns are used to achieve the
concentration of 94%v/v (oGL) ethanol. From the first column,
a slop
called vinasse is obtained, which is used as a fertilizer in
the sugarcane
fields.
|
·
|
Dehydration.
In order to produce anhydrous ethanol, two more columns are used
to
achieve the concentration of 99%v/v (oGL) ethanol. In the first
column,
the excess of water is separated with the aid of
cycle-hexane.
|
Market
|
Customer
|
%
of Net Sales For Fiscal Year Ended April 30, 2007
|
||
International
|
Vertical
UK LLP
|
11.6%
|
Market
|
Customer
|
%
of Net Sales For Fiscal Year Ended April 30, 2007
|
||
Kolmar
Petrochemicals 6
|
6.2%
|
|||
Domestic
|
Shell
Brasil Ltda.
|
14.8%
|
||
Petrobras
Distribuidora S.A.
|
9.2%
|
|||
Manancial
Distribuidora de Petróleo Ltda
|
8.2%
|
For
Fiscal Year Ended April 30,
|
For
Six Months Ended
October
31,
|
|||||||||||||||||||
2007
|
2006
|
2005
|
2007
|
2006
|
||||||||||||||||
Brazilian
net sales (in millions of US$)
|
US$ |
413.1
|
US$ |
312.4
|
US$ |
122.5
|
US$ |
139.5
|
US$ |
192.5
|
||||||||||
%
of
total net sales
|
24.6 | % | 28.5 | % | 19.0 | % | 22.2 | % | 21.7 | % | ||||||||||
Brazilian
sales volume (in millions of liters)
|
1,047.4
|
785.1
|
455.2
|
409.1
|
453.4
|
|||||||||||||||
%
of
total ethanol sales volume
|
79.2 | % | 77.3 | % | 62.3 | % | 76.1 | % | 72.1 | % |
For
Fiscal Year Ended April 30,
|
For
Six Months Ended
October
31,
|
|||||||||||||||||||
2007
|
2006
|
2005
|
2007
|
2006
|
||||||||||||||||
Export
net sales (in millions of US$)
|
US$ |
138.3
|
US$ |
66.0
|
US$ |
55.9
|
US$ |
39.8
|
US$ |
91.2
|
||||||||||
%
of
total net sales
|
8.2 | % | 6.0 | % | 8.7 | % | 6.3 | % | 10.3 | % | ||||||||||
Export
sales volume (in millions of liters)
|
274.7
|
230.9
|
275.4
|
128.7
|
175.3
|
|||||||||||||||
%
of
total sales volume
|
20.8 | % | 22.7 | % | 37.7 | % | 23.9 | % | 27.9 | % |
For
Fiscal Year Ended April 30,
|
For
Six Months Ended
October
31,
|
|||||||||||||||||||
2007
|
2006
|
2005
|
2007
|
2006
|
||||||||||||||||
Brazilian
average ethanol selling price
|
US$ |
394.5
|
US$ |
397.9
|
US$ |
269.2
|
US$ |
341.0
|
US$ |
426.6
|
||||||||||
Export
average ethanol selling price
|
503.5
|
285.9
|
202.8
|
309.4
|
520.0
|
|||||||||||||||
Average
ethanol selling price
|
US$ |
417.1
|
US$ |
372.4
|
US$ |
244.2
|
US$ |
333.4
|
US$ |
451.2
|
Market
|
Customer
|
%
of Net Sales For Fiscal Year Ended April 30,
2007
|
||
International
|
Sucres
et Denrées
|
33.3%
|
||
Coimex
Trading Ltd 6
|
11.5%
|
|||
S.A.
Fluxo
|
9.5%
|
|||
Tate
& Lyle International
|
5.3%
|
|||
Cane
International Corporation
|
2.2%
|
For
Fiscal Year Ended April 30,
|
For
Six Months Ended
October
31,
|
|||||||||||||||||||
2007
|
2006
|
2005
|
2007
|
2006
|
||||||||||||||||
Export
net sales (in millions of US$)
|
US$ |
873.0
|
US$ |
530.3
|
US$ |
344.8
|
US$ |
320.6
|
US$ |
479.9
|
||||||||||
%
of
total net sales
|
52.0 | % | 48.4 | % | 53.5 | % | 50.9 | % | 54.1 | % | ||||||||||
Export
sales volumes (in thousands of tons)
|
2,802.5
|
2,051.5
|
1,970.6
|
1,418.5
|
1,481.6
|
|||||||||||||||
%
of
total sales volume
|
86.5 | % | 83.1 | % | 85.6 | % | 86.1 | % | 86.7 | % |
For
Fiscal Year Ended April 30,
|
For
Six Months Ended
October
31,
|
|||||||||||||||||||
2007
|
2006
|
2005
|
2007
|
2006
|
||||||||||||||||
Domestic
net sales (in millions of US$)
|
US$ |
158.7
|
US$ |
130.2
|
US$ |
71.0
|
US$ |
63.2
|
US$ |
93.1
|
||||||||||
%
of
total net sales
|
9.5 | % | 11.9 | % | 11.0 | % | 10.0 | % | 10.5 | % | ||||||||||
Domestic
sales volumes (in thousands of tons)
|
438.1
|
417.9
|
331.8
|
229.3
|
226.9
|
|||||||||||||||
%
of
total sales volume
|
13.5 | % | 16.9 | % | 14.4 | % | 13.9 | % | 13.3 | % |
For
Fiscal Year Ended April 30,
|
For
Six Months Ended
October
31,
|
|||||||||||||||||||
2007
|
2006
|
2005
|
2007
|
2006
|
||||||||||||||||
(US$/ton)
|
||||||||||||||||||||
Domestic
average sugar selling price
|
US$ |
362.3
|
US$ |
311.4
|
US$ |
214.1
|
US$ |
275.7
|
US$ |
410.3
|
||||||||||
Export
average sugar selling price
(raw
and refined)
|
311.5
|
258.5
|
175.0
|
226.0
|
323.9
|
|||||||||||||||
Average
sugar selling price
|
US$ |
318.4
|
US$ |
267.4
|
US$ |
180.6
|
US$ |
232.9
|
US$ |
335.4
|
·
|
a
cleaner energy derived from renewable sources, considered to
be “carbon
neutral”;
|
·
|
highly
complementary-relationship to hydro-electric energy, because
sugarcane
bagasse energy is generated during the crop season, which coincides
with
the dry period in the Brazilian Center-South region, when water
supply
levels are lower; and
|
·
|
short
lead-times to initiate operations is
required.
|
Name
|
Products
|
Annual
Crushing Capacity
|
Sugarcane
Volume Processed
|
||||||
For
Fiscal Year Ended
|
Crop
2006/2007
|
||||||||
April
30, 2007
|
April
30, 2006
|
||||||||
(in
millions of tons)
|
|||||||||
Da
Barra
|
sugar,
ethanol and cogeneration
|
7.20
|
6.56
|
6.75
|
7.02
|
||||
Bonfim
|
sugar,
ethanol and cogeneration
|
4.60
|
3.81
|
—
|
3.81
|
||||
Costa
Pinto
|
sugar,
ethanol and cogeneration
|
4.00
|
3.68
|
3.27
|
3.68
|
||||
Junqueira
|
sugar,
ethanol and cogeneration
|
2.60
|
2.49
|
2.71
|
2.69
|
||||
Rafard
|
sugar,
ethanol and cogeneration
|
2.40
|
2.32
|
2.16
|
2.35
|
||||
Univalem
|
sugar,
ethanol and cogeneration
|
2.20
|
2.17
|
1.75
|
2.05
|
||||
Santa
Helena
|
sugar,
ethanol and cogeneration
|
2.05
|
1.87
|
1.75
|
1.88
|
||||
Ipaussu
|
sugar,
ethanol and cogeneration
|
1.95
|
1.91
|
1.63
|
1.88
|
||||
Diamante
|
sugar,
ethanol and cogeneration
|
1.95
|
1.90
|
1.86
|
1.93
|
||||
Serra
|
sugar,
ethanol and cogeneration
|
1.80
|
1.63
|
1.55
|
1.63
|
||||
Tamoio
|
sugar
and cogeneration
|
1.40
|
0.98
|
—
|
0.98
|
||||
São
Francisco
|
sugar
and cogeneration
|
1.40
|
1.48
|
1.23
|
1.47
|
||||
Dois
Córregos
|
sugar,
ethanol and cogeneration
|
1.40
|
1.20
|
1.26
|
1.20
|
||||
Destivale
|
sugar,
ethanol and cogeneration
|
1.30
|
1.08
|
0.86
|
0.98
|
||||
Mundial
|
sugar,
ethanol and cogeneration
|
1.30
|
0.87
|
0.01
|
0.88
|
||||
Gasa
|
sugar,
ethanol and cogeneration
|
1.25
|
1.22
|
1.11
|
1.19
|
||||
Bom
Retiro
|
sugar,
ethanol and cogeneration
|
1.20
|
0.98
|
—
|
0.98
|
Expansion
|
||||||||||||||||||||||||||||
Actual
Crushing Capacity
|
2009
|
2010
|
2011
|
2012
|
Future
Crushing Capacity
|
Estimated
Capital Expenditures for Expansion
|
||||||||||||||||||||||
(in
millions of tons)
|
(in
millions of US$)
|
|||||||||||||||||||||||||||
Univalem
|
2.20
|
—
|
0.50
|
—
|
—
|
2.70
|
US$ |
15.0
|
||||||||||||||||||||
Gasa
|
1.25
|
1.60
|
1.00
|
—
|
—
|
3.85
|
143.0
|
|||||||||||||||||||||
Destivale
|
1.30
|
0.40
|
1.00
|
0.50
|
—
|
3.20
|
85.5
|
|||||||||||||||||||||
Mundial
|
1.30
|
—
|
1.50
|
0.50
|
—
|
3.30
|
90.0
|
|||||||||||||||||||||
Bonfim
|
4.60
|
1.00
|
—
|
—
|
—
|
5.60
|
50.0
|
|||||||||||||||||||||
Junqueira
|
2.60
|
—
|
—
|
0.30
|
—
|
2.90
|
10.5
|
|||||||||||||||||||||
Ipaussu
|
1.95
|
—
|
0.50
|
—
|
—
|
2.45
|
17.5
|
|||||||||||||||||||||
Gasa
II
|
—
|
—
|
0.50
|
0.70
|
0.60
|
1.80
|
90.0
|
|||||||||||||||||||||
Total
|
15.2
|
3.00
|
5.00
|
2.00
|
0.60
|
25.8
|
US$ |
501.5
|
Crushing
Capacity For Fiscal Year Ended April 30
|
||||||||||||||||
2009
|
2010
|
2011
|
2012
|
|||||||||||||
(in
millions of tons)
|
||||||||||||||||
Jatai
|
0.5
|
1.5
|
3.3
|
3.3
|
||||||||||||
Montividiu
|
—
|
0.5
|
1.5
|
3.3
|
||||||||||||
Paraúna
|
—
|
0.5
|
1.5
|
3.3
|
Number
of Mills
|
Sugarcane
Crushed
|
Ethanol
Sales
|
Sugar
Sales
|
|||||||||||||
(in
millions of tons)
|
(in
millions of liters)
|
(in
thousands of tons)
|
||||||||||||||
Cosan
|
17
|
36.6
|
1,282
|
3,258
|
||||||||||||
Louis
Dreyfus
|
7
|
10.8
|
305
|
620
|
||||||||||||
Carlos
Lyra
|
5
|
9.5
|
197
|
614
|
||||||||||||
Vale
do Rosário
|
3
|
9.4
|
421
|
619
|
||||||||||||
São
Martinho
|
2
|
9.2
|
393
|
677
|
||||||||||||
Tércio
Wanderley
|
4
|
8.7
|
267
|
500
|
||||||||||||
Guarani
|
3
|
8.3
|
164
|
890
|
||||||||||||
Zillo
|
3
|
8.3
|
402
|
596
|
Number
of Mills
|
Sugarcane
Crushed
|
Ethanol
Sales
|
Sugar
Sales
|
|||||||||||||
(in
millions of tons)
|
(in
millions of liters)
|
(in
thousands of tons)
|
||||||||||||||
Oscar
Figueiredo
|
3
|
8.2
|
203
|
809
|
||||||||||||
Santa
Terezinha
|
5
|
8.1
|
206
|
835
|
||||||||||||
Santa
Elisa
|
3
|
7.6
|
346
|
482
|
·
|
the
generation, storage, handling, use and transportation of hazardous
materials;
|
·
|
the
emission and discharge of hazardous materials into the ground,
air or
water; and
|
·
|
the
health and safety of our employees.
|
·
|
20%
of the harvested area by the first year
(2002);
|
·
|
30%
of the harvested area by the fifth year
(2006);
|
·
|
50%
of the harvested area by the tenth year
(2011);
|
·
|
80%
of the harvested area by the fifteenth year (2016);
and
|
·
|
100%
of the harvested area by the twentieth year
(2021).
|
·
|
10%
of the harvested area by the tenth year
(2011);
|
·
|
20%
of the harvested area by the fifteenth year
(2016);
|
·
|
30%
of the harvested area by the twentieth year
(2021);
|
·
|
50%
of the harvested area by the twenty-fifth year (2026);
and
|
·
|
100%
of the harvested area by the thirtieth year
(2031).
|
·
|
Civil
Liability: Brazilian law provides for strict and joint and several
liability for polluters (i.e. persons or legal entities, private
or public, which are directly or indirectly responsible for an
activity
that causes environmental damage). Strict liability means that
a party can
be held responsible regardless of its knowledge, fault and degree
of care
or intent. Joint and several liability means that any individual
party
directly or indirectly involved with the cause of the damage
may be sued
for the entire amount of such damage, with the right to proportionally
recover the losses from the other responsible
parties.
|
·
|
Criminal
and administrative liability: Brazilian law provides for severe
administrative and criminal sanctions against legal entities
and
individuals that violate its provisions regarding the protection
of
natural resources and pollution control. The sanctions for administrative
infractions include: (1) warnings, (2) fines, which may range
from R$50.00
to R$50 million (US$24.60 to US$24.6 million) that can be doubled
or
tripled in case of recidivism, (3) partial or total interruption
or
suspension of business operations, (4) demolition, (5) cancellation
of
licenses, (6) loss or restriction of tax incentives and benefits,
(7) loss
or suspension of eligibility for credit lines with official credit
institutions, and (8) prohibition from contracting with the government.
The criminal penalties imposed may involve imprisonment or confinement,
may limit or restrict certain rights (such as the temporary suspension
or
cancellation of an authorization, or prohibition to contract
with public
bodies), and may also include a monetary
penalty.
|
At
April 30,
|
At
October 31,
|
|||||||||||||||||||
2007
|
2006
|
2005
|
2007
|
2006
|
||||||||||||||||
Agricultural
|
27,063
|
26,370
|
15,436
|
28,831
|
24,624
|
|||||||||||||||
Industrial
|
6,256
|
6,106
|
5,360
|
6,546
|
6,543
|
|||||||||||||||
Commercial
|
85
|
94
|
69
|
89
|
68
|
|||||||||||||||
Administrative
|
1,930
|
1,823
|
1,419
|
2,193
|
1,786
|
|||||||||||||||
Financial
and investor relations
|
42
|
50
|
47
|
42
|
48
|
|||||||||||||||
Port
|
213
|
198
|
196
|
208
|
198
|
|||||||||||||||
Total
|
35,589
|
34,641
|
22,527
|
37,909
|
33,267
|
Name
|
Initial
Year of Appointment to Cosan Limited’s
Board
|
Initial
Year of Appointment to Cosan’s Board
|
Class(1)
|
Position
Held
|
Year
of Birth
|
||||
Rubens
Ometto Silveira Mello(2)
|
2007
|
2000
|
III
|
Chairman
|
1950
|
||||
Marcus
Vinicios Pratini de Moraes(2)(3)
|
2007
|
2005
|
II
|
Vice
Chairman
|
1939
|
||||
Paulo
Sérgio de Oliveira Diniz(2)
|
2007
|
2005
|
III
|
Director
|
1957
|
||||
Mailson
Ferreira da Nóbrega(3)
|
2007
|
—
|
I
|
Director
|
1942
|
||||
Marcos
Marinho Lutz
|
2007
|
—
|
II
|
Director
|
1969
|
||||
Pedro
Isamu Mizutani(2)
|
2007
|
2000
|
III
|
Director
|
1959
|
||||
George
E. Pataki(3)
|
2007
|
—
|
I
|
Director
|
1945
|
||||
Marcelo
de Souza Scarcela Portela(2)
|
2007
|
2005
|
II
|
Director
|
1961
|
||||
José
Alexandre Scheinkman(3)
|
2007
|
—
|
I
|
Director
|
1948
|
(1)
|
The
terms of the directors expire as follows: Class I at the annual
general
meeting held in fiscal year 2008; Class II at the annual general
meeting
held in fiscal year 2009; and Class III at the annual general
meeting held
in fiscal year 2010.
|
(2)
|
Also
serves as director of Cosan.
|
(3)
|
Independent
director.
|
Name
|
Initial
Year of Appointment to Cosan Limited
|
Initial
Year of Appointment to Cosan
|
Position
Held
|
Year
of Birth
|
|||
Rubens
Ometto Silveira Mello
|
2007
|
2000
|
Chief
Executive Officer
|
1950
|
|||
Pedro
Isamu Mizutani
|
2007
|
2000
|
Chief
Operating Officer
|
1959
|
|||
Paulo
Sérgio de Oliveira Diniz
|
2007
|
2003
|
Chief
Financial and Investor Relations Officer
|
1957
|
|||
Marcos
Marinho Lutz
|
2007
|
2006
|
Chief
Commercial Officer
|
1969
|
·
|
pre-approve
services to be provided by our independent
auditor;
|
·
|
review
auditor independence issues and rotation
policy;
|
·
|
supervise
the appointment of our independent
auditors;
|
·
|
discuss
with management and auditors major audit
issues;
|
·
|
review
quarterly financial statements prior to their publication, including
the
related notes, management’s report and auditor’s
opinion;
|
·
|
review
our annual report and financial
statements;
|
·
|
provide
recommendations to the board on the audit committee’s policies and
practices;
|
·
|
review
related party transactions;
|
·
|
review
recommendations given by our independent auditor and internal
audits and
management’s responses; and
|
·
|
provide
recommendations on the audit committee’s
bylaws.
|
Shareholders
|
Class
A Common Shares
|
%
|
Class
B Common Shares
|
%
|
Total
Number of Shares
|
%
|
||||||||||||||||||
Aguassanta
Participações
|
5,000,000
|
4.5
|
—
|
—
|
5,000,000
|
2.4
|
||||||||||||||||||
FMR
Corp. (1)
|
13,425,000
|
12.0
|
—
|
—
|
13,425,000
|
6.5
|
||||||||||||||||||
Janus
Capital Management LLC(2)
|
27,459,175
|
24.6
|
—
|
—
|
27,459,175
|
13.2
|
||||||||||||||||||
Queluz
Holdings Limited
|
—
|
—
|
66,321,766
|
68.8
|
66,321,766
|
31.9
|
||||||||||||||||||
Usina
Costa Pinto S.A. Açúcar e Álcool
|
—
|
—
|
30,010,278
|
31.2
|
30,010,278
|
14.4
|
||||||||||||||||||
Wellington
Management Company, LLP (3)
|
13,914,200
|
12.5
|
—
|
—
|
13,914,200
|
6.7
|
||||||||||||||||||
Others
|
51,879,625
|
46.5
|
—
|
—
|
51,879,625
|
24.9
|
||||||||||||||||||
Total
|
111,678,000
|
100.0 | % |
96,332,044
|
100.0 | % |
208,010,044
|
100.0 | % |
Shareholders
|
Common
Shares
|
%
|
||||||
Cosan
Limited
|
152,939,440
|
56.1 | % | |||||
Kuok
Group (Lewington Pte. Ltd)
|
1,256,122
|
6.0
|
||||||
Sucres
et Denrées
|
4,910,094
|
1.8
|
||||||
Others
|
98,433,376
|
36.1
|
||||||
Total
|
272,539,032
|
100.0 | % |
·
|
any
actions that may jeopardize the capacity of Cosan Portuária to service its
customers in the ordinary course of
business;
|
·
|
the
performance by Cosan Portuária of any activities or businesses different
from its ordinary course of business (including the sale and
acquisition
of assets);
|
·
|
any
merger, amalgamation or spin-off of Cosan Portuária with or into any other
companies;
|
·
|
transactions
between Cosan Portuária and any of its shareholders or
affiliates;
|
·
|
the
issuance, cancellation or amendment of any guarantees, indemnities
or
powers-of-attorney (except if entered into with the Brazilian
Port
Authorities—CODESP by virtue of the port
concession);
|
·
|
any
amendments to the bylaws or any other corporate documents of
Cosan
Portuária that may affect any of the matters that require the approval
of
Tate & Lyle do Brasil Serviços e Participações S.A. or any minority
shareholders rights to which Tate & Lyle do Brasil Serviços e
Participações S.A. is entitled;
|
·
|
any
changes in the share capital of Cosan
Portuária;
|
·
|
the
dissolution, termination or liquidation of Cosan
Portuária;
|
·
|
distribution
of dividends or other payments by Cosan Portuária to its shareholders;
and
|
·
|
the
termination of any agreements entered into between Cosan Portuária and
Tate and Lyle (or any of Tate & Lyle’s
affiliates).
|
·
|
import,
export, produce and sell ethanol, sugar, sugarcane and other
sugar
by-products;
|
·
|
distribute
and sell fuel and other fuel
by-products;
|
·
|
produce
and market electricity, steam and other co-generation
by-products;
|
·
|
render
technical services related to the activities mentioned above;
and
|
·
|
hold
equity interests in other
companies.
|
·
|
appointment
of the chief executive officer of our company or any of its
subsidiaries
(including successors thereof);
|
·
|
changes
to the core business strategy of our company or any of its
subsidiaries;
|
·
|
change
name or corporate purpose of our company or any of its
subsidiaries;
|
·
|
amendments
to any rights of the class B series 1 common
shares;
|
·
|
any
recapitalization, stock split, combination, reclassification
or similar
action affecting equity interests in our company or any of
its
subsidiaries;
|
·
|
redemption,
capital reduction or other acquisition for value of any shares
of equity
interests in our company or any of its
subsidiaries;
|
·
|
any
transaction or series of transactions resulting in a spin-off,
delisting,
merger, amalgamation, reorganization or combination of or by
our company
or any of its subsidiaries with, or any acquisition of, another
person
involving an amount in excess of US$250
million;
|
·
|
any
sale, lease, assignment, transfer or other disposition of assets
valued in
the aggregate, in excess of US$250
million;
|
·
|
any
voluntary liquidation, reorganization, dissolution or winding-up
of, or a
voluntary filing for bankruptcy protection by our company or
any of its
subsidiaries;
|
·
|
the
approval of the limit of the compensation of members of the
board of
directors or executive officers of our company or any of its
subsidiaries;
|
·
|
the
making of any investment in excess of US$250 million other
than
investments in the ordinary course of
business;
|
·
|
entering
into any joint venture, partnership or any similar arrangement
other than
in the ordinary course of business;
|
·
|
any
related-party transactions;
|
·
|
the
incurrence of any liens on properties valued, in the aggregate,
in excess
of US$250 million;
|
·
|
amendment
of the provisions of any of the foregoing actions or events;
and
|
·
|
agreeing
to, or otherwise committing to take, any of the foregoing
actions.
|
·
|
any
merger, consolidation or amalgamation with an interested
shareholder;
|
·
|
any
disposition or security arrangement with or for the benefit
of any
interested shareholder involving any of our assets, securities
or
commitments or those of any subsidiary or any interested shareholder
that
has an aggregate fair market value and/or involves aggregate
commitments
of US$250 million or more or constitutes more than 10% of the
book value
of the total assets or 10% of the shareholders equity of the
entity in
question;
|
·
|
the
adoption of any plan for our liquidation or dissolution or
for the
discontinuation into another jurisdiction, unless proposed
or adopted
independently of any interested shareholder;
or
|
·
|
any
reclassification of our shares or other securities, or recapitalization,
or any merger, consolidation or amalgamation with any of our
subsidiaries
or any other transaction that has the effect of increasing
the
proportionate share of any class of shares beneficially owned
by an
interested shareholder.
|
·
|
Our
bye-laws contain provisions that could make it more difficult
for a third
party to acquire us without the consent of our board of directors.
These
provisions provide, among other things,
for:
|
·
|
a
classified board of directors with staggered three-year
terms;
|
·
|
restrictions
on the time period in which directors may be
nominated;
|
·
|
the
affirmative vote of a majority of our directors then in office
and a
majority of all votes attaching to all shares then in issue
or, if not
approved by a majority of the directors in office, at least
66-2/3% of all
votes attaching to all shares then in issue for amalgamation
and other
business combination transactions;
and
|
·
|
the
tag-along rights described under “Tag-Along
Rights”.
|
·
|
the
corporate laws of Bermuda and Brazil;
and
|
·
|
our
memorandum of association and by-laws and Cosan’s
bye-laws.
|
Rights
of Holders of
Cosan
Common Shares
|
Rights
of Holders of
the
Company Common
Shares
|
Voting
|
In
accordance with Cosan’s by-laws, each common share of Cosan grants to its
holder the right to one vote at general meetings of shareholders.
At a
general shareholders’ meeting, if called and constituted in accordance
with applicable Brazilian laws, shareholders are generally
empowered to
take any action relating to the corporate purposes of Cosan
and to pass
such resolutions as they deem necessary. In order to participate
and vote
at a general shareholders’ meeting, a shareholder must evidence
his/her/its position as a shareholder of Cosan presenting at
least 2 days
prior to the relevant meeting the original or a copy of (i)
his/her
identification document; (ii) evidence of the shares held issued
by the
depositary of Cosan’s shares; and (iii) a power of attorney, if the
shareholder will be represented by proxy. The originals of
the documents
referred above must be presented before the opening of the
shareholders’
meeting.
In
accordance with the Brazilian corporate law, a shareholder
may be
represented at a shareholders’ meeting by proxy appointed within a year of
the meeting, which proxy must be another shareholder, one of
the directors
or executive officers of Cosan, a lawyer or a financial institution.
An
investment fund shareholder must be represented by its investment
fund
officer.
|
Bermuda
law provides that, subject to the rights contained in the bye-laws
and any
other rights or restrictions attached to any class of shares
or series of
shares, at a general meeting each member of the company is
entitled to one
vote for each share held by him and such votes may be given
in person or
by proxy.
Our
bye-laws provide for different voting rights for the two different
classes
of shares in the company: the holders of class A common shares
each have
one vote per share, the holders of class B series 1 shares
generally have
10 votes per share and the holders of class B series 2 common
shares
generally have 10 votes per share.
Under
Bermuda law, a company is required to convene at least one
general meeting
of shareholders in each calendar year. Bermuda law provides
that a special
general meeting of shareholders may be called by the board
of directors of
a company and must be called upon the requisition of shareholders
holding
not less than 10% of the paid up voting power.
Our
bye-laws provide that a shareholder may appoint one or more
persons as his
proxy to represent him to vote on his behalf in respect of
some or all of
his shares at any general meeting. The shareholder may also
appoint a
proxy or corporate representative for a specific general
|
Rights
of Holders of
Cosan
Common Shares
|
Rights
of Holders of
the
Company Common
Shares
|
Brazilian
corporate law and Cosan’s by-laws provide that certain actions may be
taken only at shareholders’ meetings (such as amendments to the by-laws,
election of directors and members of the fiscal council, share
splits,
mergers, spin-offs and delisting). However, according to Brazilian
corporate law, neither a company’s by-laws nor actions taken at a
shareholders' meeting may deprive a shareholder of the following
rights:
(i) the right to participate in the distribution of net income;
(ii) the
right to participate equally and ratably in any remaining residual
assets
in the event of liquidation of the company; (iii) the right
to preemptive
rights in the event of subscription of shares, convertible
debentures and
subscription bonuses, except in some specific circumstances;
and (iv) the
right to withdraw from the company in specific
cases.
|
meeting and may appoint a standing proxy by serving on the company a proxy or an authorization. | |||
Dividends
|
Brazilian
corporate law and Cosan’s by-laws require that Cosan distributes annually
to its shareholders a mandatory minimum dividend, unless Cosan’s board of
directors notifies the shareholders that such distribution
is not
advisable in light of Cosan’s financial condition as reflected in Cosan’s
financial statements in accordance with Brazilian GAAP. The
mandatory
dividend is equal to 25% of Cosan’s net income for the prior year (as
calculated under Brazilian GAAP, subject to certain adjustments
mandated
by Brazilian corporate law). The mandatory dividend may be
made in the
form of dividends or interest on shareholders’ equity, which may be
deducted by Cosan in calculating its income and social contribution
tax
obligations. The declaration of annual dividends, including
dividends in
excess of the mandatory distribution, requires approval by
the vote of a
majority of the holders of Cosan’s common shares and depends on numerous
factors. These factors include Cosan’s results of operations, financial
condition, cash requirements, future prospects, financial covenant
limitations, and other factors deemed relevant by Cosan’s board of
directors and shareholders. Cosan’s board of directors has adopted a
dividend policy pursuant to which Cosan has distributed as
dividends
and/or interest on shareholders’ equity in the amount of approximately 25%
of Cosan’s net income for each fiscal year. Under Brazilian corporate
law,
Cosan may establish income reserve accounts composed of a legal
reserve,
an investments reserve and/or a retained profit reserve. The
balance of
such income reserve accounts must not exceed the amount of
Cosan’s capital
stock and any excess amounts must either be
|
Bermuda
law places a liquidity control over the declaration and payment
of
dividends or distributions from contributed surplus. Under
Bermuda law a
company may declare and pay dividends or make distributions
from
contributed surplus unless there are reasonable grounds for
believing that
the company is or would, after the payment is made, be unable
to pay its
liabilities as they become due or that its realizable assets
would thereby
be less than the aggregate of its liabilities (including its
issued share
capital and share premium accounts).
Our
bye-laws provide that the directors may declare dividends (or
distributions out of the contributed surplus of the company),
to be paid
to the shareholders according to their rights and interests.
Our
bye-laws provide that, save for any rights attached to any
preference
shares issued by the company providing for a preferred dividend
payment,
any dividend payment or distribution from contributed surplus
will be made
to the holders of class A common shares, class B series 1 commons
shares
and class B series 2 commons shares on a pro-rata
basis.
|
Rights
of Holders of
Cosan
Common Shares
|
Rights
of Holders of
the
Company Common
Shares
|
incorporated into its capital stock or distributed as dividends. Cosan currently does not have any income reserve accounts, but may establish them in the future. Cosan has historically paid cash distributions. | ||||
Number
of Directors; Qualifications
|
Cosan’s
by-laws require that the board of directors consists of a minimum
of seven
and a maximum of twenty directors, 20% of whom must be independent
as
provided by the Novo Mercado rules. The exact number of directors
is established by a vote of a majority of Cosan’s common shares at a
shareholders’ meeting. Currently, the board of directors of Cosan is
composed of nine members.
Brazilian
corporate law requires that each director owns at least one
share of
Cosan’s capital stock. There is no mandatory retirement age for
directors.
|
Bermuda
law prescribes that a company must be managed by not less than
two
directors who must be individuals.
Our
bye-laws provide that there must not be less than five directors
of the
company and not more than eleven directors of the company or
such number
in excess thereof as the board by resolution may from time
to time
determine.
The
quorum necessary for the transaction of the business of the
board may be
fixed by the board and, unless fixed at any other number, must
be two
individuals.
|
||
Term
of Directors
|
The
directors of Cosan are elected for a term of office of two
years, being
eligible for reelection.
|
Our
bye-laws provide that the directors are categorized by classes.
The
classes are designed to facilitate the retirement and rotation
of the
directors from the board and are not reflective of different
voting rights
or powers or authority. Class I, II and III directors serve
until the
annual general meetings held in calendar years 2008, 2009 and
2010
respectively and subsequently must serve for three-year terms,
each
concluding at the third annual general meeting after their
class of
directors together were last appointed or re-elected.
|
||
Election
of Directors
|
The
directors of Cosan are appointed at the annual shareholders’ meeting. The
Brazilian corporate law and the CVM regulations allow cumulative
voting
for directors at the request of at least 5% of the voting capital
stock.
This minimum percentage may vary between 5% and 10% depending
on the
amount of the capital stock as established by CVM regulations.
If there is
no request for cumulative voting, directors are elected by
a majority of
the common shares of Cosan present in person or represented
by proxy at
the shareholders’ meeting, provided that any shareholders that,
individually or in blocs, hold at least 15% of the common shares
have the
right to select one director and his or her alternate.
|
No
person other than a director retiring by rotation may be appointed
a
director at any general meeting unless nominated for election
by a
majority of the directors then in office (or proposed by a
shareholder by
notice given not less than ninety days before the first anniversary
of the
last annual general meeting or ten days after the notice of
the general
meeting at which the directors will be elected, whichever is
the earlier)
and elected by a majority of the aggregate voting power of
the issued and
outstanding shares in the company.
|
||
Filling
of Vacancies in the Board of Directors
|
During
periods of absence or temporary unavailability of the president
of the
board of directors of Cosan, his/her functions shall be performed
by the
vice-president of the board of directors, and in the event
of temporary
absence or unavailability of the vice-president, his/her functions
shall
be performed by another director appointed by the remaining
directors.
During periods of absence or temporary unavailability
|
Any
one or more vacancies in the board not filled at any general
meeting will
be deemed casual vacancies for the purposes of the bye-laws,
which provide
that the board has the power to appoint an individual to be
a director to
fill such casual vacancies. A director appointed to fill a
casual vacancy
will hold that position until the next following annual general
meeting
and must vacate that office if not
|
Rights
of Holders of
Cosan
Common Shares
|
Rights
of Holders of
the
Company Common
Shares
|
of
any other director, his/her functions shall be performed by
a director
empowered to do so by the absent director or, in case no director
is
empowered for such purpose, by any director appointed by the
remaining
directors.
In
the event of any vacancy of any office of the board of directors
(which is
determined by the unjustified absence in more than 3 consecutive
meetings
or in case of death, resignation, destitution, incapacitation
or evidenced
impediment) the president of the board of directors of Cosan
may appoint
an alternate member as a substitute for the absent member until
the next
shareholders’ meeting in which a new member shall be appointed for a term
of office that shall last until the end of the term of office
of the other
directors. In the event of a vacancy of the president and vice-president
of the board of directors of Cosan, the remaining board members
shall call
a shareholders’ meeting to appoint their
substitutes.
|
reappointed at that annual general meeting. | |||
Quorum
of Shareholders for a General Shareholders’ Meeting
|
As
a
general rule, Brazilian corporate law provides that a quorum
at a
shareholders’ meeting consists of shareholders representing at least 25%
of a company’s issued and outstanding voting capital on the first call
and, if that quorum is not reached, any percentage on the second
call. If
the shareholders are called to amend the by-laws, a quorum
at a
shareholders’ meeting consists of shareholders representing at least
two-thirds of the issued and outstanding common shares on the
first call
and any percentage on the second call.
As
a
general rule, the affirmative vote of shareholders representing
at least
the majority of the issued and outstanding common shares present
in person
or represented by proxy at a shareholders’ meeting is required to ratify
any proposed action, and abstentions are not taken into account.
However,
the affirmative vote of shareholders representing one-half
of the issued
and outstanding common shares of Cosan is required to: (i)
reduce the
percentage of the mandatory dividends; (ii) change the corporate
purpose;
(iii) merge (fusão or incorporação) Cosan with another
company; (iv) spin-off a portion of Cosan’s assets or liabilities; (v)
approve the participation of Cosan in a group of companies
(as defined in
Brazilian corporate law); (vi) apply for cancellation of any
voluntary
liquidation; (vii) approve Cosan’s dissolution; (viii) approve the merger
of all of Cosan’s shares into another Brazilian company so that, as a
result, Cosan becomes a wholly-owned subsidiary of such company;
and (ix)
delisting of Cosan’s shares from the Novo
Mercado.
|
Our
bye-laws provide that for the purposes of a general meeting
at least two
shareholders present in person or by proxy and entitled to
vote
representing the holders of more than 45% of the aggregate
voting power of
the issued and outstanding share capital will be a quorum,
provided that
in the case of a meeting of a class or series of shares where
such class
or series of shares has only one shareholder, one shareholder
present in
person or by proxy will constitute the necessary
quorum.
|
||
Rights
of Holders of
Cosan
Common Shares
|
Rights
of Holders of
the
Company Common
Shares
|
Notice
of Shareholders’ Meetings
|
Notice
of shareholders’ meetings of Cosan must be published at least three times
in the Diário Oficial do Estado de São Paulo, the official
newspaper of the State of São Paulo, and in another widely circulated
newspaper, currently the newspapers Valor Econômico and the
Jornal de Piracicaba. The first notice must be published no later
than 15 days before the date of the meeting on the first call,
and no
later than 8 days before the date of the meeting on the second
call.
However, in certain circumstances, the CVM may require that
the first
notice be published 30 days in advance of the meeting.
The
shareholders’ meetings of Cosan take place at the headquarters in the City
of Piracicaba, State of São Paulo, Brazil. Brazilian corporate law allows
the shareholders of Cosan to hold meetings outside the headquarters
in the
event of force majeure, provided that the meetings are held in
the City of Piracicaba and the relevant notice includes a clear
indication
of the place where the meeting will occur.
The
board of directors of Cosan may call a shareholders’ meetings.
Shareholders’ meetings may also be called by: (i) any shareholder, if the
board of directors fails to call a shareholders’ meeting within 60 days
after the date they were required to do so under applicable
laws and
Cosan’s by-laws; (ii) shareholders holding at least 5% of the capital
stock of Cosan, if the board of directors fails to call a meeting
within
eight days after receipt of a request to call the meeting by
those
shareholders indicating the proposed agenda; (iii) shareholders
holding at
least 5% of Cosan’s shares if the board of directors fails to call a
meeting within eight days after receipt of a request to call
the meeting
for the creation of the fiscal council; and (iv) the fiscal
council, if
the board of directors fails to call an annual shareholders’ meeting. The
fiscal council may also call a special shareholders’ meeting, if it
believes that there are important or urgent matters to be
addressed.
|
Bermuda
law requires that shareholders be given at least 5 days’ notice of a
general meeting but the accidental omission to give notice
to, or the
non-receipt of a notice by any person entitled to receive notice,
does not
invalidate the proceedings at the meeting.
Our
bye-laws provide that at least 10 days’ notice of an annual general
meeting or a special general meeting must be given to each
shareholder
entitled to vote at such meeting. This notice requirement is
subject to
the ability to hold such meeting on shorter notice if notice
is served
pursuant to Bermuda law in the manner provided by the Companies
Act 1981.
Any action required to be taken at a meeting of shareholders
(except in
the case of removal of auditors or directors) may be taken
without a
meeting and without a vote if consent (or consents) in writing,
setting
forth the actions so taken, is (or are) signed by the holders
of issued
and outstanding shares of the company, their proxy, or corporate
representative representing the percentage of votes required
if the
resolution had been voted on at a meeting of the
shareholders.
|
||
Mandatory
Public Tender Offer by a Majority Shareholder
|
Pursuant
to the Brazilian corporate law, the CVM regulations, and the
Novo
Mercado rules, a mandatory public tender offer for the acquisition
of
Cosan’s shares is required in the following situations:
(i) delisting
from the Novo Mercado: the controlling shareholder of Cosan must
effect a mandatory tender offer for the acquisition of all
shares held by
the remaining shareholders of Cosan if of Cosan delists from
the Novo
|
Bermuda
legislation provides certain compulsory acquisition procedures
in sections
102 and 103 of the Companies Act 1981. Pursuant to section
102 of the
Companies Act 1981 an acquiring entity may compel the acquisition
of
shares of shareholders dissenting to a scheme of arrangement
or contract
involving the transfer of shares or any class of shares of
the company
where the scheme of arrangement or contract has received the
approval of
90% in value of the shareholders of
|
Rights
of Holders of
Cosan
Common Shares
|
Rights
of Holders of
the
Company Common
Shares
|
Mercado.
The acquisition price shall be the economic value of the tendered
shares
determined in accordance with an appraisal report prepared
by a
specialized firm. There are specific requirements for the appointment
of
the appraisal firm and the applicable laws and regulations
also allow the
review of the economic value appraised in certain
circumstances;
(ii) delisting
of Cosan’s shares: Cosan or its controlling shareholder must effect a
mandatory tender offer for the acquisition of all shares held
by the
remaining shareholders of Cosan for purposes of delisting Cosan’s shares
and cancelling its registration as a publicly-held company.
The
acquisition price shall reflect the fair value of Cosan’s shares evaluated
in accordance with the specific requirements established by
applicable
laws and regulations. Shareholders holding at least ten per
cent (10%) of
outstanding shares may request that management call a special
general
meeting with holders of outstanding shares in order to determine
a new
appraisal, based on the same or different criteria from those
originally
adopted, for purposes of determining the valuation of the company
as
provided;
(iii) increase
of the interest held by the controlling shareholder: in the event of
the acquisition by the controlling shareholder of additional
shares in
Cosan (i) representing more than 1/3 of its free float; or
(ii) which may
affect the liquidity of Cosan’s shares as determined by the CVM, the
controlling shareholder of Cosan must effect a mandatory tender
offer for
acquisition of all shares held by the remaining shareholders
of Cosan. The
acquisition price shall reflect the fair price of Cosan’s shares evaluated
in accordance with the specific requirements established by
the applicable
laws and regulations. Shareholders holding at least ten per
cent (10%) of
outstanding shares may request that the officers call a special
general
meeting with holders of outstanding shares in order to determine
a new
appraisal, based on the same or different criteria from those
originally
adopted, for purposes of determining the valuation of the company
as
provided; and
(iv) change
of control: a buyer of a controlling interest of Cosan must effect
a
mandatory tender offer for the acquisition of Cosan’s remaining shares in
the event of an acquisition of control of Cosan, providing
to the
remaining shareholders of Cosan the same conditions that applied
to the
acquisition of the controlling
|
the
company. The acquiring entity may, within two months of obtaining
the
requisite 90% approval from the shareholders of the company,
give notice
to any dissenting shareholders that it desires to acquire such
dissenting
shareholders shares. A dissenting shareholder who receives
notice has the
ability to apply to court for relief within one month after
the receipt of
the notice.
Pursuant
to section 103 of the Companies Act 1981 where an acquirer
supported by
not less than 95% of the shares or class of shares of the company
can
compel the remaining minority shareholders to sell their interest
to the
acquirer provided that the terms offered are the same for all
holders of
shares whose acquisition is involved. Under this procedure
the acquirer is
only required to give notice to the remaining shareholders
of the
intention to acquire their shares and once notice has been
received the
acquirer is bound to acquire the shares on the terms set out
in the notice
unless the remaining minority shareholders apply to the courts
for an
appraisal of the value of their
shares. |
Rights
of Holders of
Cosan
Common Shares
|
Rights
of Holders of
the
Company Common
Shares
|
interest.
The
mandatory public tender offers described above are subject
to several
specific rules and requirements. The description above is merely
a general
description and does not intend to provide a detailed description
of the
procedures and rules to which Cosan and its controlling shareholder
are
subject with respect to mandatory public tender
offers.
|
||||
Transfer
Rights
|
The
transfer of any of Cosan’s shares occurs upon the an entry, made by the
Depositary Institution of Cosan’s shares on its books, at the expense of
the transferor and to the credit of the transferee’s account, taking into
account a written order by the transferor or a judicial order,
which will
remain in the Institution’s care.
|
Our
board of directors may, in its discretion and without assigning
any reason
therefor, refuse to register the transfer of any share that
is not fully
paid. Our board of directors may also refuse to recognize an
instrument of
transfer of a share unless it is accompanied by the relevant
share
certificate and other evidence of the transferor’s rights to make the
transfer, as our board of directors shall reasonably require.
Any transfer
of beneficial ownership of the class B series 1 common shares
or class B
series 2 common shares not registered with the company will
be null and
void.
Under
our bye-laws each class B common share is convertible into
one class A
common share at the option of the holder. Each class B common
share will
automatically convert into one class A common share if the
aggregate
outstanding class B common series 1 shares represent less than
45% of the
company’s voting power in respect of the issued and outstanding share
capital in the company or, upon particular transfers of control
of such
class B common shares. Each class B series 2 common share will
automatically convert into one class A common share in the
event that all
of the class B series 1 shares are converted into class A common
shares
pursuant to the bye-laws.
|
||
Modification
of Rights
|
Pursuant
to Brazilian corporate law, the number of Cosan’s shares and their
respective value may only be modified in the case of an alteration
of its
share capital, its monetary expression, splitting or grouping
of shares,
redemption, refund shares or the cancellation of shares issued.
Except for
the redemption and refund of shares, which, according to Cosan’s by-laws
must be approved by the Board, all other measures to modify
the rights of
Cosan’s shares must be approved at a General Shareholders’
Meeting.
|
Pursuant
to our bye-laws rights attaching to the class A common shares,
class B
common series 1 common shares and class B series 2 common shares
may be
modified with the consent of the holders of not less than 66
2/3
% of the
aggregate voting power of the issued shares in the company
and with the
consent of the holders of not less than 75% of the aggregate
voting power
of the issued shares of the class or series whose rights are
being
modified. The quorum for any general meeting held for the purpose
of
modifying the rights of the shares of the company is two persons
present
or by proxy holding one third of the voting power of the shares
of the
relevant class or
series
(providing that where one class or series of share has only
one
shareholder, one shareholder present in person or proxy will
constitute
the necessary quorum). Each holder of shares of the relevant
|
Rights
of Holders of
Cosan
Common Shares
|
Rights
of Holders of
the
Company Common
Shares
|
class or series is entitled on poll when voting as a class or series to one vote for every such share held by him. | ||||
Amendment
of Organizational Documents
|
According
to Cosan’s by-laws, any alteration in the corporate purpose or in the
organizational documents must be approved by the General Shareholders’
Meeting, which must follow the procedure mentioned in the section
referring to “Voting”, above. It should be noted, however, that as Cosan
is a listed in the Novo Mercado segment of BOVESPA, its
organizational documents must comply with the requirements
of the Novo
Mercado Listing Rules.
|
Our
bye-laws provide that in the case of rescission, alteration
or amendment
to the bye-laws relating to interpretation, rights of shares,
modification
of rights, indemnity of directors and officers, amalgamations
and other
business combinations, specific transactions involving interested
shareholders, discontinuation into another jurisdiction, tag
along rights
and amendment or alteration over the bye-laws, the required
resolutions
must include the affirmative vote of at least 662/3%
of our
directors then in office and holders of at least 662/3%
of
the class A common shares and
at least a majority of the class B common shares then in issue
entitling
the holder to attend and vote on the resolution with holders
of each class
voting separately.
In
the case of rescission, alteration of amendment to the bye-laws
relating
to the transmission of shares upon death of the holder of class
B series 1
shares, election of directors, the removal of directors, the
increase of
share capital and the alteration of share capital, the requisite
affirmative votes are the majority of the directors in office
and the
holders of a majority of each of the class A common shares
and the class B
common share then in issue entitling the holder to attend and
vote on the
resolution, with holders of each class voting separately.
Under
Bermuda law, the holders of an aggregate of not less than 20%
in par value
of the company’s issued and outstanding share capital or any class
thereof, or the holders of the aggregate of not less than 20%
of the
company’s debentures entitled, object to amendments to the memorandum
of
association have the right to apply to a Bermuda court for
annulment of
any amendment to the memorandum of association adopted by the
shareholders
at any general meeting, other than an amendment which alters
or reduces a
company’s share capital or changes its name as provided in the Companies
Act 1981. Where such application is made, the amendment only
becomes
effective to the extent that it is confirmed by the Bermuda
court. An
application for annulment of an amendment of the memorandum
of association
must be made within 21 days after the date on which the resolution
altering the company’s memorandum of association has passed and may be
made on behalf of persons entitled to make the
|
Rights
of Holders of
Cosan
Common Shares
|
Rights
of Holders of
the
Company Common
Shares
|
application by one or more of their number as they may appoint in writing for the purpose. No application may be made by shareholders voting in favor of the amendment. | ||||
Appraisal
Rights and Shareholders’ Suits
|
Pursuant
to Brazilian corporate law, the company, subject to deliberation
in the
shareholders’ meeting, may file an action against the directors and
officers for losses incurred by the company on account of (i)
negligence
or willful misconduct by the directors and officers, or (ii)
violation of
the law or of the Company’s by-laws on behalf of the directors and
officers.
Any
shareholder may file such action if is not brought within three
months
from the shareholders’ meeting. If the general meeting does not approve
the filing of the action, it may still be brought by shareholders
representing at least 5% of a company’s share capital.
|
Class
actions and derivative actions are not generally available
to shareholders
under Bermuda law. Bermuda courts may permit in certain circumstances
a
shareholder to commence an action in the name of a company
to remedy a
wrong to the company where the challenged act would allegedly
be beyond
the power of the company or illegal. In addition, consideration
would be
given by a Bermuda court to acts that would allegedly constitute
a fraud
against the minority shareholders or for instance, where an
act requires
the approval of a greater percentage of the company’s shareholders’ voting
power than that which actually approved it.
When
the affairs of the company are being conducted in a manner
which is
oppressive or prejudicial to the interests of some or all of
the
shareholders, one or more shareholder may apply to a Bermuda
court, which
may make such an order as it sees fit, including an order regulating
the
conduct of the company’s affairs in the future or ordering the purchase of
the shares by any shareholder by other shareholders or by the
company.
|
||
Inspection
of Records
|
According
to Brazilian law and CVM regulations, the public documents
of a company
are available through the CVM’s website and the investor relations
department of the company. These documents include the company’s by-laws
and any alterations thereto, the notice and the minutes of
shareholders’
meetings, minutes of the board of directors’ meetings, as well as the
company’s audited annual and quarterly financial statements. A company
is
required to keep its registration data current, updating its
records in up
to five days from the occurrence of any alteration. Cosan’s records are
publicly available through CVM’s website (www.cvm.gov.br) and Cosan’s
Investor Relations department.
Furthermore,
any person may obtain certified copies of the entries made
in the Shares
Registry Book, the Registered Shares Transfer Book, the Registered
Founder
Shares Registry Book and the Registered Founder Shares Transfer
Book, as
long as it is necessary for the defense of his/her rights or
the
clarification of situations of personal interest or interest
of any
shareholder or the capital market. A company is authorized
to charge for
the cost of such copies and should the company deny the request
for
|
Bermuda
law provides the general public with the right to inspect the
public
documents of a company available at the Registrar of Companies
in Bermuda.
These documents include the company’s memorandum of association and any
alteration to its memorandum of association. The shareholders
have the
additional right to inspect the bye-laws of the company, minutes
of
general meetings (copies of which are held at the registered
office of the
company) and the company’s audited financial statements, which must be
presented at the annual general meeting unless waived in accordance
with
the provisions of the Companies Act 1981. The register of shareholders
is
required to be open for inspection for not less than two hours
in any
business day (subject to the ability of a company to close
the register of
shareholders for not more than thirty days in a year). A company
is
required to maintain its share register in Bermuda, but may
subject to the
provisions of the Companies Act 1981, establish a branch register
outside
Bermuda. A company is required to keep at its registered office
a register
of directors and officers that is open for inspection for not
less than
two hours in any
|
Rights
of Holders of
Cosan
Common Shares
|
Rights
of Holders of
the
Company Common
Shares
|
such copies, this decision is subject to appeal to the CVM. | business day by members of the general public without charge. Bermuda law does not, however, provide a general right for shareholders to inspect or obtain copies of any other corporate records. | |||
Directors
and Officers’ Indemnity
|
Brazilian
corporate law provides that a director or officer is not personally
liable
for the obligations it contracts on behalf of the company and
in virtue of
its regular management. It is, however, liable for losses when
they arise:
(i) within his or her attribution due to negligence or willful
misconduct;
or (ii) in violation of law or the company’s by-laws. Cosan’s by-laws do
not provide any indemnity for directors and officers’
liability.
|
Bermuda
law provides that a company may in its bye-laws or in any contract
or
arrangement indemnify a director or officer in respect of any
liability
attaching to him as a result of any negligence, default, breach
of duty or
breach of trust, except in the case of fraud or dishonesty,
of which the
director may be guilty in relation to the company or any subsidiary
thereof.
Our
bye-laws provide that the directors and officers of the company
are
indemnified in respect of their actions and omissions, except
in case of
fraud or dishonesty.
|
||
Directors’
Interests
|
Pursuant
to Brazilian corporate law, a director is prohibited from intervening
in
or deliberating about any transaction which has conflicting
interests with
that of the company. The director with conflicting interests
must notify
the Board of directors of the nature and scope of his or her
impediment,
which must then be registered in the minutes of the meeting.
Further,
Brazilian law provides that a director can only contract with
the company
under arms’ length conditions, observing principles of equity and
reasonableness.
|
Our
bye-laws provide that a director is entitled to be counted
in the quorum
of any board meeting provided that he discloses to the board
any direct or
indirect interest in any contract or arrangement. However,
the director
may not vote in respect of any such contract or arrangement
in which he is
interested.
|
||
Loans
to Directors
|
Brazilian
corporate law provides that directors and officers of a company
must seek
prior approval from the General Shareholders’ Meeting or the board of
directors in order to borrow resources or assets from such
company.
|
Bermuda
law provides that a director (including the spouse or children
of the
director, or any company (other than the holding company or
a subsidiary
company of the company giving the loan) of which such director,
spouse or
children own or control, directly or indirectly, more than
20% of the
total capital or loan debt) cannot borrow money from the company
without
the consent of not less than 90% of shareholders having the
right to vote
at any general meeting of the
shareholders.
|
·
|
we
are a holding company, and therefore, our ability to pay dividend
will
depend on our ability to receive distributions from our subsidiaries,
particularly our subsidiary Cosan. See “Risk Factors – Risks Related to
the Corporate Restructuring and the Exchange Offer – As a holding company,
we may face limitations on our ability to receive distributions
from our
subsidiaries” and “Cosan’s Dividend
Policy”;
|
·
|
our
subsidiaries may become subject to covenants restricting their
ability to
distribute dividends under credit facilities, term loans or
other
indebtedness;
|
·
|
any
imposition of restrictions on conversions and remittances by
the Brazilian
government could hinder or prevent us from converting into
U.S. dollars or
other foreign currencies and remitting abroad dividends of
our Brazilian
subsidiaries. See “Risk Factors – Risks Related To the Corporate
Restructuring and the Exchange Offer – As a holding company, we may face
limitations on our ability to receive distributions from our
subsidiaries”;
|
·
|
our
shareholders have no contractual or other legal rights to dividends
pursuant to Bermuda law; and
|
·
|
we
may not have sufficient cash to pay dividends due to changes
in our
operating earnings, working capital requirements and anticipated
cash
needs.
|
Fiscal
Year
|
Total
Dividend Distribution
|
|||
(in
millions of US$)
|
||||
2003
|
US$ |
1.8
|
||
2004
|
1.0
|
|||
2005
|
0.6
|
|||
2006
|
—
|
|||
2007
|
37.3
|
·
|
certain
financial institutions;
|
·
|
insurance
companies;
|
·
|
dealers
in securities;
|
·
|
persons
holding common shares of Cosan or the new common shares as
part of a
hedge, “straddle”, integrated transaction or similar
transactions;
|
·
|
persons
whose functional currency for U.S. federal income tax purposes
is not the
U.S. dollar;
|
·
|
partnerships
or other entities classified as partnerships for U.S. federal
income tax
purposes;
|
·
|
persons
subject to the alternative minimum
tax;
|
·
|
tax-exempt
organizations; or
|
·
|
persons
that own or are deemed to own five percent or more of both
our voting
stock and the total value of our
stock.
|
·
|
an
individual citizen or resident of the United
States;
|
·
|
a
corporation, or other entity taxable as a corporation, created
or
organized in or under the laws of the United States or any
political
subdivision thereof; or
|
·
|
an
estate or trust the income of which is subject to U.S. federal
income
taxation regardless of its source.
|
Filing
fees
|
|
Legal
fees(1)
|
|
Accounting
|
|
Printing
costs
|
|
Other
|
|
Total
|
(1)
|
Includes
legal fees in both the U.S. and
Brazil.
|
·
|
fulfills
all formalities required for its enforceability under the laws
of the
United States;
|
·
|
is
issued by a court of competent jurisdiction after proper service
of
process on the parties, which service must be in accordance
with Brazilian
law if made in Brazil, or after sufficient evidence of our
absence has
been given, as established pursuant to applicable
law;
|
·
|
is
not subject to appeal;
|
·
|
is
for payment of a determined sum of
money;
|
·
|
is
authenticated by a Brazilian diplomatic office in the United
States and is
accompanied by a sworn translation into Portuguese;
and
|
·
|
is
not against Brazilian public policy, good morals or national
sovereignty
(as set forth in Brazilian law).
|
Cosan
Limited
|
|
Audited
Consolidated Financial Statements
|
|
Report
of Independent Registered Public Accounting
Firm
|
F-2
|
Consolidated
Balance Sheets at April 30, 2007 and
2006
|
F-3
|
Consolidated
Statements of Operations for Years Ended April 30, 2007, 2006
and
2005
|
F-5
|
Consolidated
Statements of Shareholders’ Equity and Comprehensive Income for Years
Ended April 30, 2007, 2006 and 2005
|
F-6
|
Consolidated
Statements of Cash Flows for Years Ended April 30, 2007, 2006
and
2005
|
F-7
|
Notes
to the Consolidated Financial
Statements
|
F-8
|
Cosan
Limited
|
|
Unaudited
Condensed Consolidated Financial Statements
|
|
Condensed
Consolidated Balance Sheets at October 31, 2007 (Unaudited)
and April 30,
2007
|
F-38
|
Condensed
Consolidated Statements of Income for the Six-Month Periods
Ended October
31, 2007 and 2006 (Unaudited)
|
F-40
|
Condensed
Consolidated Statements of Shareholders’ Equity for the Six-Month Period
Ended October 31, 2007 (Unaudited)
|
F-41
|
Condensed
Consolidated Statements of Cash Flows for the Six-Month Periods
Ended
October 31, 2007 and 2006 (Unaudited)
|
F-42
|
Notes
to the Condensed Consolidated Financial Statements (Unaudited)
October 31,
2007
|
F-43
|
São
Paulo, Brazil
August
17, 2007
|
ERNST
& YOUNG
Auditores
Independentes S.S.
CRC2SP015199/O-8
|
/s/ Luiz Carlos Nannini | |
Luiz
Carlos Nannini
Accountant
CRC 1SP171638/O-7
|
2007
|
2006
|
|||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
316,542
|
29,215
|
||||||
Restricted
cash
|
17,672
|
62,996
|
||||||
Marketable
securities
|
281,879
|
368,838
|
||||||
Trade
accounts receivable, less allowances: 2007—4,013;
2006—2,343
|
55,206
|
101,762
|
||||||
Inventories
|
247,480
|
187,174
|
||||||
Advances
to suppliers
|
103,961
|
63,526
|
||||||
Deferred
income taxes
|
—
|
74,755
|
||||||
Other
current assets
|
116,763
|
72,049
|
||||||
1,139,503
|
960,315
|
|||||||
Property,
plant, and equipment, net
|
1,194,050
|
1,008,052
|
||||||
Goodwill
|
491,857
|
497,865
|
||||||
Intangible
assets, net
|
93,973
|
98,935
|
||||||
Accounts
receivable from Federal Government
|
156,526
|
—
|
||||||
Other
non-current assets
|
177,460
|
126,585
|
||||||
2,113,866
|
1,731,437
|
|||||||
Total
assets
|
3,253,369
|
2,691,752
|
||||||
Liabilities
and shareholders’ equity
|
||||||||
Current
liabilities:
|
||||||||
Trade
accounts payable
|
55,938
|
96,552
|
||||||
Advances
from customers
|
24,275
|
37,888
|
||||||
Taxes
payable
|
57,543
|
39,991
|
||||||
Salaries
payable
|
31,109
|
23,801
|
||||||
Current
portion of long-term debt
|
36,076
|
46,576
|
||||||
Derivative
financial instruments
|
9,779
|
133,376
|
||||||
Dividends
payable
|
37,261
|
—
|
||||||
Other
liabilities
|
22,238
|
18,932
|
||||||
274,219
|
397,116
|
|||||||
Long-term
liabilities:
|
||||||||
Long-term
debt
|
1,342,496
|
941,741
|
||||||
Estimated
liability for legal proceedings and labor claims
|
379,191
|
462,248
|
||||||
Taxes
payable
|
106,897
|
152,446
|
||||||
Advances
from customers
|
24,333
|
41,595
|
||||||
Deferred
income taxes
|
141,587
|
81,633
|
||||||
Other
long-term liabilities
|
47,484
|
33,083
|
||||||
2,041,988
|
1,712,746
|
|||||||
Minority
interest in consolidated subsidiaries
|
463,551
|
287,644
|
2007
|
2006
|
|||||||
Shareholders’
equity:
|
||||||||
Common
stock, no par value. Authorized 96,332,044 shares; issued
and outstanding
96,332,044 shares in 2007 and 2006
|
963
|
963
|
||||||
Additional
paid-in capital
|
354,022
|
349,231
|
||||||
Accumulated
other comprehensive income
|
36,696
|
19,819
|
||||||
Accumulated
income (loss)
|
81,930
|
(75,767 | ) | |||||
Total
shareholders’ equity
|
473,611
|
294,246
|
||||||
Total
liabilities and shareholders’ equity
|
3,253,369
|
2,691,752
|
2007
|
2006
|
2005
|
||||||||||
Net
sales
|
1,679,050
|
1,096,614
|
644,376
|
|||||||||
Cost
of goods sold
|
(1,191,251 | ) | (796,295 | ) | (456,567 | ) | ||||||
Gross
profit
|
487,799
|
300,319
|
187,809
|
|||||||||
Selling
expenses
|
(133,807 | ) | (97,848 | ) | (57,796 | ) | ||||||
General
and administrative expenses
|
(121,094 | ) | (71,998 | ) | (39,981 | ) | ||||||
Operating
income
|
232,898
|
130,473
|
90,032
|
|||||||||
Other
income (expenses):
|
||||||||||||
Financial
income
|
555,550
|
186,469
|
76,753
|
|||||||||
Financial
expenses
|
(266,187 | ) | (413,050 | ) | (115,910 | ) | ||||||
Other
|
16,284
|
(5,457 | ) | (16,367 | ) | |||||||
Income
(loss) before income taxes, equity in income of affiliates
and minority
interest
|
538,545
|
(101,565 | ) |
34,508
|
||||||||
Income
taxes (expense) benefit
|
(188,818 | ) |
29,742
|
(14,859 | ) | |||||||
Income
(loss) before equity in income of affiliates and minority
interest
|
349,727
|
(71,823 | ) |
19,649
|
||||||||
Equity
in income of affiliates
|
(38 | ) |
1,584
|
3,423
|
||||||||
Minority
interest in net income of subsidiaries
|
(172,989 | ) |
33,115
|
(11,495 | ) | |||||||
Net
income (loss)
|
176,700
|
(37,124 | ) |
11,577
|
||||||||
Earnings
(loss) per share:
|
||||||||||||
Basic
and diluted
|
1.83
|
(0.35 | ) |
0.10
|
||||||||
Weighted
number of shares outstanding
|
||||||||||||
Basic
and Diluted
|
96,745,329
|
106,554,279
|
119,445,143
|
Capital
Stock
|
||||||||||||||||||||||||
Class
B
Common
shares
number
|
Class
B
Common
shares
amount
|
Additional
paid-in
capital
|
Accumulated
Income
(loss)
|
Accumulated
other
comprehensive
income
(loss)
|
Total
shareholders’
equity
|
|||||||||||||||||||
Balances
at May 1, 2004
|
1,000
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Contribution
of 51% of Cosan S.A. Equity
|
96,331,044
|
963
|
132,508
|
(17,320 | ) | (47,513 | ) |
68,638
|
||||||||||||||||
Issuance
of common shares for shares of Santa Bárbara Agrícola S.A.
|
—
|
—
|
11,799
|
—
|
—
|
11,799
|
||||||||||||||||||
Shares
issued in connection with contribution of investments in
subsidiaries at
carryover basis
|
—
|
—
|
69
|
—
|
—
|
69
|
||||||||||||||||||
Issuance
of common shares for cash
|
—
|
—
|
3
|
—
|
—
|
3
|
||||||||||||||||||
Dividends
|
—
|
—
|
—
|
(327 | ) |
—
|
(327 | ) | ||||||||||||||||
Legal
reorganization
|
—
|
—
|
—
|
(8,172 | ) |
—
|
(8,172 | ) | ||||||||||||||||
Conversion
of preferred to common stock
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Net
income
|
—
|
—
|
—
|
11,577
|
—
|
11,577
|
||||||||||||||||||
Currency
translation adjustment
|
—
|
—
|
—
|
—
|
13,483
|
13,483
|
||||||||||||||||||
Balances
at April 30, 2005
|
96,332,044
|
963
|
144,379
|
(14,242 | ) | (34,030 | ) |
97,070
|
||||||||||||||||
Issuance
of common shares for cash
|
—
|
—
|
43,631
|
—
|
—
|
43,631
|
||||||||||||||||||
Spin—off
of investments in subsidiary distributed to owners
|
—
|
—
|
(47,156 | ) | (13,346 | ) |
—
|
(60,502 | ) | |||||||||||||||
Capitalization
of retained earnings of new shares
|
—
|
—
|
11,054
|
(11,054 | ) |
—
|
—
|
|||||||||||||||||
Issuance
of common shares for cash
|
—
|
—
|
169,038
|
—
|
—
|
169,038
|
||||||||||||||||||
Issuance
of common shares for cash
|
—
|
—
|
26,328
|
—
|
—
|
26,328
|
||||||||||||||||||
Share
based compensation
|
—
|
—
|
1,956
|
—
|
—
|
1,956
|
||||||||||||||||||
Net
loss
|
—
|
—
|
—
|
(37,124 | ) |
—
|
(37,124 | ) | ||||||||||||||||
Currency
translation adjustment
|
—
|
—
|
—
|
—
|
53,849
|
53,849
|
||||||||||||||||||
Balances
at April 30, 2006
|
96,332,044
|
963
|
349,231
|
(75,767 | ) |
19,819
|
294,246
|
|||||||||||||||||
Exercise
of stock option
|
—
|
—
|
1,633
|
—
|
—
|
1,633
|
||||||||||||||||||
Share
based compensation
|
—
|
—
|
3,158
|
—
|
—
|
3,158
|
||||||||||||||||||
Dividends
|
—
|
—
|
—
|
(19,003 | ) |
—
|
(19,003 | ) | ||||||||||||||||
Net
income
|
—
|
—
|
—
|
176,700
|
—
|
176,700
|
||||||||||||||||||
Currency
translation adjustment
|
—
|
—
|
—
|
—
|
16,877
|
16,877
|
||||||||||||||||||
Balances
at April 30, 2007
|
96,332,044
|
963
|
354,022
|
81,930
|
36,696
|
473,611
|
||||||||||||||||||
2007
|
2006
|
2005
|
||||||||||
Cash
flow from operating activities:
|
||||||||||||
Net
(loss) income for the year
|
176,700
|
(37,124 | ) |
11,577
|
||||||||
Adjustments
to reconcile net income to cash provided by operating
activities
|
||||||||||||
Depreciation
and amortization
|
187,367
|
98,632
|
41,732
|
|||||||||
Deferred
income and social contribution taxes
|
150,242
|
(53,001 | ) | (2,314 | ) | |||||||
Interest,
monetary and exchange variation
|
116,284
|
24,275
|
8,092
|
|||||||||
Minority
interest in net income of subsidiaries
|
172,989
|
(33,115 | ) |
11,495
|
||||||||
Accounts
receivable from Federal Government
|
(149,121 | ) |
—
|
—
|
||||||||
Others
|
(27,669 | ) |
15,942
|
9,826
|
||||||||
Decrease/increase
in operating assets and liabilities
|
||||||||||||
Trade
accounts receivable, net
|
48,226
|
(35,412 | ) | (18,525 | ) | |||||||
Inventories
|
(54,108 | ) |
30,920
|
(20,704 | ) | |||||||
Advances
to suppliers
|
(38,707 | ) | (10,679 | ) | (1,920 | ) | ||||||
Trade
accounts payable
|
(43,239 | ) |
28,676
|
14,755
|
||||||||
Derivative
financial instruments
|
(155,028 | ) |
83,538
|
(16,020 | ) | |||||||
Taxes
payable
|
(36,592 | ) | (37,640 | ) | (9,129 | ) | ||||||
Other
assets and liabilities, net
|
(63,393 | ) |
11,025
|
(21,248 | ) | |||||||
Net
cash provided by operating activities
|
283,951
|
86,037
|
7,617
|
|||||||||
Cash
flows from investing activities:
|
||||||||||||
Restricted
cash
|
47,037
|
(62,565 | ) |
5,088
|
||||||||
Marketable
securities
|
96,987
|
(366,856 | ) |
9,507
|
||||||||
Acquisition
of property, plant and equipment
|
(356,225 | ) | (135,152 | ) | (68,825 | ) | ||||||
Acquisitions,
net of cash acquired
|
(39,409 | ) | (260,878 | ) | (8,454 | ) | ||||||
Net
cash used in investing activities
|
(251,610 | ) | (825,451 | ) | (62,684 | ) | ||||||
Cash
flows from financing activities:
|
||||||||||||
Proceeds
from issuance of common stock
|
3,201
|
383,071
|
23,275
|
|||||||||
Dividends
paid
|
—
|
—
|
(642 | ) | ||||||||
Additions
of long-term debts
|
424,605
|
899,273
|
538,995
|
|||||||||
Payments
of long-term debts
|
(204,959 | ) | (556,486 | ) | (528,076 | ) | ||||||
Net
cash provided by financing activities
|
222,847
|
725,858
|
33,552
|
|||||||||
Effect
of exchange rate changes on cash and cash equivalents
|
32,139
|
29,611
|
12,764
|
|||||||||
Net
increase (decrease) in cash and cash equivalents
|
287,327
|
16,055
|
(8,751 | ) | ||||||||
Cash
and cash equivalents at beginning of year
|
29,215
|
13,160
|
21,911
|
|||||||||
Cash
and cash equivalents at end of year
|
316,542
|
29,215
|
13,160
|
|||||||||
Supplemental
cash flow information
|
||||||||||||
Cash
paid during the year for interest
|
74,567
|
61,154
|
5,275
|
|||||||||
Income
tax
|
12,760
|
17,066
|
—
|
|||||||||
Non-cash
transactions:
|
||||||||||||
Acquisitions
paid with equity
|
—
|
100,900
|
—
|
Class
B
Common
shares
number
|
Class
B
Common
shares
amount
|
Additional
paid-in
capital
|
Accumulated
income
(loss)
|
Accumulated
other
comprehensive
loss
|
Total
shareholders'
equity
|
|||||||||||||||||||
As
stated
|
||||||||||||||||||||||||
Cosan
Limited
|
1,000
|
–
|
–
|
–
|
–
|
–
|
||||||||||||||||||
Cosan
S.A. Indústria e Comércio
|
–
|
149,963
|
111,746
|
(33,961 | ) | (93,163 | ) |
134,585
|
||||||||||||||||
Contribution
of 51% of Cosan S.A. equity as of April 30, 2004
|
96,331,044
|
76,481
|
56,990
|
(17,320 | ) | (47,513 | ) |
68,638
|
||||||||||||||||
Reclassification
from common stock
|
–
|
(75,518 | ) |
75,518
|
–
|
–
|
–
|
|||||||||||||||||
As
restated
|
96,332,044
|
963
|
132,508
|
(17,320 | ) | (47,513 | ) |
68,638
|
Ownership
%
|
||||||||||||||||||||||||
2007
|
2006
|
2005
|
||||||||||||||||||||||
Direct
|
Indirect
|
Direct
|
Indirect
|
Direct
|
Indirect
|
|||||||||||||||||||
Cosan
S.A. Indústria e Comércio
|
51.0 | % |
—
|
51.0 | % |
—
|
51.0 | % |
—
|
|||||||||||||||
Amaralina
Agrícola Ltda.(5)
|
—
|
—
|
—
|
—
|
—
|
50.9 | % | |||||||||||||||||
Cosan
Operadora Portuária S.A.
|
—
|
45.9 | % |
—
|
45.9 | % |
—
|
45.9 | % | |||||||||||||||
Administração
de Participações Aguassanta Ltda.
|
—
|
46.7 | % |
—
|
46.7 | % |
—
|
46.7 | % | |||||||||||||||
Usina
da Barra S.A. Açúcar e Álcool(1)
|
—
|
—
|
—
|
—
|
—
|
48.5 | % | |||||||||||||||||
Agrícola
Ponte Alta S.A.
|
—
|
50.2 | % |
—
|
50.2 | % |
—
|
48.5 | % | |||||||||||||||
Cosan
Distribuidora de Combustíveis Ltda.
|
—
|
50.9 | % |
—
|
50.9 | % |
—
|
50.9 | % | |||||||||||||||
Cosan
S.A. Bioenergia(3)
|
—
|
50.9 | % |
—
|
50.9 | % |
—
|
—
|
||||||||||||||||
Corona
Bioenergia S.A.(3)
|
—
|
50.2 | % |
—
|
—
|
—
|
—
|
|||||||||||||||||
FBA
Bioenergia S.A.(3)
|
—
|
50.2 | % |
—
|
—
|
—
|
—
|
|||||||||||||||||
Barra
Bioenergia S.A.(3)
|
—
|
50.2 | % |
—
|
—
|
—
|
—
|
|||||||||||||||||
Cosan
International Universal Corporation
|
—
|
51.0 | % |
—
|
—
|
—
|
—
|
|||||||||||||||||
Cosan
Finance Limited
|
—
|
51.0 | % |
—
|
—
|
—
|
—
|
|||||||||||||||||
Cosan
S.A. Refinadora de Açúcar(4)
|
—
|
—
|
—
|
—
|
—
|
50.9 | % | |||||||||||||||||
Da
Barra Alimentos Ltda.(3)
|
—
|
50.2 | % |
—
|
50.2 | % |
—
|
—
|
||||||||||||||||
Jump
Participações S.A.(2),(7)
|
—
|
—
|
—
|
51.0 | % |
—
|
—
|
|||||||||||||||||
Mundial
Açúcar e Álcool S.A.(6),(7)
|
—
|
—
|
—
|
51.0 | % |
—
|
—
|
|||||||||||||||||
Alcomira
S.A.(6),(7)
|
—
|
—
|
—
|
51.0 | % |
—
|
—
|
|||||||||||||||||
ABC
125 Participações Ltda.(2),(7)
|
—
|
—
|
—
|
50.9 | % |
—
|
—
|
|||||||||||||||||
ABC
126 Participações Ltda.(2),(7)
|
—
|
—
|
—
|
50.9 | % |
—
|
—
|
|||||||||||||||||
Bonfim
Nova Tamoio—BNT Agrícola Ltda.
|
—
|
50.2 | % |
—
|
50.2 | % |
—
|
—
|
||||||||||||||||
Usina
da Barra S.A. Açúcar e Álcool
|
—
|
50.2 | % |
—
|
50.2 | % |
—
|
—
|
||||||||||||||||
Aguapar
Participações S.A.(2),(7)
|
—
|
—
|
—
|
51.0 | % |
—
|
—
|
|||||||||||||||||
Usina
Açucareira Bom Retiro S.A.(6),(7)
|
—
|
—
|
—
|
51.0 | % |
—
|
—
|
|||||||||||||||||
Grançucar
S.A. Refinadora de Açúcar
|
—
|
51.0 | % |
—
|
—
|
—
|
—
|
|||||||||||||||||
Cosan
Centroeste S.A. Açúcar e Álcool
|
—
|
51.0 | % |
—
|
—
|
—
|
—
|
|
(1)
|
Merged
into Usina da Barra S.A. Açúcar e Álcool—formerly Açucareira Corona
S.A.
|
|
(2)
|
Holding
companies set up in 2006 to allow the acquisition
process.
|
|
(3)
|
Companies
set up in 2006
|
|
(4)
|
Merged
into Cosan
|
|
(5)
|
Assets
distributed to owners in a spin-off
|
|
(6)
|
Companies
acquired through holding companies
|
|
(7)
|
Merged
into Cosan S.A. Indústria e
Comércio
|
2007
|
2006
|
|||||||
Local
currency
|
||||||||
Cash
and bank accounts
|
16,208
|
21,930
|
||||||
Foreign
currency
|
||||||||
Bank
accounts
|
300,334
|
7,285
|
||||||
316,542
|
29,215
|
Notional
amounts
|
Carrying
value asset
(liability)
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Commodities
derivatives
|
||||||||||||||||
Future
contracts:
|
||||||||||||||||
Purchase
commitments
|
—
|
1,378
|
—
|
86
|
||||||||||||
Sell
commitments
|
783,019
|
626,932
|
47,427
|
(73,508 | ) | |||||||||||
Options:
|
||||||||||||||||
Purchased
|
335,715
|
860,785
|
4,502
|
6,728
|
||||||||||||
Written
|
—
|
187,513
|
—
|
(27,175 | ) | |||||||||||
Foreign
exchange derivatives
|
||||||||||||||||
Forward
contracts:
|
||||||||||||||||
Sale
commitments
|
153,824
|
264,810
|
13,274
|
9,841
|
||||||||||||
Swap
agreements
|
328,419
|
383,214
|
(9,779 | ) | (32,693 | ) | ||||||||||
Total
assets
|
65,203
|
16,655
|
||||||||||||||
Total
liabilities
|
(9,779 | ) | (133,376 | ) | ||||||||||||
2007
|
2006
|
|||||||
Finished
goods:
|
||||||||
Sugar
|
5,730
|
12,897
|
||||||
Ethanol
|
8,731
|
9,160
|
||||||
Others
|
1,681
|
453
|
||||||
16,142
|
22,510
|
|||||||
Annual
maintenance cost of growing crops
|
183,157
|
130,316
|
||||||
Other
|
48,181
|
34,348
|
||||||
247,480
|
187,174
|
|
247,480
|
187,174
|
2007
|
2006
|
|||||||
Land
and rural properties
|
157,952
|
149,695
|
||||||
Machinery,
equipment and installations
|
868,775
|
847,980
|
||||||
Vehicles
|
87,840
|
82,026
|
||||||
Furniture,
fixtures and computer equipment
|
20,122
|
15,482
|
||||||
Buildings
|
94,233
|
89,442
|
||||||
Leasehold
improvements
|
93,334
|
83,617
|
||||||
Construction
in progress
|
130,295
|
19,011
|
||||||
Sugarcane
plant development costs
|
373,267
|
248,404
|
||||||
1,825,818
|
1,535,657
|
|||||||
Accumulated
depreciation and amortization
|
(631,768 | ) | (527,605 | ) | ||||
Total
|
1,194,050
|
1,008,052
|
Description
|
FBA
|
Corona
|
Alcomira
and
Mundial
|
Bom
Retiro
|
Total
|
|||||||||||||||
Property,
plant and equipment
|
110,716
|
306,029
|
34,633
|
59,456
|
510,834
|
|||||||||||||||
Intangible
assets
|
19,284
|
35,755
|
7,706
|
3,590
|
66,335
|
|||||||||||||||
Other
assets
|
44,257
|
130,504
|
11,268
|
8,981
|
195,010
|
|||||||||||||||
Long-term
debts including current installments
|
(28,152 | ) | (175,032 | ) | (27,274 | ) | (2,076 | ) | (232,534 | ) | ||||||||||
Other
liabilities
|
(78,126 | ) | (313,115 | ) | (49,348 | ) | (35,237 | ) | (475,826 | ) | ||||||||||
Net
assets (liabilities) acquired (assumed)
|
67,979
|
(15,859 | ) | (23,015 | ) |
34,714
|
63,819
|
|||||||||||||
Purchase
price, net of cash acquired
|
100,900
|
180,582
|
29,218
|
51,078
|
361,778
|
|||||||||||||||
Goodwill
|
32,921
|
196,441
|
52,233
|
16,364
|
297,959
|
2006
|
2005
|
|||||||
Net
sales
|
1,278,361
|
869,564
|
||||||
Net
income (loss)
|
(84,509 | ) | (7,870 | ) | ||||
Basic
EPS per thousand shares (R$)
|
(0.54 | ) | (0.07 | ) | ||||
Diluted
EPS per thousand shares (R$)
|
(0.53 | ) |
—
|
Sugar
segment
|
Ethanol
segment
|
Total
|
||||||||||
Balance
as of April 30, 2005
|
101,182
|
65,466
|
166,648
|
|||||||||
Acquisitions
|
177,487
|
120,472
|
297,959
|
|||||||||
Total
tax benefit applied to reduce goodwill
|
(4,428 | ) | (4,058 | ) | (8,486 | ) | ||||||
Existing
goodwill of equity investment now consolidated
|
2,444
|
4,483
|
6,927
|
|||||||||
Reduction
of equity interest on TEAS
|
—
|
(447 | ) | (447 | ) | |||||||
Effect
of currency translation
|
21,411
|
13,853
|
35,264
|
|||||||||
Balance
as of April 30, 2006
|
298,096
|
199,769
|
497,865
|
|||||||||
Total
tax benefit applied to reduce goodwill
|
(11,647 | ) | (7,898 | ) | (19,545 | ) | ||||||
Effect
of currency translation
|
8,105
|
5,432
|
13,537
|
|||||||||
Balance
as of April 30, 2007
|
294,554
|
197,303
|
491,857
|
Gross
carrying
amount
|
Weighted
average
amortization
period
|
Accumulated
amortization
|
Net
carrying
amount
|
||||||||||
Intangible
assets subject to amortization:
|
|||||||||||||
Favorable
operating leases
|
110,872
|
16 years
|
(20,934 | ) |
89,938
|
||||||||
Trademark
|
5,857
|
15
years
|
(1,822 | ) |
4,035
|
||||||||
Balance
as of April 30, 2007
|
116,729
|
(22,756 | ) |
93,973
|
|||||||||
Intangible
assets subject to amortization:
|
|||||||||||||
Favorable
operating leases
|
107,937
|
16
years
|
(13,311 | ) |
94,626
|
||||||||
Trademark
|
5,702
|
15
years
|
(1,393 | ) |
4,309
|
||||||||
Balance
as of April 30, 2006
|
113,639
|
(14,704 | ) |
98,935
|
Fiscal
Year ending April 30,
|
2007
|
|||
2008
|
7,525
|
|||
2009
|
7,025
|
|||
2010
|
7,002
|
|||
2011
|
7,002
|
|||
2012
|
7,002
|
|||
Thereafter
|
58,417
|
|||
Total
|
93,973
|
2007
|
2006
|
|||||||
Special
State Tax Payment Program State REFIS
|
—
|
30,468
|
||||||
Tax
Recovery Program—Federal REFIS
|
81,626
|
82,455
|
||||||
Special
Tax Payment Program—PAES
|
43,239
|
50,646
|
||||||
Others
|
39,575
|
28,868
|
||||||
164,440
|
192,437
|
|||||||
Current
liabilities
|
(57,543 | ) | (39,991 | ) | ||||
Long-term
liabilities
|
106,897
|
152,446
|
Index
|
Average
annual
interest
rate
|
2007
|
2006
|
||||||||||
Resolution
No. 2471 (PESA)
|
IGP-M
|
3.95 | % |
196,545
|
176,326
|
||||||||
Corn
price
|
12.50 | % |
685
|
445
|
|||||||||
Senior
notes due 2009
|
US Dollar
|
9.0 | % |
200,000
|
200,000
|
||||||||
Senior
notes due 2017
|
US
Dollar
|
7.0 | % |
407,311
|
—
|
||||||||
IFC
|
US
Dollar
|
7.44 | % |
67,677
|
66,879
|
||||||||
Perpetual
notes
|
US
Dollar
|
8.25 | % |
459,035
|
459,585
|
||||||||
Others
|
Various
|
Various
|
47,319
|
85,082
|
|||||||||
1,378,572
|
988,317
|
||||||||||||
Current
liability
|
(36,076 | ) | (46,576 | ) | |||||||||
Long-term
debt
|
1,342,496
|
941,741
|
|||||||||||
Index
|
Average
annual
interest
rate
|
2007
|
2006
|
||||||||||
1,378,572
|
988,317
|
||||||||||||
Current
liability
|
(36,076 | ) | (46,576 | ) | |||||||||
Long-term
debt
|
1,342,496
|
941,741
|
2009
|
9,420
|
|||
2010
|
206,940
|
|||
2011
|
6,855
|
|||
2012
|
6,670
|
|||
2013
|
18,504
|
|||
2014
|
2,009
|
|||
2015
and thereafter
|
1,092,098
|
|||
1,342,496
|
2007
|
2006
|
2005
|
||||||||||
Transactions
involving assets
|
||||||||||||
Remittance
of financial resources, net of receipts and credit
assignments
|
21
|
(44 | ) |
60,396
|
||||||||
Sale
of finished products and services
|
—
|
—
|
4,461
|
|||||||||
Purchase
of finished products and services
|
—
|
—
|
(65,428 | ) | ||||||||
Financial
expenses
|
—
|
—
|
(2,832 | ) | ||||||||
Transactions
involving liabilities
|
||||||||||||
Payment
of financial resources, net of funding
|
(11,469 | ) | (12,213 | ) | (9,969 | ) | ||||||
Sale
of finished products and services
|
—
|
2,076
|
—
|
|||||||||
Financial
expenses
|
—
|
—
|
468
|
|||||||||
Land
leasing
|
11,096
|
8,606
|
1,717
|
2007
|
2006
|
|||||||
Tax
contingencies
|
329,493
|
415,776
|
||||||
Civil
and labor contingencies
|
49,698
|
46,472
|
||||||
379,191
|
462,248
|
2007
|
2006
|
|||||||
Tax
assessment – withholding income tax
|
73,037
|
-
|
||||||
IPI
Premium Credit Resulting from Regulatory Ruling No. 67/98
|
70,860
|
57,972
|
||||||
ICMS—State
value added tax
|
28,964
|
28,836
|
||||||
IAA—Sugar
and Ethanol Institute
|
23,706
|
22,638
|
||||||
IPI—Federal
value-added tax
|
31,921
|
6,575
|
||||||
Others
|
18,574
|
7,802
|
||||||
247,062
|
123,823
|
Balance
at April 30, 2005
|
101,724
|
Provision
|
47,280
|
|||
Acquisitions
|
291,718
|
|||
Foreign
currency translation
|
21,526
|
|||
Balance
at April 30, 2006
|
462,248
|
|||
Provision,
less effect of State VAT amnesty
|
(25,466 | ) | ||
Settlements
|
(70,160 | ) | ||
Effect
of foreign currency translation
|
12,569
|
|||
Balance
at April 30, 2007
|
379,191
|
2007
|
2006
|
2005
|
||||||||||
Net
sales
|
2,106
|
8,086
|
7,993
|
|||||||||
General
and administrative expenses
|
(6,208 | ) |
—
|
—
|
||||||||
Financial
expenses
|
(1,404 | ) |
21,840
|
12,535
|
||||||||
Other
income (expense)
|
(19,960 | ) |
6,317
|
10,791
|
||||||||
Income
taxes
|
—
|
11,037
|
1,597
|
|||||||||
(25,466 | ) |
47,280
|
32,916
|
Product
|
2007
|
2006
|
||||||
Sugar
(in tons)
|
5,459,000
|
3,196,000
|
Harvest period |
2007
|
2006
|
|||||||
2006/2007
|
—
|
1,402,000
|
|||||||
2007/2008
|
2,507,000
|
897,000
|
|||||||
2008/2009
|
2,068,000
|
897,000
|
|||||||
2009/2010
|
884,000
|
—
|
|||||||
Total |
5,459,000
|
3,196,000
|
Harvest period |
2007
|
2006
|
|||||||
2007/2008
|
5,743,069
|
6,187,195
|
|||||||
2008/2009
|
5,259,707
|
5,484,059
|
|||||||
2009/2010
|
5,123,754
|
5,077,070
|
|||||||
2010/2011
|
3,360,875
|
2,901,271
|
|||||||
2011/2012
|
2,578,114
|
2,166,673
|
|||||||
Thereafter |
3,450,395
|
3,322,512
|
|||||||
Total |
25,515,914
|
25,138,780
|
2007
|
2006
|
2005
|
||||||||||
Minimum
rentals
|
53,081
|
46,199
|
26,304
|
|||||||||
Contingent
rentals
|
55,621
|
14,767
|
1,320
|
|||||||||
Rental
expense
|
108,702
|
60,966
|
27,624
|
Fiscal
Year ending April 30,
|
Operating
leases
|
|||
2008
|
56,023
|
|||
2009
|
55,741
|
|||
2010
|
54,694
|
|||
2011
|
52,378
|
Fiscal
Year ending April 30,
|
Operating
leases
|
|||
2012
|
53,043
|
|||
Thereafter
|
339,816
|
|||
Total
minimum lease payments
|
611,695
|
2007
|
2006
|
2005
|
||||||||||
Financial
expenses
|
||||||||||||
Interest(1)
|
(126,876 | ) | (101,117 | ) | (61,354 | ) | ||||||
Monetary
variation—losses
|
(33,210 | ) | (13,212 | ) | (12,325 | ) | ||||||
Foreign
exchange variation—losses
|
20,024
|
(60,415 | ) | (1,141 | ) | |||||||
Results
from derivatives(3)
|
(111,156 | ) | (223,707 | ) | (31,793 | ) | ||||||
CPMF
expenses(4)
|
(11,517 | ) | (10,185 | ) | (4,285 | ) | ||||||
Bank
charges
|
(3,452 | ) | (3,080 | ) | (3,357 | ) | ||||||
Other
expenses
|
—
|
(1,334 | ) | (1,655 | ) | |||||||
(266,187 | ) | (413,050 | ) | (115,910 | ) | |||||||
Financial
income
|
||||||||||||
Interest(1)
|
18,951
|
11,681
|
20,290
|
|||||||||
Monetary
variation—Gains
|
3,282
|
8,552
|
918
|
|||||||||
Foreign
exchange—Gains(2)
|
(629 | ) |
133,054
|
45,718
|
||||||||
Results
from derivatives(3)
|
301,795
|
14,330
|
4,324
|
|||||||||
Earnings
from marketable securities
|
36,759
|
18,154
|
3,133
|
|||||||||
Discounts
obtained
|
43,370
|
418
|
2,370
|
|||||||||
Accounts
receivable from government agency(5)
|
149,121
|
—
|
—
|
|||||||||
Other
income
|
2,901
|
280
|
—
|
|||||||||
555,550
|
186,469
|
76,753
|
||||||||||
Net
amount
|
289,363
|
(226,581 | ) | (39,157 | ) |
|
(1)
|
Includes
results from swap operations.
|
|
(2)
|
Includes
foreign exchange gains on liabilities denominated in foreign
currency.
|
|
(3)
|
Includes
results from transactions in futures, options and forward
contracts.
|
|
(4)
|
Tax
on Financial Transactions—CPMF.
|
|
(5)
|
See
note 13.
|
2007
|
2006
|
2005
|
||||||||||
Income
taxes benefit (expense):
|
||||||||||||
Current
|
(43,346 | ) | (19,946 | ) | (15,179 | ) | ||||||
Deferred
|
(145,472 | ) |
49,688
|
320
|
||||||||
(188,818 | ) |
29,742
|
(14,859 | ) |
2007
|
2006
|
2005
|
||||||||||
(188,818 | ) |
29,742
|
(14,859 | ) |
2007
|
2006
|
2005
|
||||||||||
Income
(loss) before income taxes
|
538,545
|
(101,565 | ) |
34,508
|
||||||||
Income
tax benefit (expense) at statutory rate—34%
|
(183,105 | ) |
34,532
|
(11,733 | ) | |||||||
Increase
(reduction) in income taxes resulting from:
|
||||||||||||
Write-off
of deferred income taxes on tax loss carry forwards related
to merged
affiliates
|
—
|
(3,366 | ) |
—
|
||||||||
Equity
in earnings of affiliates not subject to taxation
|
(12 | ) |
539
|
1,163
|
||||||||
Nondeductible
goodwill amortization
|
(3,758 | ) | (1,381 | ) | (1,422 | ) | ||||||
Nondeductible
donations, contributions and others
|
(1,943 | ) | (582 | ) | (2,867 | ) | ||||||
Income
tax benefit (expense)
|
(188,818 | ) |
29,742
|
(14,859 | ) |
2007
|
2006
|
|||||||
Deferred
tax assets:
|
||||||||
Derivatives
|
54,663
|
|||||||
Net
operating loss carryforwards
|
28,016
|
84,572
|
||||||
Provision
for contingencies
|
82,313
|
97,498
|
||||||
Legal
reorganization
|
8,214
|
11,217
|
||||||
Other
temporary differences
|
33,413
|
17,485
|
||||||
Total
gross deferred tax assets
|
151,956
|
265,435
|
||||||
Current
portion
|
24,788
|
83,193
|
||||||
Non-current
portion
|
127,168
|
182,242
|
||||||
Deferred
tax liabilities:
|
||||||||
Deferred
tax liabilities on assigned value of the net assets and on
temporary
differences
|
297,174
|
272,313
|
||||||
Current
portion
|
28,419
|
8,438
|
||||||
Non-current
portion
|
268,755
|
263,875
|
||||||
Net
deferred tax assets (liabilities):
|
||||||||
Current
portion
|
(3,631 | ) |
74,755
|
|||||
Non-current
portion
|
(141,587 | ) | (81,633 | ) | ||||
(145,218 | ) | (6,878 | ) |
Shareholder
|
Number
of
shares
of
Cosan’s
issue
contributed
as
capital to
Cosan
Limited
|
Interest
held
in
Cosan
|
||||||
Usina
Costa Pinto
|
30,010,278
|
15.89 | % | |||||
Aguassanta
Participações
|
66,321,766
|
35.11 | % | |||||
96,332,044
|
51.00 | % |
Shareholder
|
Class
of shares
|
Number
of shares
|
Interest
|
|||||||
Usina
Costa Pinto
|
B1
|
30,010,278
|
15.29 | % | ||||||
Queluz
Holdings Limited
|
B1
|
66,321,766
|
33.78 | % | ||||||
Aguassanta
Participações
|
A
|
5,000,000
|
2.55 | % | ||||||
Other
shareholders
|
A
|
95,000,000
|
48.39 | % | ||||||
196,332,044
|
100.00 | % |
Grant
date
|
September 22,
2005
|
|||
Grant
price—in U.S. dollars
|
2.93
|
|||
Expected
life (in years)
|
7.5
|
|||
Interest
rate
|
14.52 | % | ||
Volatility
|
34 | % | ||
Dividend
yield
|
1.25 | % | ||
Weighted-average
fair value at grant date—in U.S. dollars
|
5.92
|
Shares
|
Weighted-average
exercise
price
|
|||||||
Outstanding
as of April 30, 2005
|
—
|
—
|
||||||
Grants
of options
|
4,302,780
|
2.93
|
||||||
Exercises
|
—
|
—
|
||||||
Forfeitures
or expirations
|
—
|
—
|
||||||
Outstanding
as of April 30, 2006
|
4,302,780
|
2.93
|
||||||
Grants
of options
|
—
|
—
|
||||||
Exercises
|
(1,132,707 | ) |
3.00
|
|||||
Forfeitures
or expirations
|
(285,060 | ) |
3.00
|
|||||
Outstanding
as of April 30, 2007
|
2,885,013
|
3.00
|
||||||
Shares
exercisable at April 30, 2007
|
—
|
—
|
||||||
Shares
exercisable at April 30, 2006
|
—
|
—
|
|
•
|
Accounts
receivable and trade accounts payable: The carrying amounts reported
in the balance sheet for accounts and notes receivable and
accounts
payable approximate their fair
values.
|
|
•
|
Short-term
and long-term debt and advances from customers: The market values of
loans and financing were calculated based on their present
value
calculated through the future cash flows and using interest
rates
applicable to instruments of similar nature, terms and risks
or based on
the market quotation of these
securities.
|
2007
|
2006
|
|||||||||||||||
Carrying
amount
|
Fair
value
|
Carrying
amount
|
Fair
value
|
|||||||||||||
Financial
assets:
|
||||||||||||||||
Cash
and cash equivalents
|
316,542
|
316,542
|
29,215
|
29,215
|
||||||||||||
Marketable
securities
|
281,879
|
281,879
|
368,838
|
368,838
|
||||||||||||
Financial
liabilities:
|
||||||||||||||||
Short-term
and long-term debt
|
1,378,572
|
1,416,390
|
988,317
|
1,154,625
|
||||||||||||
Advances
from customers
|
48,608
|
45,576
|
79,483
|
80,659
|
2007
|
2006
|
2005
|
||||||||||
Net
sales—Brazilian GAAP
|
||||||||||||
Sugar
|
1,029,592
|
657,846
|
417,795
|
|||||||||
Ethanol
|
551,474
|
378,366
|
198,830
|
|||||||||
Others
|
95,832
|
57,792
|
51,545
|
|||||||||
Total
|
1,676,898
|
1,094,004
|
668,170
|
|||||||||
Reconciling
items to U.S. GAAP
|
||||||||||||
Sugar
|
2,152
|
2,610
|
(1,957 | ) | ||||||||
Ethanol
|
—
|
—
|
(20,426 | ) | ||||||||
Others
|
—
|
—
|
(1,411 | ) | ||||||||
Total
|
2,152
|
2,610
|
(23,794 | ) | ||||||||
Total
net sales
|
1,679,050
|
1,096,614
|
644,376
|
|||||||||
Segment
operating income—Brazilian GAAP
|
||||||||||||
Sugar
|
105,290
|
65,997
|
39,493
|
|||||||||
Ethanol
|
56,396
|
37,959
|
18,795
|
|||||||||
Others
|
9,800
|
5,797
|
4,872
|
|||||||||
Operating
income—Brazilian GAAP
|
171,486
|
109,753
|
63,160
|
2007
|
2006
|
2005
|
||||||||||
Reconciling
items to U.S. GAAP
|
||||||||||||
Depreciation
and amortization expenses
|
||||||||||||
Sugar
|
39,340
|
24,013
|
18,458
|
|||||||||
Ethanol
|
21,072
|
13,811
|
8,784
|
|||||||||
Others
|
3,662
|
2,110
|
2,277
|
|||||||||
64,074
|
39,934
|
29,519
|
||||||||||
Other
adjustments
|
||||||||||||
Sugar
|
(816 | ) | (10,501 | ) |
11,407
|
|||||||
Ethanol
|
(1,573 | ) | (7,559 | ) | (14,280 | ) | ||||||
Others
|
(273 | ) | (1,154 | ) |
226
|
|||||||
Total
sugar
|
143,814
|
79,509
|
69,358
|
|||||||||
Total
ethanol
|
75,895
|
44,211
|
13,299
|
|||||||||
Total
others
|
13,189
|
6,753
|
7,375
|
|||||||||
Operating
income—U.S. GAAP
|
232,898
|
130,473
|
90,032
|
2007
|
2006
|
2005
|
||||||||||
Brazil
|
663,886
|
522,435
|
261,017
|
|||||||||
Europe
|
304,634
|
61,457
|
31,609
|
|||||||||
Middle
East and Asia
|
473,752
|
323,488
|
202,486
|
|||||||||
North
America
|
113,010
|
43,841
|
29,710
|
|||||||||
Latin
America, other than Brazil
|
19,392
|
5,784
|
3,059
|
|||||||||
Africa
|
102,224
|
136,999
|
140,289
|
|||||||||
Total
|
1,676,898
|
1,094,004
|
668,170
|
Market
|
Customer
|
2007
|
2006
|
2005
|
||||||||||
International
|
Sucres
et Denrées
|
33.3 | % | 33.7 | % | 25.8 | % | |||||||
Coimex
Trading Ltd
|
11.5 | % | 11.3 | % | 15.3 | % | ||||||||
S.A.
Fluxo
|
9.5 | % | 0.8 | % |
—
|
|||||||||
Tate
& Lyle International
|
5.3 | % | 10.0 | % | 12.2 | % | ||||||||
Cane
International Corporation
|
2.2 | % | 12.8 | % | 13.3 | % |
Market
|
Customer
|
2007
|
2006
|
2005
|
||||||||||
International
|
Vertical
UK LLP
|
11.6 | % | 9.3 | % | 16.3 | % | |||||||
Kolmar
Petrochemicals
|
6.2 | % | 0.3 | % | 0.7 | % | ||||||||
Alcotra
S.A.
|
—
|
5.8 | % |
—
|
||||||||||
Domestic
|
Shell
Brasil Ltda.
|
14.8 | % | 27.8 | % | 30.4 | % | |||||||
Petrobrás
Distribuidora S.A.
|
9.2 | % | 12.0 | % | 6.0 | % | ||||||||
Manancial
Distribuidora de Petróleo Ltda.
|
8.2 | % | 2.3 | % |
—
|
|||||||||
Flag
Distribuidora de Petróleo Ltda.
|
4.1 | % | 8.9 | % | 9.8 | % |
(Unaudited)
October
31,
2007
|
April
30,
2007
|
|||||||
Assets
|
(restated)
|
|||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
77,037
|
316,542
|
||||||
Restricted
cash
|
1,780
|
17,672
|
||||||
Marketable
securities
|
1,131,612
|
281,879
|
||||||
Trade
accounts receivable, less allowances: October, 31, 2007 – 2,113; April 30,
2007 – 4,013
|
61,352
|
55,206
|
||||||
Inventories
|
676,967
|
247,480
|
||||||
Advances
to suppliers
|
173,448
|
103,961
|
||||||
Other
current assets
|
90,597
|
116,763
|
||||||
2,212,793
|
1,139,503
|
|||||||
Property,
plant and equipment, net
|
1,405,094
|
1,194,050
|
||||||
Goodwill
|
562,654
|
491,857
|
||||||
Intangible
assets, net
|
105,178
|
93,973
|
||||||
Accounts
receivable from Federal Government
|
190,038
|
156,526
|
||||||
Other
non-current assets
|
209,998
|
177,460
|
||||||
2,471,962
|
2,113,867
|
|||||||
Total
assets
|
4,684,755
|
3,253,370
|
(Unaudited)
October
31,
2007
|
April
30,
2007
|
|||||||
Liabilities
and shareholders’ equity
|
(restated)
|
|||||||
Current
liabilities:
|
||||||||
Trade
accounts payable
|
212,015
|
55,938
|
||||||
Advances
from customers
|
16,435
|
24,275
|
||||||
Taxes
payable
|
51,705
|
57,543
|
||||||
Salaries
payable
|
63,805
|
31,109
|
||||||
Current
portion of long-term debt
|
44,010
|
36,076
|
||||||
Derivative
financial instruments
|
26,779
|
9,779
|
||||||
Dividends
payable
|
—
|
37,261
|
||||||
Other
liabilities
|
7,279
|
22,238
|
||||||
422,028
|
274,219
|
|||||||
Long-term
liabilities:
|
||||||||
Long-term
debt
|
1,226,173
|
1,342,496
|
||||||
Estimated
liability for legal proceedings and labor claims
|
459,824
|
379,191
|
||||||
Taxes
payable
|
130,494
|
106,897
|
||||||
Advances
from customers
|
8,333
|
24,333
|
||||||
Deferred
income taxes
|
144,657
|
141,587
|
||||||
Other
long-term liabilities
|
50,963
|
47,485
|
||||||
2,020,444
|
2,041,989
|
|||||||
Minority
interest in consolidated subsidiaries
|
550,040
|
463,551
|
||||||
Shareholders’
equity
|
||||||||
Common
stock class A, $.01 par value, 1,000,000,000 shares authorized;
111,678,000 shares issued and outstanding
|
1,117
|
—
|
||||||
Common
stock class B1, $.01 par value, 96,332,044 shares authorized,
issued and
outstanding
|
963
|
963
|
||||||
Common
stock class B2, $.01 par value, 92,554,316 shares authorized;
no shares
issued
|
—
|
—
|
||||||
Additional
paid-in capital
|
1,473,250
|
354,022
|
||||||
Accumulated
other comprehensive income
|
116,035
|
36,696
|
||||||
Retained
earnings
|
100,878
|
81,930
|
||||||
Total
shareholders’ equity
|
1,692,243
|
473,611
|
||||||
Total
liabilities and shareholders' equity
|
4,684,755
|
3,253,370
|
||||||
Six
months ended October 31,
|
||||||||
2007
|
2006
|
|||||||
(restated)
|
||||||||
Net
sales
|
629,268
|
887,749
|
||||||
Cost
of goods sold
|
(583,675 | ) | (593,771 | ) | ||||
Gross
profit
|
45,593
|
293,978
|
||||||
Selling
expenses
|
(82,133 | ) | (63,192 | ) | ||||
General
and administrative expenses
|
(54,501 | ) | (46,025 | ) | ||||
Operating
income (loss)
|
(91,041 | ) |
184,761
|
|||||
Other
income (expense):
|
||||||||
Financial
income
|
307,687
|
295,440
|
||||||
Financial
expenses
|
(178,368 | ) | (206,110 | ) | ||||
Other
|
(405 | ) |
18,385
|
|||||
Income
before income taxes, equity in income (loss) of affiliates
and minority
interest
|
37,873
|
292,475
|
||||||
Income
taxes
|
(9,834 | ) | (100,027 | ) | ||||
Income
before equity in income (loss) of affiliates and minority
interest
|
28,039
|
192,448
|
||||||
Equity
in income (loss) of affiliates
|
(2,033 | ) |
153
|
|||||
Minority
interest in net income of subsidiaries
|
(7,058 | ) | (95,251 | ) | ||||
Net
income
|
18,948
|
97,349
|
||||||
Earnings
per share:
|
||||||||
Basic
and Diluted
|
0.13
|
0.98
|
||||||
Weighted
average number of shares outstanding:
|
||||||||
Basic
and Diluted
|
140,752,618
|
99,747,279
|
Class
A
Common
number
|
Class
A
Common
amount
|
Class
B
Common
number
|
Class
B
Common
amount
|
Additional
paid-in
capital
|
Accumulated
other
comprehensive
income
|
Retained
earnings
|
Total
shareholders’
equity
|
|||||||||||||||||||||||||
Balance
at May 1, 2007
|
—
|
—
|
1,000
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||||
Contribution
of 51% of Cosan S.A. equity
|
—
|
—
|
96,331,044
|
963
|
354,872
|
76,159
|
81,930
|
513,924
|
||||||||||||||||||||||||
Issuance
of common shares class A for cash
|
100,000,000
|
1,000
|
—
|
—
|
994,814
|
—
|
—
|
995,814
|
||||||||||||||||||||||||
Issuance
of common shares class A for cash
|
11,678,000
|
117
|
—
|
—
|
122,502
|
—
|
—
|
122,619
|
||||||||||||||||||||||||
Stock
compensation
|
—
|
—
|
—
|
—
|
1,062
|
—
|
—
|
1,062
|
||||||||||||||||||||||||
Net
income
|
—
|
—
|
—
|
—
|
—
|
—
|
18,948
|
18,948
|
||||||||||||||||||||||||
Currency
translation adjustment
|
—
|
—
|
—
|
—
|
—
|
39,876
|
—
|
39,876
|
||||||||||||||||||||||||
Total
comprehensive income
|
58,824
|
|||||||||||||||||||||||||||||||
Balances
at October 31, 2007
|
111,678,000
|
1,117
|
96,332,044
|
963
|
1,473,250
|
116,035
|
100,878
|
1,692,243
|
|
Six
months Ended
October
31,
|
|||||||
2007
|
2006
|
|||||||
Cash
flow from operating activities
|
(restated)
|
|||||||
Net
income
|
18,948
|
97,349
|
||||||
Adjustments
to reconcile net income to cash used in operating
activities
|
||||||||
Depreciation
and amortization
|
158,997
|
83,129
|
||||||
Deferred
income and social contribution taxes
|
(14,531 | ) |
88,157
|
|||||
Interest,
monetary and exchange variation
|
(97,641 | ) |
96,133
|
|||||
Minority
interest in net income of subsidiaries
|
7,058
|
95,251
|
||||||
Others
|
12,652
|
(13,130 | ) | |||||
Decrease
(increase) in operating assets and liabilities
|
||||||||
Trade
accounts receivable, net
|
(1,280 | ) | (29,348 | ) | ||||
Inventories
|
(388,349 | ) | (388,453 | ) | ||||
Advances
to suppliers
|
(52,206 | ) | (19,378 | ) | ||||
Trade
accounts payable
|
146,778
|
68,242
|
||||||
Derivative
financial instruments
|
42,496
|
(131,370 | ) | |||||
Taxes
payable
|
(16,214 | ) | (52,470 | ) | ||||
Other
assets and liabilities, net
|
(14,502 | ) | (42,591 | ) | ||||
Net
cash used in operating activities
|
(197,794 | ) | (148,479 | ) | ||||
Cash
flows from investing activities
|
||||||||
Restricted
cash
|
18,830
|
59,873
|
||||||
Marketable
securities
|
(791,758 | ) |
198,284
|
|||||
Acquisition
of property, plant and equipment
|
(184,851 | ) | (51,133 | ) | ||||
Other
|
(1,207 | ) | (62 | ) | ||||
Net
cash provided by (used in) investing activities
|
(958,986 | ) |
206,962
|
|||||
Cash
flows from financing activities
|
||||||||
Proceeds
from issuance of common stock
|
1,118,433
|
—
|
||||||
Additions
of long-term debt
|
—
|
25,295
|
||||||
Payments
of long-term debt
|
(260,419 | ) | (95,641 | ) | ||||
Net
cash provided by (used in) financing activities
|
858,014
|
(70,346 | ) | |||||
Effect
of exchange rate changes on cash and cash equivalents
|
59,261
|
9,105
|
||||||
Net
decrease in cash and cash equivalents
|
(239,505 | ) | (2,758 | ) | ||||
Cash
and cash equivalents at beginning of period
|
316,542
|
29,215
|
||||||
Cash
and cash equivalents at end of period
|
77,037
|
26,457
|
Class
B
Common
stock
number
|
Class
B
Common
stock
amount
|
Additional
paid-in
capital
|
Accumulated
other
comprehensive
income
|
Retained
earnings
|
Total
shareholders’
equity
|
|||||||||||||||||||
As
stated
|
||||||||||||||||||||||||
Cosan
Limited
|
1,000
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Cosan
S.A. Indústria e Comércio
|
—
|
535,105
|
160,944
|
71,953
|
160,648
|
928,650
|
||||||||||||||||||
Contribution
of 51% of Cosan S.A. equity as of April 30, 2007
|
96,331,044
|
272,904
|
82,081
|
36,696
|
81,930
|
473,611
|
||||||||||||||||||
Reclassification
from common stock
|
—
|
(271,941 | ) |
271,941
|
—
|
—
|
—
|
|||||||||||||||||
As
restated
|
96,332,044
|
963
|
354,022
|
36,696
|
81,930
|
473,611
|
October
31,
2007
|
April
30,
2007
|
|||||||
Local
currency
|
||||||||
Cash
and bank accounts
|
54,258
|
16,208
|
||||||
Foreign
currency
|
||||||||
Cash
and bank accounts
|
22,779
|
300,334
|
||||||
77,037
|
316,542
|
October
31,
2007
|
April
30,
2007
|
|||||||
Investment
funds
|
1,129,355
|
—
|
||||||
Bank
Deposits Certificate
|
2,257
|
281,873
|
||||||
Other
fixed income securities
|
—
|
6
|
||||||
1,131,612
|
281,879
|
Notional
amounts
|
Carrying
value asset (liability)
|
|||||||||||||||
October
31,
2007
|
April
30,
2007
|
October
31,
2007
|
April
30,
2007
|
|||||||||||||
Commodities
derivatives
|
||||||||||||||||
Future
contracts:
|
||||||||||||||||
Purchase
commitments
|
928
|
—
|
11
|
—
|
||||||||||||
Sell
commitments
|
152,321
|
247,882
|
575
|
47,427
|
||||||||||||
Options:
|
||||||||||||||||
Purchased
|
—
|
58,587
|
—
|
4,502
|
||||||||||||
Written
|
105,307
|
—
|
(3,510 | ) |
—
|
|||||||||||
Foreign
exchange derivatives
|
||||||||||||||||
Future
contracts:
|
||||||||||||||||
Purchase
commitments
|
897
|
—
|
(8 | ) |
—
|
|||||||||||
Forward
contracts:
|
||||||||||||||||
Sale
commitments
|
327,860
|
153,824
|
47,834
|
13,274
|
||||||||||||
Swap
agreements
|
327,236
|
328,419
|
(23,261 | ) | (9,779 | ) | ||||||||||
Total
assets
|
48,420
|
65,203
|
||||||||||||||
Total
liabilities
|
(26,779 | ) | (9,779 | ) |
October
31,
2007
|
April
30,
2007
|
|||||||
Finished
goods:
|
||||||||
Sugar
|
233,851
|
5,730
|
||||||
Ethanol
|
239,493
|
8,731
|
||||||
Others
|
1,962
|
1,681
|
||||||
475,306
|
16,142
|
|||||||
Annual
maintenance cost of growing crops
|
133,209
|
183,157
|
||||||
Others
|
68,452
|
48,181
|
||||||
676,967
|
247,480
|
Financial
charges
|
|||||||||||||
Index
|
Average
annual
interest
rate
|
October
31, 2007
|
April
30, 2007
|
||||||||||
Resolution
2471 (PESA)
|
IGP-M
|
3.95 | % |
244,986
|
196,545
|
||||||||
Corn
price variation
|
12.50 | % |
419
|
685
|
|||||||||
Senior
notes due 2009
|
US
Dollar
|
9.0 | % |
40,915
|
200,000
|
||||||||
Senior
notes due 2017
|
US
Dollar
|
7.0 | % |
406,922
|
407,311
|
||||||||
IFC
|
US
Dollar
|
7.44 | % |
65,480
|
67,677
|
||||||||
Perpetual
notes
|
US
Dollar
|
8.25 | % |
458,839
|
459,035
|
||||||||
Others
|
Various
|
Various
|
52,622
|
47,319
|
|||||||||
1,270,183
|
1,378,572
|
||||||||||||
Current
liability
|
(44,010 | ) | (36,076 | ) | |||||||||
Long-term
debt
|
1,226,173
|
1,342,496
|
|||||||||||
October
31,
|
||||
2009
|
9,769
|
|||
2010
|
48,187
|
|||
2011
|
40,439
|
|||
2012
|
3,446
|
|||
2013
|
8,187
|
|||
2014
|
1,313
|
|||
2015
and thereafter
|
1,114,832
|
|||
Total
|
1,226,173
|
October
31,
2007
|
April
30,
2007
|
|||||||
Tax
contingencies
|
403,418
|
329,493
|
||||||
Civil
and labor contingencies
|
56,406
|
49,698
|
||||||
459,824
|
379,191
|
October
31,
2007
|
April
30,
2007
|
|||||||
Tax
assessment – Withholding Income Tax
|
84,616
|
73,037
|
||||||
IPI
Premium Credit resulting from Regulatory Ruling No. 67/98
|
87,097
|
70,860
|
||||||
ICMS
– State value added tax
|
35,494
|
28,964
|
||||||
IAA
– Sugar and Ethanol Institute
|
27,873
|
23,706
|
||||||
IPI
– Federal value added tax
|
41,961
|
31,921
|
||||||
Others
|
23,275
|
18,574
|
||||||
300,315
|
247,062
|
Balance
at May 1, 2007
|
22,027
|
|||
Accrued
interest on unrecognized tax benefit
|
612
|
|||
Settlements
|
(312 | ) | ||
Balance
at October 31, 2007
|
22,327
|
|||
Awards
granted
on
September
22,
2005
|
Awards
granted
on
September
11,
2007
|
|||||||
Grant
price – US$
|
3.50
|
3.50
|
||||||
Expected
life (in years)
|
7.5
|
7.5
|
||||||
Interest
rate
|
14.52 | % | 9.34 | % | ||||
Volatility
|
34 | % | 46.45 | % | ||||
Dividend
yield
|
1.25 | % | 1.47 | % | ||||
Weighted-average
fair value at grant date – US$
|
7.09
|
10.43
|
Six
months ended
October
31,
|
||||||||
2007
|
2006
|
|||||||
Net
income
|
18,948
|
97,349
|
||||||
Currency
translation adjustment
|
39,876
|
(9,444 | ) | |||||
Total
comprehensive income
|
58,824
|
87,905
|
October
31,
|
||||||||
2007
|
2006
|
|||||||
Net
sales – Brazilian GAAP:
|
||||||||
Sugar
|
383,831
|
573,015
|
||||||
Ethanol
|
177,441
|
282,155
|
||||||
Others
|
66,130
|
31,014
|
||||||
Total
|
627,402
|
886,184
|
||||||
Reconciling
item to U.S. GAAP
|
||||||||
Sugar
|
1,866
|
1,565
|
||||||
Ethanol
|
—
|
—
|
||||||
Others
|
—
|
—
|
||||||
Total
|
1,866
|
1,565
|
||||||
Total
net sales
|
629,268
|
887,749
|
October
31,
|
||||||||
2007
|
2006
|
|||||||
Segment
operating income – Brazilian GAAP
|
||||||||
Sugar
|
(108,980 | ) |
94,097
|
|||||
Ethanol
|
(50,380 | ) |
46,334
|
|||||
Others
|
(18,776 | ) |
5,092
|
|||||
Operating
income (loss) under Brazilian GAAP
|
(178,136 | ) |
145,523
|
|||||
Reconciling
items to U.S. GAAP
|
||||||||
Depreciation
and amortization expenses
|
||||||||
Sugar
|
22,190
|
26,632
|
||||||
Ethanol
|
10,258
|
13,114
|
||||||
Others
|
3,823
|
1,441
|
||||||
36,271
|
41,187
|
|||||||
Other
adjustments
|
||||||||
Sugar
|
31,816
|
(709 | ) | |||||
Ethanol
|
13,847
|
(1,118 | ) | |||||
Others
|
5,161
|
(122 | ) | |||||
50,825
|
1,949
|
|||||||
Total
sugar
|
(54,974 | ) |
120,020
|
|||||
Total
ethanol
|
(26,275 | ) |
58,330
|
|||||
Total
others
|
(9,792 | ) |
6,411
|
|||||
Operating
income (loss) under U.S. GAAP
|
(91,041 | ) |
184,761
|
Market
|
Customer
|
2007
|
2006
|
|||||||
International
|
Tate
& Lyle International
|
20 | % | 8 | % | |||||
Sucres
Et Denrees
|
19 | % | 45 | % | ||||||
S/A
Fluxo Com Assess International
|
14 | % | 12 | % | ||||||
Fluxo
– Cane Overseas Ltd
|
13 | % | 10 | % | ||||||
Coimex
Trading Ltd
|
9 | % | 9 | % | ||||||
Domestic
|
Atacadão
Distr Com Ind Ltda
|
11 | % | 8 | % | |||||
Nova
América S/A – Agroenergia
|
5 | % | 5 | % | ||||||
Companhia
Brasileira de Distribuição
|
4 | % | 10 | % |
Market
|
Customer
|
2007
|
2006
|
|||||||
International
|
Vertical
Uk LLP
|
38 | % | 41 | % | |||||
Vitol
Inc.
|
30 | % |
—
|
|||||||
Noble
Americas Corporation
|
6 | % |
—
|
|||||||
Domestic
|
Shell
Brasil Ltda.
|
32 | % | 29 | % | |||||
Euro
Petróleo do Brasil Ltda.
|
18 | % |
—
|
|||||||
Petrobrás
Distribuidora S.A.
|
9 | % | 8 | % |
Cosan
S.A. and Cosan
Ltd.
|
|
Appraisal
Report As of December
19, 2007
|
|
(Convenience
Translation into
English from the Original Previously Issued in
Portuguese)
|
|
Deloitte
Touche Tohmatsu
Consultores Ltda.
|
Important
Notes
|
Page
03
|
Executive
Summary
|
Page
06
|
Information
about the Appraisal
Firm
|
Page
09
|
Information
about the Companies
Appraised
|
Page
14
|
Market
|
Page
22
|
Methodologies
Adopted
|
Page
31
|
Results
|
Page
55
|
Glossary
|
Page
57
|
Attachment
|
Page
59
|
1.
|
Deloitte
Touche Tohmatsu
Consultores Ltda. (“Deloitte
Consultores”) has
been engaged by the
management of Cosan Limited (“Cosan
Ltd.” or “Holding”)
to prepare this
Economic-Financial Appraisal
Report on the shares of Cosan S.A. and Cosan Ltd., within the
scope of a
proposed exchange offer, in accordance with the provisions
contained in
Instruction No. 361 issued by the Brazilian Securities Commission
(CVM) on
March
5,
2002.
|
2.
|
The
exchange of shares should
occur as disclosed to the market in the Notices of Relevant
Facts
(“Fatos
Relevantes”)
dated June 25, July 6 and July 27, 2007.
|
3.
|
This
Appraisal Report has been
prepared pursuant to Article 8 of the above-mentioned
CVM Instruction (No.
361/2002), as amended by CVM Instruction No. 436/2006, and
is intended
solely for the use of the management of Cosan S.A. and Cosan
Ltd. and the
shareholders of Cosan S.A. in order for them to evaluate the
exchange
offer referred
to
above.
|
4.
|
The
variations in the appraisal
values of Cosan S.A. and Cosan Ltd. are limited to a range
of minimum and
maximum values of 10% for both cases, pursuant to requirements
of CVM
Instruction No. 361/02.
|
5.
|
Deloitte
Consultores does not
express hereby
any
judgment in relation to distribution of the economic value
among the
various types and/or classes of shares of Cosan S.A. and Cosan
Ltd.
|
6.
|
This
report is not intended for
general circulation and may not be reproduced or used for any
purpose other
than
the one cited above without our prior written authorization.
We assume no
responsibility, liability or accountability for contingencies
due to any
damages caused or for any losses that might be incurred by
any party
involved, as a result of the
circulation, publication,
reproduction or use of this document for any purpose other
than the one
proposed in our engagement letter.
|
7.
|
This
report does not represent any
kind of advice or recommendation on the part of Deloitte Consultores
to
shareholders to
participate in the exchange offer; such decision is the sole
and exclusive
responsibility of each shareholder.
|
8.
|
Shareholders
should conduct their
own analyses regarding the advisability and timeliness of participating
in
the exchange offer and should consult
their own legal, tax
and financial counsel, in order to form their own opinions
about the offer
and its risks. Accordingly, Deloitte Consultores and its partners
and
professional staff members are exempt from responsibility in
relation to
any and
all losses that might arise from
any shareholder’s
decision to participate or not
participate in the exchange
offer.
|
9.
|
Our
procedures did not include any
work that would be required to conduct an independent verification
of the
data and information
provided by the management of Cosan S.A. and Cosan Ltd., which
were
considered and mentioned in the following report. Our work
did not
constitute an audit or any other kind of assurance in accordance
with
generally accepted auditing standards.
Accordingly, we cannot and do
not express any opinion on Cosan S.A. and Cosan Ltd.’s
financial statements. However,
this information was considered consistent for our analysis
purposes.
|
10.
|
Deloitte
is not responsible for
any direct or indirect losses or business
interruption (loss of
income) resulting from the use of this Appraisal
Report.
|
11.
|
Among
other sources,
Deloitte’s
appraisal work used as a basis
the following information or documents that have been made
available to us
up to December 19, 2007: (i)
the business plans of Cosan
S.A. for harvest years 2007/2008 to 2016/2017, as drawn up
by its
management; (ii) historical operating and financial information
of Cosan
S.A.; (iii) the amounts of net indebtedness of Cosan S.A. and
its equity
stakes in other
companies; (iv) public
information regarding the industry in which Cosan S.A. operates;
(v)
information on shareholders’
equity, number of shares and net
cash investments provided by Cosan Ltd. management; and (vi)
discussions
with the management of Cosan
S.A. in relation to past
performance and expectations for future
business.
|
12.
|
We
understand that the estimates
and projections that were supplied by the management of Cosan
S.A. to
Deloitte Consultores, or that were discussed with Deloitte
Consultores,
especially those whose occurrence depends on uncertain future
events
reflect the best assessment of its management with respect
to the
evolution of Cosan S.A. and its markets. We verified the operating
assumptions used to prepare the Business Plan of Cosan
S.A. for reasonableness and
assumed that such information reflect the best estimates and
projections
presently available with respect to the Company’s
future financial
performance.
|
13.
|
It
is important to emphasize that
Deloitte Consultores is not responsible
for, and does not
provide any guarantees with respect to attainment of the projections
contained in this report, since such projections are based
on the
prospects and strategic plans of the management of Cosan S.A.,
which we
believe will continue
to conduct its business affairs
in the future.
|
14.
|
We
reserve the right, but are not
under any obligation, to revise all the calculations included
or referred
to in this report, should we deem it necessary, as well as
to revise our
opinion as to the fair market
value of the shares of
Cosan S.A. and Cosan Ltd., in the event we subsequently become
aware of
information that was not available as of the issuance of this
report.
|
·
|
Discounted
Cash Flow Method was
used considering only the projections of operating results
(debt-free
model), adjusted by the non-operating assets and liabilities,
in nominal
Brazilian Reais (R$).
|
·
|
The
base date for the appraisal is
October 31, 2007, considering
the capital contribution
by Cosan Ltd. on December 5,
2007.
|
·
|
The
projections have been based on
the operational aspects of the Company’s
Business Plan for the period
from November 1, 2007 through April 30, 2017. The macroeconomic
assumptions adopted
in developing the appraisal work, as shown in page 38 of this
Report, were
based on public information. VHP sugar prices were based on
expectations
of Deloitte’s
sugar and alcohol industry
analysts.
|
·
|
Perpetual
growth figures have been
calculated based on
the Gordon growth model. The projected cash flow for harvest
year
2016/2017 has been adjusted for income tax and social contribution
resulting from expectations for reduction in depreciation,
considering a
perpetual estimated growth rate of 4.0% in nominal
Brazilian Reais (R$),
equivalent to the projected long-term
inflation.
|
·
|
The
discount rate used was 12.14%
in nominal Brazilian Reais
(R$).
|
·
|
Appraisal
date: October 31, 2007,
considering the capital contribution to Cosan S.A. on December
5,
2007.
|
(1)
|
Economic
value per share after
issuance of shares on November 19, 2007 and December 5 and
11, 2007, based
on the Discounted Cash Flow Method, with a minimum
and maximum value range
of 10%, pursuant to CVM Instruction No. 361/02.
|
|
(2)
|
Market
value per share based on
the weighted average price for shares of:
|
|
(i)
|
R$39.49
per share in the 12 months
prior to the disclosure of the Relevant Fact dated June 25,
2007.
|
|
(ii)
|
R$26.28
per share from the date of
disclosure of the Relevant Fact (June 25, 2007) through the
date of this
Appraisal Report.
|
|
(iii)
|
R$20.66
per share from the
announcement on November 19, 2007 of the Cosan S.A. share issue
through
the date
of this
Appraisal Report.
|
|
(3)
|
Book
value per share as of October
31, 2007, adjusted after issuance of shares on November 19,
2007 and
December 5 and 11, 2007, resulting in 272,548,032
shares.
|
(1)
|
Economic
value per share based on
the Assets Approach, with the investment in Cosan S.A. estimated
on a discounted cash flow
basis, with a minimum and maximum value range of 10%, pursuant
to CVM
Instruction No. 361/02.
|
|
(2)
|
Assets
Approach with the
investment in Cosan S.A. being estimated based on the weighted
average
price for shares in Cosan S.A. of:
|
|
(i)
|
R$35.11
per share, for the
weighted average value of R$39.49 per share in Cosan S.A. in
the 12 months
prior to the disclosure of the Relevant Fact dated June 25,
2007.
|
|
(ii)
|
R$23.74
per share, for the
weighted average value of R$26.28 per share Cosan
S.A. from the date of
disclosure of the Relevant Fact (June 25, 2007) through the
date of this
Appraisal Report.
|
|
(iii)
|
R$18.91
per share, for the
weighted average value of R$20.66 per share Cosan S.A. from
the
announcement on November 19, 2007 of the
Cosan S.A. share issue
through the date of this Appraisal Report.
|
|
(3)
|
Market
value per share traded on
the NYSE based on the weighted average price per share (i)
21.68 per
share, from the date of the Initial Public Offering on August
16, 2007,
through the
date of
this Appraisal Report and; (ii) 19.12 per share, from the announcement
on
November 19, 2007 of the share issue of Cosan S.A. through
the date of
this Appraisal Report.
|
|
(4)
|
Book
Value per Class A share,
based on 208,010,044 shares as of October
31,
2007.
|
Credentials
- Companies in the Sugar
Alcohol Industry
|
Service
|
Year
|
Louis
Dreyfus
|
Economic-financial
appraisal to
provide backing for the goodwill and purchase price alocation
(SFAS
141).
|
2007
|
Usina
Noroeste
Paulista
|
Economic-financial
appraisal to
provide backing
for
the goodwill and purchase price alocation (SFAS
141).
|
2007
|
Usina
Monte
Alegre
|
Economic-financial
appraisal to
provide backing for the goodwill and purchase price alocation
(SFAS
141).
|
2006
|
Credentials
- Publicly-Traded
Companies
|
Service
|
Year
|
Plascar
Participações Industriais
S.A.
|
Appraisal
Report for public offer
of shares OPA
|
2007
|
Cia.
Providência
Indústria
e Comércio
S.A.
|
Economic-financial
appraisal to
provide backing for the goodwill generated by corporate restructuring
process.
|
2007
|
Energisa
S.A.
|
Appraisal
of projections for
future operating results in order to obtain credit from the
Inter-American
Development Bank (IADB).
|
2007
|
Companhia
de Saneamento do
Paraná
S.A.
|
Economic-financial
appraisal to
update the market value of the investment
for the controlling
stockholder.
|
2005-2007
|
ENERSUL
- Empresa
Energética
do Mato
Grosso do Sul S.A.
|
Economic-financial
appraisal to
update the market value of the investment for the controlling
stockholder.
|
2005-2007
|
ESCELSA
- Espírito
Santo Centrais Elétricas
S.A.
|
Economic-financial
appraisal to
updated the market value of the investment for the controlling
stockholder.
|
2005-2007
|
Telemig
Celular
Participações
S.A.
|
Economic-financial
appraisal to
updated the market value of the investment for the controlling
stockholder.
|
2005
|
Tele
Norte Celular
Participações
S.A.
|
Economic-financial
appraisal to
updated the market value of the investment for the controlling
stockholder.
|
2005
|
Brasil
Telecom
S.A.
|
Economic-financial
appraisal to
updated the market value of
the investment for the
controlling stockholder.
|
2005
|
·
|
The
partners and the professionals
involved in this
project do not own any shares in either Cosan S.A. or Cosan
Ltd., nor do
they conduct discretionary management services with respect
to such
shares.
|
·
|
There
is no conflict of interest
that could decrease the independence required in order for
it to
perform its
functions
as an independent appraisal
firm.
|
·
|
The
cost to prepare this Appraisal
Report was R$350,000.00 (three hundred and fifty thousand Reais),
net of
taxes.
|
·
|
Besides
the amount received
mentioned above, in the past 12 (twelve) months it has received
the amount of R$1,179,016.49
(one million, one hundred and seventy-nine thousand, and sixteen
Reais and
forty-nine centavos) relating to: (i) advisory services in
negotiating the
Company’s
payroll; (ii) preparation of an
economic-financial appraisal
report, as well as evaluation of
its property and organization of fixed assets; and (iii) tax
planning;
and
|
·
|
Notwithstanding
the relationship
described above, it does not have any other commercial and
credit
information of any kind with respect to the Cosan S.A. and
Cosan Ltd. that
might impact this Appraisal
Report.
|
Nominal
Capacity1
|
||||
Productive
Units
|
Sugarcane
Crushing (Thousands
tons/year)
|
Sugar
(tons/day)
|
Ethanol
(m3
/day)
|
Energy
(MW)
|
Barra
|
7,200
|
3,000
|
1,800
|
19
|
Bom
Retiro
|
1,200
|
600
|
350
|
4
|
Bomfim
|
4,600
|
2,250
|
1,100
|
17
|
Costa
Pinto
|
4,000
|
2,075
|
1,250
|
9
|
Destivale
|
1,300
|
360
|
520
|
3
|
Diamante
|
1,950
|
1,200
|
340
|
7
|
Dois
Córregos
|
1,400
|
925
|
220
|
4
|
Gasa
|
1,250
|
n.a.
|
450
|
4
|
Ipaussu
|
1,950
|
1,250
|
360
|
6
|
Junqueira
|
2,600
|
1,200
|
900
|
19
|
Mundial
|
1,300
|
500
|
300
|
3
|
Rafard
|
2,400
|
1,350
|
550
|
10
|
Santa
Helena
|
2,050
|
1,200
|
350
|
4
|
São
Francisco
|
1,400
|
1,100
|
n.a.
|
4
|
Serra
|
1,800
|
1,200
|
430
|
15
|
Tamoio
|
1,400
|
900
|
n.a.
|
4
|
Univalem
|
2,200
|
950
|
650
|
8
|
Total
|
40,000
|
20,060
|
9,570
|
140
|
Source:
Cosan
S.A.
|
Retail
|
Export
|
1. Shapeless
refined
sugar
|
1. Bulk
VHP
sugar
|
2. Granulated
refined
sugar
|
2. Granulated
refined
sugar
|
3. Demerara
sugar
|
3. Crystal
sugar
|
4. Crystal
sugar
|
4. Organic
sugar
|
5. Brown
sugar
|
5. Refined
hydrous
ethanol
|
6. Gel
alcohol
|
6. Neutral
hydrous
ethanol
|
Industry
|
|
1. Demerara
sugar
|
|
2. Crystal
sugar
|
|
3. Granulated
refined
sugar
|
|
4. Shapeless
refined
sugar
|
|
5. Liquid
sugar
|
|
6. Inverte
liquid
sugar
|
|
7. Molasses
|
|
8. Ethanol
|
Source:
Cosan S.A.
management.
|
Shareholders
- Cosan
S.A.
|
Total
Shares
|
(%)
|
Cosan
Limited
|
96,332,044
|
51.00%
|
Aguassanta
Participações S.A.
|
470,185
|
0.25%
|
Rio
das Pedras
Participações
S.A.
|
23,820
|
0.01%
|
Rubens
Ometto Silveira
Mello
|
675
|
0.00%
|
Nova
Celisa
S.A.
|
468
|
0.00%
|
Board
of Directors
|
19,110
|
0.01%
|
Executive
Board
|
33,721
|
0.02%
|
Shares
Held by Minority
Shareholders
|
92,006,337
|
48.71%
|
Total
|
188,886,360
|
100.00%
|
Source:
Annual Information Form
(AIF) –
Apr 30,
2007
|
Shareholders
- Cosan
S.A.
|
Total
Shares
|
(%)
|
Cosan
Limited
|
179,032,044
|
65.69%
|
Aguassanta
Participações S.A.
|
470,185
|
0.17%
|
Rio
das Pedras
Participações
S.A.
|
23,820
|
0.01%
|
Rubens
Ometto Silveira
Mello
|
675
|
0.00%
|
Nova
Celisa
S.A.
|
468
|
0.00%
|
Board
of
Directors
|
19,110
|
0.01%
|
Executive
Board
|
995,393
|
0.37%
|
Shares
Held by Minority
Shareholders
|
92,006,337
|
33.76%
|
Total
|
272,548,032
|
100.00%
|
Income
Statement
|
R$
thousand
|
Income
Statement
|
2005/06
|
2006/07
|
May
to
Oct/07
|
Net
Operating
Revenues
|
2,477,921
|
3,605,056
|
1,219,202
|
.
Growth %
|
n.d.
|
45.5%
|
n.d.
|
Cost
of Products
Sold
|
(1,721,309)
|
(2,481,115)
|
(1,099,122)
|
.
Cost of Products Sold/Net
Revenue
|
-69.5%
|
-68.8%
|
-90.2%
|
Gross
Profit
|
756,612
|
1,123,941
|
120,080
|
.
Gross Profit/Net
Revenue
|
30.5%
|
31.2%
|
9.8%
|
Operating
Expenses
(*)
|
(378,842)
|
(492,872)
|
(259,066)
|
.
Operating Expenses / Net
Revenue
|
-15.3%
|
-13.7%
|
-21.2%
|
.
Administrative
Expenses
|
(149,985)
|
(246,159)
|
(102,540)
|
.
Selling
Expenses
|
(217,070)
|
(282,022)
|
(153,027)
|
.
Other
Expenses
|
(11,787)
|
35,309
|
(3,499)
|
EBIT
|
377,770
|
631,069
|
(138,986)
|
.
EBIT Margin (EBIT /Net
Revenue)
|
15.2%
|
17.5%
|
-11.4%
|
.
Goodwill
Amortization
|
(142,835)
|
(223,686)
|
(112,594)
|
.
Financial
Result
|
(245,177)
|
157,967
|
295,156
|
.
Equity
in
Subsidiaries
|
571
|
(57)
|
141
|
.
Share Placement
Expenses
|
(52,805)
|
-
|
-
|
.
Non-Operating
Result
|
(1,017)
|
2,008
|
5,248
|
Profit
/ (Loss) Before Income
Tax
|
(63,493)
|
567,301
|
48,965
|
.
Operating Margin (Profit Before
Income Tax/Net Revenue)
|
-2.6%
|
15.7%
|
4.0%
|
.
Income Tax and Social
Contribution
|
5,823
|
(203,858)
|
(21,377)
|
.
% Income Tax and Social
Contribution
|
9.2%
|
35.9%
|
43.7%
|
Minority
Shareholders
|
(6,892)
|
(6,174)
|
1,302
|
Net
Income /
(Loss)
|
(64,562)
|
357,269
|
28,890
|
.
Net Margin (Net Income/Net
Revenue)
|
-2.6%
|
9.9%
|
2.4%
|
2005/06
|
2006/07
|
May
to
Oct/07
|
|
EBIT
|
377,770
|
631,069
|
(138,986)
|
.
EBIT Margin (EBIT /Net
Revenue)
|
15.2%
|
17.5%
|
-11.4%
|
.
Depreciation and
Amortization
|
139,892
|
296,960
|
264,406
|
EBITDA
|
517,662
|
928,029
|
125,420
|
.
EBITDA Margin (EBITDA /Net
Revenue)
|
20.9%
|
25.7%
|
10.3%
|
Balance
Sheet –
Assets
|
R$
thousand
|
Actual
|
|||
Assets
|
04/30/06
|
04/30/07
|
10/31/2007
|
.
Cash and Cash
Equivalents
|
831,522
|
1,217,129
|
141,591
|
.
Trade Accounts
Receivable
|
212,601
|
112,283
|
107,296
|
.
Inventories
|
390,845
|
503,350
|
1,194,841
|
.
Advances to
Suppliers
|
132,719
|
211,446
|
304,492
|
.
Receivables from Related
Parties
|
3
|
-
|
-
|
.
Deferred Income Tax & Social
Contribution
|
41,418
|
38,093
|
24,236
|
.
Derivative Financial
Instruments
|
288,601
|
37,578
|
3,554
|
.
Other
Credits
|
115,727
|
104,866
|
75,076
|
Current
Assets
|
2,013,436
|
2,224,745
|
1,851,086
|
.
Financial
Applications
|
90
|
-
|
-
|
.
Receivables from Related
Parties
|
-
|
45
|
11
|
.
National Treasury
Certificates
|
104,921
|
123,310
|
135,886
|
.
Deferred Income Tax & Social
Contribution
|
361,785
|
242,530
|
277,065
|
.
Indemnity
Suits
|
-
|
318,358
|
331,426
|
.
Other
Credits
|
99,372
|
112,323
|
105,752
|
.
Despesas
Antecipadas
|
|||
Long-Term
Assets
|
566,168
|
796,566
|
850,140
|
.
Investments
|
13,414
|
93,169
|
13,872
|
.
Property, Plant &
Equipment
|
1,656,396
|
2,013,137
|
2,070,286
|
.
Deferred Charges
|
1,355,359
|
1,135,737
|
1,093,802
|
Permanent
Assets
|
3,025,169
|
3,242,043
|
3,177,960
|
Total
Assets
|
5,604,773
|
6,263,354
|
5,879,186
|
Balance
Sheet –
Liabilities
|
R$
thousand
|
Actual
|
|||
Liabilities
|
04/30/06
|
04/30/07
|
07/31/2007
|
.
Trade Accounts
Payable
|
201,717
|
113,773
|
373,295
|
.
Loans and
Financing
|
68,778
|
88,991
|
105,072
|
.
Salaries and Wages
Payable
|
49,726
|
63,273
|
113,423
|
.
Taxes and
Contributions
|
111,120
|
126,202
|
101,037
|
.
Advances from
Customers
|
79,156
|
49,373
|
28,663
|
.
Promissory
Notes
|
55,791
|
1,261
|
-
|
.
Payables to
Related
Parties
|
76
|
667
|
-
|
.
Deferred Income Tax & Social
Contribution without Revaluation Reserve
|
5,486
|
5,486
|
5,486
|
.
Dividends
Payable
|
-
|
75,815
|
34
|
.
Derivative Financial
Instruments
|
65,368
|
35,536
|
31,184
|
.
Other
Obligations
|
32,758
|
31,356
|
12,283
|
Current
Liabilities
|
669,976
|
591,733
|
770,477
|
.
Loans and
Financing
|
2,002,684
|
2,770,435
|
2,178,807
|
.
Taxes and
Contributions
|
446,947
|
338,507
|
344,968
|
.
Payables to Related
Parties
|
1,350
|
-
|
-
|
.
Advances from
Customers
|
86,901
|
49,491
|
14,533
|
.
Promissory
Notes
|
12,747
|
-
|
-
|
.
Reserve for
Contingencies
|
907,395
|
727,966
|
757,468
|
.
Debentures
|
55,069
|
55,069
|
55,069
|
.
Deferred Income Tax & Social
Contribution without Revaluation Reserve
|
40,801
|
33,435
|
28,303
|
.
Other
Obligations
|
11,464
|
45,528
|
50,783
|
Long-Term
Liabilities
|
3,565,358
|
4,020,431
|
3,429,931
|
Minority
Interest
|
14,017
|
20,191
|
18,889
|
Shareholder's
Equity
|
1,355,422
|
1,630,999
|
1,659,889
|
Total
Liabilities and
Shareholder's Equity
|
5,604,773
|
6,263,354
|
5,879,186
|
Description
|
Date
|
Common
shares of
class A stock |
Common
shares of
class B stock |
Total
shares
|
Starting
capital
stock
|
04/30/2007
|
-
|
1,000.00
|
1,000
|
Capital
contribution
|
08/01/2007
|
-
|
96,331,044
|
96,331,044
|
Total
prior to
offering
|
-
|
96,332,044
|
96,332,044
|
|
Global
initial public
offering
|
08/16/2007
|
100,000,000
|
-
|
100,000,000
|
Total
after
offering
|
100,000,000
|
96,332,044
|
196,332,044
|
|
Supplementary
batch
(greenshoe)
|
09/07/2007
|
11,678,000
|
-
|
11,678,000
|
Total
after
offering
|
111,678,000
|
96,332,044
|
208,010,044
|
Source:
Interim Financial Statements as
of October 31, 2007.
|
Shareholders
- Cosan
Ltd.
|
Total
Shares
|
(%)
|
Usina
Costa Pinto S.A.
Açúcar e
Álcool
|
30,010,278
|
14.43%
|
Queluz
Holdings
Limited
|
66,321,766
|
31.88%
|
Aguassanta
Participações S.A.
|
5,000,000
|
2.40%
|
Janus
Capital Group
(Denver)
|
27,500,000
|
13.22%
|
Wellington
Management Company,
LLP
|
14,000,000
|
6.73%
|
Fidelity
(Boston)
|
12,750,000
|
6.13%
|
Outros
|
52,428,000
|
25.20%
|
Total
|
208,010,044
|
100.00%
|
Source:
Annual Information Form (AIF)
–
Apr 30,
2007
|
1.
|
Mills
that own the land were the
sugarcane raw material is obtained for crushing;
|
2.
|
Mills
that lease
land for production of
cane and subsequent crushing; and
|
3.
|
Specialized
rural producers
contractually linked to the
mills.
|
1.
|
Weighted
average quotation price
of the Company’s
shares at the stock exchange or
over-the-counter market, specifying the share price by kind
and class: (i)
in the past twelve (12) months immediately prior to the disclosure
of the
relevant fact; and (ii) between
the date of disclosure of
the relevant fact and the appraisal report date.
|
2.
|
Book
value per share of Cosan S.A.
as verified in the last periodical information sent to the
CVM.
|
3.
|
The
economic value per share,
calculated on a discounted cash flow basis
or on a multiple basis, as
may be regarded as the most appropriate method for the case,
in order to
appraise it properly.
|
4.
|
Value
according to the appraisal
criteria adopted by the offering party for the purposes of
defining a fair
price, as the case
should be, and provided that it is not included in the previous
items.
|
·
|
Business
Plan of Cosan S.A. for
harvest years 2007/2008 through 2016/2017,
as prepared by
management.
|
·
|
Standardized
Financial Statements
(DFP) of Cosan S.A. as of April 30, 2006 and April 30, 2007,
audited by
Ernst & Young Auditores Independentes
S.S.
|
·
|
Interim
Financial Statements (ITR)
of Cosan S.A. as of October 31, 2007 and
October 31, 2006, with
Limited Review by Ernst & Young Auditores Independentes
S.S.
|
·
|
Consolidated
interim analytical
balance sheet of Cosan S.A. as of October 31,
2007.
|
·
|
Quarterly
Financial Letter
relating to the Interim Financial Statements (ITR) of Cosan
S.A. as of October 31,
2007 and 2006.
|
·
|
Presentation
made at the Meeting
with Investors & Analysts –
APIMEC-SP held September 21,
2007.
|
·
|
Definitive
Prospectus for First
Public Distribution of Certified Certificates of Deposit for
Class A
Common Shares
issued
by Cosan Limited on August 16,
2007.
|
Methodologies
Adopted
|
Cosan
S.A.
|
Period
|
Traded
Shares
|
Volume
(R$
thousand)
|
Average
Price
(R$)
|
25/06/06
a
24/07/06
|
16,391,100
|
769,733
|
46.96
|
25/07/06
a
24/08/06
|
19,825,500
|
841,924
|
42.47
|
25/08/06
a
24/09/06
|
13,574,800
|
489,093
|
36.03
|
25/09/06
a
24/10/06
|
21,244,700
|
715,525
|
33.68
|
25/10/06
a
24/11/06
|
11,934,700
|
448,717
|
37.60
|
25/11/06
a 24/12/06
|
21,140,300
|
854,042
|
40.40
|
25/12/06
a
24/01/07
|
18,317,500
|
774,134
|
42.26
|
25/01/07
a
24/02/07
|
25,358,000
|
1,016,205
|
40.07
|
25/02/07
a
24/03/07
|
16,225,600
|
621,535
|
38.31
|
25/03/07
a
24/04/07
|
17,091,400
|
684,683
|
40.06
|
25/04/07
a
24/05/07
|
13,486,900
|
553,609
|
41.05
|
25/05/07
a
24/06/07
|
40,526,200
|
1,515,666
|
37.40
|
Average
06/25/2006 to
06/24/2007
|
235,116,700
|
9,284,866
|
39.49
|
Methodologies
Adopted
|
Cosan
S.A.
|
Period
|
Traded
Shares
|
Volume
(R$
thousand)
|
Average
Price
(R$)
|
06/25/07
to
07/24/07
|
29,084,300
|
946,458
|
32.54
|
07/25/07
to
08/24/07
|
31,700,600
|
874,668
|
27.59
|
08/25/07
to
09/24/07
|
31,107,200
|
730,135
|
23.47
|
09/25/07
to
10/24/07
|
22,498,400
|
596,836
|
26.53
|
10/25/07
to
11/24/07
|
20,882,100
|
510,425
|
24.44
|
11/25/07
to
12/19/07
|
18,459,100
|
381,533
|
20.67
|
Average
06/25 to
12/19/2007
|
153,731,700
|
4,040,055
|
26.28
|
Period
|
Traded
Shares
|
Volume
(R$
thousand)
|
Average
Price
(R$)
|
Average
11/20 to
12/19/2007
|
22,188,400
|
458,515
|
20.66
|
Methodologies
Adopted
|
Cosan
S.A.
|
Assets
|
10/31/2007
|
.
Cash and Cash
Equivalents
|
141,591
|
.
Trade Accounts
Receivable
|
107,296
|
.
Inventories
|
1,194,841
|
.
Advances to
Suppliers
|
304,492
|
.
Receivables from Related
Parties
|
-
|
.
Deferred Income Tax & Social
Contribution
|
24,236
|
.
Derivative
Financial
Instruments
|
3,554
|
.
Other
Credits
|
75,076
|
Current
Assets
|
1,851,086
|
.
Financial
Applications
|
-
|
.
Receivables from Related
Parties
|
11
|
.
National Treasury
Certificates
|
135,886
|
.
Deferred Income Tax & Social
Contribution
|
277,065
|
.
Indemnity
Suits
|
331,426
|
.
Other
Credits
|
105,752
|
.
Despesas
Antecipadas
|
|
Long-Term
Assets
|
850,140
|
.
Investments
|
13,872
|
.
Property, Plant &
Equipment
|
2,070,286
|
.
Deferred
Charges
|
1,093,802
|
Permanent
Assets
|
3,177,960
|
Total
Assets
|
5,879,186
|
Liabilities
|
07/31/2007
|
.
Trade Accounts
Payable
|
373,295
|
.
Loans and
Financing
|
105,072
|
.
Salaries and Wages
Payable
|
113,423
|
.
Taxes and
Contributions
|
101,037
|
.
Advances from
Customers
|
28,663
|
.
Promissory
Notes
|
-
|
.
Payables to Related
Parties
|
-
|
.
Deferred Income Tax & Social
Contribution without Revaluation Reserve
|
5,486
|
.
Dividends
Payable
|
34
|
.
Derivative Financial
Instruments
|
31,184
|
.
Other
Obligations
|
12,283
|
Current
Liabilities
|
770,477
|
.
Loans and
Financing
|
2,178,807
|
.
Taxes and Contributions
|
344,968
|
.
Payables to Related
Parties
|
-
|
.
Advances from
Customers
|
14,533
|
.
Promissory
Notes
|
-
|
.
Reserve for
Contingencies
|
757,468
|
.
Debentures
|
55,069
|
.
Deferred Income Tax & Social
Contribution without Revaluation Reserve
|
28,303
|
.
Other Obligations
|
50,783
|
Long-Term
Liabilities
|
3,429,931
|
Minority
Interest
|
18,889
|
Shareholder's
Equity
|
1,659,889
|
Total
Liabilities and
Shareholder's Equity
|
5,879,186
|
Proforma
Shareholders’
Equity
|
|
Shareholders’
Equity –
10/31/2007
(R$)
|
1,659,889
|
Stock
Option Plan - 11/19/2007
(R$)
|
5,639
|
Issuance
of Common Shares
(R$)
|
1,736,700
|
Stock
Option Plan - 12/11/2007
(R$)
|
237
|
Proforma
Shareholders’
Equity
(R$)
|
3,402,465
|
Proforma
Book Value per Share (R$
/ share)
|
12.48
|
Methodologies
Adopted
|
Cosan
S.A.
|
Methodologies
Adopted
|
Cosan
S.A.
|
·
|
The
financial projections are
shown in nominal terms, that is, they contain the inflation
estimated
during the projection period and are translated in thousands
of Reais (R$
thousands), except when another unit
is otherwise
indicated.
|
·
|
The
base date for the appraisal is
October 31, 2007. The projections of Cosan S.A.’s
operations include the period
from November 1, 2007 to April 30, 2017 (end of harvest year
2016/2017).
|
·
|
The
assumptions used in this
study were
based on
the Business Plan prepared by Cosan S.A.'s management for the
period from
2007/2008 to 2016/2017.
|
·
|
Perpetuity
figures have been
calculated based on Gordon’s
growth model. The projected cash
flow for harvest year 2016/2017 has been adjusted with
respect to income tax and
social contribution owing to expectations for reduction in
depreciation
expenses and considers a perpetual growth rate estimated at
4.0% in
nominal Brazilian reais (R$), equivalent to the projected long-term
inflation.
|
·
|
To
calculate the present value, the
half-rate approach was used, assuming that the Company’s
cash flow is generated evenly
throughout the year.
|
·
|
The
main macroeconomic assumptions
adopted in the business plan are as
follows:
|
Harvest
year
|
2007/08
|
2008/09
|
2009/10
|
2010/11
|
2011/12
|
2012/13
|
2013/14
|
2014/15
|
2015/16
|
2016/17
|
Macroeconomic
Assumptions
|
||||||||||
IGP-M
(1)
|
4.92%
|
4.13%
|
4.05%
|
4.01%
|
4.00%
|
4.00%
|
4.00%
|
4.00%
|
4.00%
|
4.00%
|
CPI
- Consumer Price Index
(2)
|
2.40%
|
2.07%
|
2.27%
|
2.40%
|
2.47%
|
2.61%
|
2.61%
|
2.61%
|
2.61%
|
2.61%
|
Exchange
rate (R$/US$)
(3)
|
1.94
|
1.88
|
1.97
|
2.01
|
2.06
|
2.12
|
2.15
|
2.18
|
2.21
|
2.24
|
Source:
Focus Report by Central
Bank of Brazil of 12/07/2007, The Economist, Nov/2007 and Deloitte
analyses.
|
(1)
Central
Bank's projection
until 2011. After this period, the
indicator projected for
2011 was held constant.
|
(2)
Projections
from The Economist "Country Forecast Brazil" Report, Nov/2007,
through
2012, adjusted for the harvest years. After this period, na
indicator of
2,61% p.y., based on Deloitte’s
judgement
and
analysis.
|
(3)
Central Bank of Brazil's
projections for the average exchange rate until 2010/11, adjusted
for the
harvest years. After this period, the difference between the
Brazilian and
American inflation (purchasing power parity) was maintained.
|
Methodologies
Adopted
|
Cosan
S.A.
|
§
|
Production
Capacity
|
§
|
Volume
of
Sugarcane
|
Methodologies
Adopted
|
Cosan
S.A.
|
§
|
Volume
of
Sugar
|
§
|
Volume
of
Ethanol
|
§
|
Co-generation
|
§
|
Other
Revenues
|
Methodologies
Adopted
|
Cosan
S.A.
|
§
|
Prices
|
Harvest
year
|
2007/08
|
2008/09
|
2009/10
|
2010/11
|
2011/12
|
VHP
Sugar Price (US$
cents/lb)
|
9.50
|
9.80
|
10.50
|
11.50
|
12.50
|
Source:
VHP sugar prices were
based on expectations of Deloitte’s
sugar and alcohol industry
analysts.
|
§
|
Net
Operating
Revenue
|
§
|
Sugar
and ethanol Domestic
and Foreign Markets
|
Methodologies
Adopted
|
Cosan
S.A.
|
§
|
Cost
of Products
Sold
|
Methodologies
Adopted
|
Cosan
S.A.
|
§
|
Operating
Expenses
|
§
|
EBITDA
|
Methodologies
Adopted
|
Cosan
S.A.
|
§
|
Depreciation
and
Amortization
|
§
|
Working
Capital
|
§
|
Income
Tax and Social
Contribution
|
Tax
|
Rate
(%)
|
IR
(Income
Tax)
|
15%
|
IR
-
Surcharge
|
10%
|
CSLL
(Social Contribution
on Net
Income)
|
9%
|
§
|
Tax
Losses and Negative
Results for Social Contribution
purposes
|
Methodologies
Adopted
|
Cosan
S.A.
|
§
|
Investments
|
1.
|
Expansion
of current
milling capacity of 40.0
million to 50.6 million tons.
|
2.
|
Greenfield
project, which
encompasses investments in three mills in the State of Goiás, with
projections for a total
million capacity of 10.0 million tonnes, reaching a total of
60.6
million tonnes,
and
beginning production of ethanol for exportation in harvest
year 2009/2010,
reaching 900 thousand cubic meters per year.
|
3.
|
Investments
in additional
operating processes with a view to increasing productivity
from the
harvests and enhancing efficiency,
as well as reducing
production costs and making investments to increase the level
of harvest
mechanization from the current 28% in harvest year 2006/2007
to 79% by
harvest year 2011/2012 (both reflected in replacement
investments).
|
4.
|
Investments
in electric power co-generation
systems for sale to the Brazilian distribution network as from
2009.
|
Methodologies
Adopted
|
Cosan
S.A.
|
Formula
|
WACC
= Ke* (E/E+D) + Kd * (1-tax)
* (D/D+E)
|
Ke
= rf + β*(ERP)
+
CRP
|
Weighed
Average Cost of Capital
(WACC)
|
Notes
|
|
Cost
of Equity
(ke)
|
||
Risk-free
rate (Rrf
)
|
4.92%
|
(a)
|
Market
premium
(ERP)
|
7.10%
|
(b)
|
Beta
(β)
|
0.75
|
(c)
|
Country
risk
(CRP)
|
1.69%
|
(d)
|
Cost
of own equity
(ke)
|
11.94%
|
|
Own
capital share
(E)
|
80%
|
(e)
|
Cost
of debt
(Kd)
|
5.45%
|
(f)
|
Third
parties' capital share
(D)
|
20%
|
(e)
|
Nominal
WACC in
US$
|
10.64%
|
|
Difference
between Brazilian and
American inflation rate
|
1.36%
|
(g)
|
Nominal
WACC in
R$
|
12.14%
|
(a)
|
Represents
the return required by
an investors for investments in risk-free securities. As a
risk-free
rate parameter
the
historical arithmetic mean for the last 24 months as disclosed
by the US
Government (North American 30-year T- Bond) was adopted . Source:
Bloomberg and Deloitte’s
analyses.
|
(b)
|
Represents
the return above the
risk-free rate that the investor
requires to invest (to accept
the risk exposure) in the capital market (equity risk premium),
due to the
risk inherent in the investment. As parameter the average premium
recorded
for shares was adopted (valuation and dividends paid) in large
American
companies since 1926. Source:
Ibbotson Associates.
|
(c)
|
Represents
the average risk of the
company or industry under analysis. For the beta calculation,
the average
unleveraged beta of companies playing in the same industry
as Cosan was
used, based on the
capital structure and IR rate of each company. This beta was
then
releveraged using the average capital structure projected for
the company
under analysis and its 34% Income Tax and Social Contribution
rate. The
mean releveraged beta, after elimination of
samples falling away from the
average curve and standard deviation, was adopted. Source:
Bloomberg and
Deloitte’s
analyses.
|
(d)
|
Represents
the total additional
interest (premium) required by an institutional investor to
invest in
Brazil (country risk premium).
As a parameter the
historical arithmetic mean of spread in the last 12 months
applied to
Brazilian and American government securities in a comparable
period was
adopted . Source: Bloomberg and Deloitte’s
analyses.
|
(e)
|
To
calculate the financial
leverage,
selection
of samples was based on comparability with Cosan S.A. in operational
terms, although there is some disparity between them in the
debt/equity
ratio. Based on the calculation of the mean debt/equity ratio
of samples,
as a result an approximate
structure of 80% of own capital
and 20% of third parties’
capital was obtained. Source:
Bloomberg and Deloitte’s
analyses.
|
(f)
|
The
cost of third
parties’
capital is calculated using the
marginal cost of Cosan S.A., i.e., 8.25% p.y., net of IR/CS
(income and
social
contribution taxes). Source: Cosan S.A.
management.
|
(g)
|
Represents
a difference between
the long-term annual inflation rate in Brazil (4.00%) and in
the United
States (2.61%). The American inflation rate was determined
using the
built-in expectation
of inflation in long-term securities (North American 30-year
T- Bond) of
the United States, whose yield is indexed to the Consumer Price
Index
(CPI). Source: EIU.
|
Methodologies
Adopted
|
Cosan
S.A.
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
||
Company
|
Market
Value in Local
Currency
|
Current
Indebtedness
|
Noncurrent
Indebtedness
|
Cash
and Cash
Equivalents
|
Third
Parties’Capital
|
Third
Parties’Capital
|
Industry
|
Illovo
Sugar
Limited
|
8,024
|
134
|
1,577
|
974
|
738
|
8.4%
|
Sugar-ethanol
|
Agrana
Beteiligungs
AG
|
1,025
|
265
|
290
|
104
|
450
|
30.5%
|
Sugar-ethanol
|
Cosan
SA Industria e
Comercio
|
5,104
|
117
|
2,646
|
816
|
1,946
|
27.6%
|
Sugar-ethanol
|
Archer
Daniels Midland
Company
|
23,052
|
2,590
|
4,733
|
1,121
|
6,202
|
21.2%
|
Agribusiness,
consumer
goods
|
Verasun
Energy
|
1,249
|
-
|
657
|
414
|
242
|
16.3%
|
Sugar-ethanol
|
CSR
Limited
|
3,161
|
4
|
498
|
53
|
449
|
12.4%
|
Sugar-ethanol
|
Suedzucker
AG
|
2,967
|
327
|
2,153
|
803
|
1,677
|
36.1%
|
Sugar-ethanol
|
Bunge
Limited
|
13,919
|
1,635
|
3,480
|
845
|
4,270
|
23.5%
|
Agribusiness,
consumer
goods
|
Corn
Products International,
Inc.
|
3,184
|
85
|
535
|
157
|
463
|
12.7%
|
Agribusiness,
consumer
goods
|
Sample
Average
|
20%
|
Source:
Bloomberg
|
|
Formulas:
|
|
Third
parties’
capital:
|
(e)
= (b) + (c) -
(d)
|
Third
parties’
capital
share:
|
(f)
= (e) / [(a) +
(e)]
|
(h)
|
(i)
|
(j)
|
(k)
|
(l)
|
|
Company
|
Capital
terceiros/
capital próprio |
Beta
(Local) |
Taxa
de IR da
Empresa
|
Beta
Desalavancado |
Beta
Realavancado |
Illovo
Sugar
Limited
|
9.2%
|
0.43
|
34.0%
|
0.41
|
0.48
|
Agrana
Beteiligungs
AG
|
44.0%
|
0.43
|
19.7%
|
0.32
|
0.38
|
Cosan
SA Industria e
Comercio
|
38.1%
|
1.57
|
38.9%
|
1.27
|
1.51
|
Archer
Daniels Midland
Company
|
26.9%
|
0.84
|
30.3%
|
0.71
|
0.84
|
Verasun
Energy
|
19.4%
|
0.86
|
41.4%
|
0.77
|
0.92
|
CSR
Limited
|
14.2%
|
0.54
|
19.4%
|
0.48
|
0.57
|
Suedzucker
AG
|
56.5%
|
0.60
|
16.7%
|
0.41
|
0.48
|
Bunge
Limited
|
30.7%
|
0.77
|
27.1%
|
0.63
|
0.75
|
Corn
Products International,
Inc.
|
14.5%
|
0.82
|
34.8%
|
0.75
|
0.89
|
Sample
Average
|
28.2%
(g)
|
0.58
|
27.0%
|
0.64
|
0.75
|
Source:
Bloomberg
|
|
Formulas:
|
|
Third
parties’
capital / Own
capital:
|
(h)
= (f) / [1 -
(f)]
|
Unleveraged
Beta:
|
(k)
= (i) / [1 + {1-(j)} *
(h)]
|
Releveraged
Beta:
|
(l)
= (k) * [1 + {1 - 34%} *
(g)]
|
Methodologies
Adopted
|
Cosan
S.A.
|
Projected
Income
Statement
|
R$
thousand
|
Projected
|
||||||||||
Income
Statement
|
2007/08
(6M)
|
2008/09
|
2009/10
|
2010/11
|
2011/12
|
2012/13
|
2013/14
|
2014/15
|
2015/16
|
2016/17
|
Net
Operating
Revenues
|
1,452,800
|
2,878,375
|
3,537,034
|
4,404,462
|
5,373,175
|
6,062,447
|
6,379,605
|
6,692,795
|
7,020,790
|
7,365,323
|
.
Growth %
|
n.d.
|
7.7%
|
22.9%
|
24.5%
|
22.0%
|
12.8%
|
5.2%
|
4.9%
|
4.9%
|
4.9%
|
Cost
of Products
Sold
|
(1,097,150)
|
(2,279,747)
|
(2,717,724)
|
(3,167,950)
|
(3,649,675)
|
(4,042,469)
|
(4,235,509)
|
(4,365,167)
|
(4,513,190)
|
(4,665,080)
|
.
Cost of Products
Sold/Net
Revenue
|
-75.5%
|
-79.2%
|
-76.8%
|
-71.9%
|
-67.9%
|
-66.7%
|
-66.4%
|
-65.2%
|
-64.3%
|
-63.3%
|
Gross
Profit
|
355,650
|
598,628
|
819,310
|
1,236,512
|
1,723,500
|
2,019,978
|
2,144,096
|
2,327,628
|
2,507,600
|
2,700,243
|
.
Gross Profit/Net
Revenue
|
24.5%
|
20.8%
|
23.2%
|
28.1%
|
32.1%
|
33.3%
|
33.6%
|
34.8%
|
35.7%
|
36.7%
|
Operating
Expenses
(*)
|
(235,319)
|
(506,416)
|
(567,731)
|
(623,829)
|
(679,170)
|
(722,110)
|
(750,670)
|
(777,764)
|
(805,735)
|
(834,745)
|
.
Operating Expenses / Net
Revenue
|
-16.2%
|
-17.6%
|
-16.1%
|
-14.2%
|
-12.6%
|
-11.9%
|
-11.8%
|
-11.6%
|
-11.5%
|
-11.3%
|
.
Administrative
Expenses
|
(120,611)
|
(220,272)
|
(242,977)
|
(268,192)
|
(292,002)
|
(303,915)
|
(313,198)
|
(322,645)
|
(332,380)
|
(342,420)
|
.
Selling
Expenses
|
(112,207)
|
(280,144)
|
(318,754)
|
(349,637)
|
(381,168)
|
(412,195)
|
(431,472)
|
(449,119)
|
(467,355)
|
(486,325)
|
.
Other
Expenses
|
(2,501)
|
(6,000)
|
(6,000)
|
(6,000)
|
(6,000)
|
(6,000)
|
(6,000)
|
(6,000)
|
(6,000)
|
(6,000)
|
EBIT
|
120,331
|
92,212
|
251,579
|
612,683
|
1,044,330
|
1,297,867
|
1,393,426
|
1,549,864
|
1,701,865
|
1,865,498
|
.
EBIT Margin (EBIT /Net
Revenue)
|
8.3%
|
3.2%
|
7.1%
|
13.9%
|
19.4%
|
21.4%
|
21.8%
|
23.2%
|
24.2%
|
25.3%
|
.
Goodwill
Amortization
|
(83,224)
|
(139,791)
|
(129,570)
|
(119,325)
|
(115,897)
|
(115,301)
|
(115,301)
|
(115,256)
|
(87,944)
|
-
|
Profit
/ (Loss) Before Income
Tax
|
37,107
|
(47,579)
|
122,009
|
493,358
|
928,433
|
1,182,566
|
1,278,125
|
1,434,608
|
1,613,921
|
1,865,498
|
.
Operating Margin (Profit Before
Income Tax/Net Revenue)
|
2.6%
|
-1.7%
|
3.4%
|
11.2%
|
17.3%
|
19.5%
|
20.0%
|
21.4%
|
23.0%
|
25.3%
|
.
Income Tax and Social
Contribution
|
(9,991)
|
-
|
(31,350)
|
(119,730)
|
(299,190)
|
(402,774)
|
(435,264)
|
(488,468)
|
(549,435)
|
(634,971)
|
.
% Income Tax and Social
Contribution
|
26.9%
|
-
|
25.7%
|
24.3%
|
32.2%
|
34.1%
|
34.1%
|
34.0%
|
34.0%
|
34.0%
|
Minority
Shareholders
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Net
Income /
(Loss)
|
27,116
|
(47,579)
|
90,659
|
373,628
|
629,243
|
779,792
|
842,861
|
946,140
|
1,064,486
|
1,230,527
|
.
Net Margin
(Net Income/Net
Revenue)
|
1.9%
|
-1.7%
|
2.6%
|
8.5%
|
11.7%
|
12.9%
|
13.2%
|
14.1%
|
15.2%
|
16.7%
|
Methodologies
Adopted
|
Cosan
S.A.
|
Results
of Appraisal by the
Discounted Cash Flow Method
|
R$
thousand
|
Discounted
Cash
Flow
|
2007/08
(6M)
|
2008/09
|
2009/10
|
2010/11
|
2011/12
|
2012/13
|
2013/14
|
2014/15
|
2015/16
|
2016/17
|
Adjusted
Flow
|
Net
Income/(Loss) for the
Year
|
27,116
|
(47,579)
|
90,659
|
373,628
|
629,243
|
779,792
|
842,861
|
946,140
|
1,064,486
|
1,230,527
|
1,230,527
|
.
Depreciation and
Amortization
|
42,622
|
392,567
|
567,096
|
692,208
|
792,359
|
854,042
|
871,917
|
883,253
|
917,637
|
947,775
|
947,775
|
.
Goodwill
amortization
|
83,224
|
139,791
|
129,570
|
119,325
|
115,897
|
115,301
|
115,301
|
115,256
|
87,944
|
-
|
-
|
.
Ajust Income Tax and Social
Contribution
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(71,518)
|
.
Working capital
variation
|
555,879
|
(119,533)
|
(116,724)
|
(113,139)
|
(128,642)
|
(102,982)
|
(39,877)
|
(36,256)
|
(39,925)
|
(42,271)
|
(42,271)
|
.
Investments
|
(942,308)
|
(1,484,241)
|
(1,036,724)
|
(803,282)
|
(717,056)
|
(622,995)
|
(642,205)
|
(662,031)
|
(683,032)
|
(705,077)
|
(705,077)
|
Cash
Flow
|
(233,466)
|
(1,118,995)
|
(366,124)
|
268,740
|
691,801
|
1,023,159
|
1,147,997
|
1,246,362
|
1,347,111
|
1,430,954
|
1,359,436
|
Discount
Rate (*)
==>
|
0.9718
|
0.8917
|
0.7952
|
0.7091
|
0.6323
|
0.5638
|
0.5028
|
0.4484
|
0.3998
|
0.3565
|
0.3565
|
Cash
Flow at Present
Value
|
(226,872)
|
(997,836)
|
(291,132)
|
190,557
|
437,427
|
576,898
|
577,202
|
558,808
|
538,583
|
510,159
|
504,048
|
Cash
Flow at Present
Value
|
1,873,794
|
|
|||||||||
(+)
Perpetuity
(**)
|
6,190,605
|
||||||||||
Cosan
S.A. Operational
Flow
|
8,064,399
|
||||||||||
Economic
Adjustments
(***)
|
(2,688,836)
|
||||||||||
Economic
Value of 100% of Shares in
Cosan S.A.
|
5,375,563
|
||||||||||
Economic
Value of Cosan S.A. Net
of Minority Interests
|
5,314,391
|
||||||||||
Total
Number of Shares in Cosan
S.A. on 10/31/2007
|
188,886,360
|
||||||||||
Economic
Value of Cosan S.A. on
10/31/2007(R$/share)
|
28.14
|
||||||||||
Stock
Option Plan on 11/19/2007
(shares)
|
922,947
|
||||||||||
Share
Issue on 12/05/2007
(shares)
|
82,700,000
|
||||||||||
Stock
Option Plan on 12/11/2007
(shares)
|
38,725
|
||||||||||
Total
Number of Shares in Cosan
S.A. after 12/11/2007 (shares)
|
272,548,032
|
||||||||||
Capital
Contribution - Stock
Option Plan (R$ thousand)
|
5,876
|
||||||||||
Capital
Contribution - Share Issue
on 12/05/2007 (R$ thousand)
|
1,736,700
|
||||||||||
Economic
Value of Cosan S.A. after
12/11/2007 (R$ thousand)
|
7,056,966
|
||||||||||
Economic
Value of Cosan S.A. after
12/11/2007 (R$/Share)
|
25.89
|
(*)
|
The
discount rate was calculated
at 12.14% p.y., in nominal Brazilian reais, using the half-rate
approach,
that is, considering the cash flow generated in the middle of
each projected
period.
|
(**)
|
To
calculate perpetuity, income
tax and social contribution (IR/CS) expenses for the last harvest
year
(2016/2017) were adjusted to reflect a decrease in depreciation
of
property, plant and equipment in relation to the last
projected period (2016/2017),
until the same investment levels perpetuated in the value projected
for
2016/2017 are reached. To absorb this effect, IR/CS expenses
in perpetuity
increased by R$71,518 thousand, totaling R$706,489 thousand.
Accordingly, the
cash flow considered for
perpetuity is R$1,359,436 thousand.
|
Formula:
Perpetuity = Cash Flow
for the Last Adjusted Year * (1+G) / (WACC - G), where perpetuity
=
R$1,359,436 thousand, WACC = 12.14% and G = 4%.
|
|
(***)
|
The
breakdown of economic
adjustments
can be
found on page 51.
|
Methodologies
Adopted
|
Cosan
S.A.
|
Economic
Adjustments
|
R$
thousands
|
(+)
Cash and Cash
Equivalents
|
141,591
|
(+)
Treasury
Certificates
|
135,886
|
(+)
Indemnity
Suits
|
331,426
|
(+)
Investments
|
13,872
|
(-)
Loans and
Financing
|
(2,283,879)
|
(-)
Dividends
Payable
|
(34)
|
(-)
Reserve
for
Contingencies
|
(757,468)
|
(-)
Debentures
Payable
|
(55,069)
|
(-)
Present Value of Taxes Payable
in Installments (1)
|
(317,766)
|
(-)
Other Credits and Obligations,
Net (2)
|
22,417
|
(+)
Settled Derivatives
(3)
|
(4,089)
|
(+)
Unsetlled Derivatives
(4)
|
84,277
|
(=)
Total Economic
Adjustments
|
(2,688,836)
|
Source:
Interim Financial
Statements as of October 31,
2007.
|
(1)
|
Taxes
Payable in Installments
refer to Tax Debt Refinancing Programs (REFIS and PAES) and
other special
installment plans for payment of
INSS, ICMS, ISS and FGTS.
Amounts considered comprise of current and noncurrent taxes
totaling
R$36,766 thousand and R$344,968 thousand, respectively, as
detailed in
note 13 of the Interim Financial Statements as of October 31,
2007. Taxes
were projected
with the respective
adjustments, considering their respective amortization periods,
and were
calculated at present value at a discount rate of 12.14%
p.y.
|
(2)
|
Refers
to adjustments in accounts
Deferred Income Tax & Social Contribution, Debentures Payable,
Other Credits, Other
Current Obligations and Other Noncurrent
Obligations.
|
(3)
|
As
detailed in note 6 of the
Interim Financial Statements as of October 31, 2007, margin
deposits, in
the amount of R$ 3,104 thousand, net of income and social
contribution taxes
payable on the amount of R$21,607 thousand, which corresponds
to
unrealized gains from Derivative Financial
Instruments.
|
(4)
|
As
mentioned in note 22 of the
Interim Financial Statements as of October 31,
2007.
|
Methodologies
Adopted
|
Cosan
S.A.
|
Period
|
Traded
Shares
|
Volume
(R$
thousands)
|
Average
Price
(R$)
|
08/16/07to
09/15/07
|
34,291,500
|
754,191
|
21.99
|
09/16/07
to
10/15/07
|
16,701,600
|
383,986
|
22.99
|
10/16/07
to
11/15/07
|
12,418,125
|
257,832
|
20.76
|
11/16/07
to
12/16/07
|
7,170,500
|
137,439
|
19.17
|
12/17/2007
to
12/19/2007
|
1,507,395
|
29,112
|
19.31
|
Average
08/16 to
12/19/2007
|
72,089,120
|
1,562,560
|
21.68
|
Period
|
Traded
Shares
|
Volume
(R$
thousands)
|
Average
Price
(R$)
|
Average
11/20 a
12/19/2007
|
4,365,345
|
83,847
|
19.21
|
Methodologies
Adopted
|
Cosan
S.A.
|
Item
|
Amount
|
Original
Value of Net Cash
Investments (R$ thousand)
|
1,969,939
|
Capital
Contribution
|
(1,736,700)
|
Proforma
Value of Net Cash
Investments
|
233,239
|
Book
Value of the 51.0% Interest
in Cosan S.A.
|
775,609
|
Increase
of 14.7% in Cosan
Ltd.’s
Interest in Cosan.
S.A.
|
1,736,700
|
Book
Value of Cosan
Ltd.’s
65.7% Interest in Cosan
S.A.
|
2,512,309
|
Book
Value of Cosan Ltd. (R$
thousand)
|
2,745,548
|
Current
Number of Shares in Cosan
Ltd.
|
208,010,044
|
Book
Value of Cosan Ltd. Cosan
Ltd. per Share (R$/Share)
|
13.20
|
Source:
Interim Financial
Statements - 10/31/07
|
Methodologies
Adopted
|
Cosan
S.A.
|
Item
|
Amount
|
Current
Number of Shares in Cosan
Ltd.
|
208,010,044
|
Number
of Shares
in Cosan
S.A.
|
272,548,032
|
Number
of Shares in Cosan S.A.
Belonging to Cosan Ltd. (65.7%)
|
179,032,044
|
Value
of Shares in Cosan S.A.
based on Deloitte’s
Report
(R$/share)
|
25.89
|
Net
Cash Investments of Cosan Ltd.
(R$ thousand)
|
1,969,939
|
Capital
Contribution
to Cosan S.A. on
12/05/2007
|
(1,736,700)
|
Proforma
Cash Investments of Cosan
Ltd. (R$ thousand)
|
233,239
|
Value
of Cosan Ltd.’s
Interest in Cosan S.A. (R$
thousand)
|
4,635,598
|
Economic
Value of Cosan Ltd. (R$
thousand)
|
4,868,837
|
Economic
Value of Cosan
Ltd. per Share
(R$/share)
|
23.41
|
Source:
Interim Financial
Statements - 10/31/2007 and Deloitte´s
analysis
|
Item
|
Amount
|
Current
Number of Shares in Cosan
Ltd.
|
208,010,044
|
Number
of Shares in Cosan S.A. on
12/11/2007
|
272,548,032
|
Hypothetical
Capital Contribution
to Cosan Ltda. using Cosan Ltd.’s
Remaining Cash
Investments
|
11,106,619
|
Number
of Shares in
Cosan S.A. if Additional
Capital Contribution is Made by Cosan Ltd.
|
283,654,651
|
Number
of Shares in Cosan S.A.
Belonging to Cosan Ltd. on 12/05/2007 (65.7%)
|
179,032,044
|
Hypothetical
Capital Contribution
to Cosan Ltda. using Cosan Ltd.’s
Remaining Cash
Investments
|
11,106,619
|
Number
of Shares in Cosan S.A. if
Additional Capital Contribution is Made by Cosan Ltd.
(67.03%)
|
190,138,663
|
Value
of Shares in Cosan S.A. if
Additional Capital Contribution is Made by Cosan Ltd.
(R$/share)
|
25.70
|
Net
Cash Investments
of Cosan Ltd. on
10/31/2007 (R$ thousand)
|
1,969,939
|
Capital
Contribution to Cosan S.A.
on 12/05/2007
|
(1,736,700)
|
Proforma
Net Cash Investments of
Cosan Ltd. On 12/05/2007 (R$ thousand)
|
233,239
|
Capital
Contribution to Cosan S.A.
using Cosan Ltd.’s
Remaining Cash Investments (R$
thousand)
|
(233,239)
|
Net
Cash Investments of Cosan Ltd.
If Additional Capital Contribution is Made to Cosan S.A. (R$
thousand)
|
-
|
Value
of Cosan Ltd.’s
Interest in Cosan S.A. –
67.03% (R$
thousand)
|
4,886,752
|
Economic
Value of Cosan Ltd. (R$
thousand)
|
4,886,752
|
Economic
Value of Cosan Ltd. Per
Share (R$/share)
|
23.49
|
Source:
Interim Financial
Statements –
10/31/2007 and
Deloitte’s
analysis.
|
1.
|
Value
of Cosan Ltd. of R$35.11 per
share, considering the average quotation price of R$39.49 per
share of
Cosan S.A. in the 12 months prior to the disclosure of the
Relevant Fact
dated June 25, 2007.
|
2.
|
Value
of Cosan Ltd.
of R$23.74 per share,
considering the average quotation price of R$26.28 per share
of Cosan S.A.
subsequent to the disclosure of the Relevant Fact (June 25,
2007) through
the date of this Appraisal Report.
|
3.
|
Value
of Cosan Ltd. of R$18.91 per
share, considering
the average quotation price of R$20.66 per share of Cosan S.A.
subsequent
to the share issue on November 19 through the date of this
Appraisal
Report.
|
(1)
|
Economic
value per share after
issuance of shares on November 19, 2007 and December 5 and
11, 2007, based
on the Discounted Cash Flow Method, with a minimum and maximum
value range
of 10%,
pursuant to CVM Instruction No. 361/02.
|
|
(2)
|
Market
value per share based on
the weighted average price for shares of:
|
|
(i)
|
R$39.49
per share in the 12 months
prior to the disclosure of the Relevant Fact dated June 25,
2007.
|
|
(ii)
|
R$26.28
per
share from the date of
disclosure of the Relevant Fact (June 25, 2007) through the
date of this
Appraisal Report.
|
|
(iii)
|
R$20.66
per share from the
announcement on November 19, 2007 of the Cosan S.A. share issue
through
the date of this Appraisal Report.
|
|
(3)
|
Book
value per share as of October
31, 2007, adjusted after issuance of shares on November 19,
2007 and
December 5 and 11, 2007, resulting in 272,548,032
shares.
|
(1)
|
Economic
value per share based on
the Assets Approach, with the investment in Cosan S.A. estimated
on a
discounted cash flow basis, with a
minimum and maximum value
range of 10%, pursuant to CVM Instruction No.
361/02.
|
|
(2)
|
Assets
Approach with the
investment in Cosan S.A. being estimated based on the weighted
average
price for shares in Cosan S.A. of:
|
|
(i)
|
R$35.11
per share, for the
weighted
average
value of R$39.49 per share in Cosan S.A. in the 12 months prior
to the
disclosure of the Relevant Fact dated June 25,
2007.
|
|
(ii)
|
R$23.74
per share, for the
weighted average value of R$26.28 per share Cosan S.A. from
the date of
disclosure of the
Relevant Fact (June 25, 2007) through the date of this Appraisal
Report.
|
|
(iii)
|
R$18.91
per share, for the
weighted average value of R$20.66 per share Cosan S.A. from
the
announcement on November 19, 2007 of the Cosan S.A. share issue
through
the date
of this
Appraisal Report.
|
|
(3)
|
Market
value per share traded on
the NYSE based on the weighted average price per share (i)
21.68 per
share, from the date of the Initial Public Offering on August
16, 2007,
through the date of this Appraisal Report and; (ii)
19.12 per share, from the
announcement on November 19, 2007 of the share issue of Cosan
S.A. through
the date of this Appraisal Report.
|
|
(4)
|
Book
Value per Class A share,
based on 208,010,044 shares as of October 31,
2007.
|
§
|
Assets
Approach: This is the
method normally employed to appraise businesses that do not
generate
positive cash
flows,
in which case they should be liquidated, that is, when such
businesses are
incapable of generating an appropriate return on investment
in their
operations or in which the nature of their business is such
that a buyer
would only eye the asset
itself.
|
§
|
Bloomberg:
Source of financial
information to which we had access for development of this
project.
|
§
|
CPS:
Cost of Products
Sold.
|
§
|
CVM:
Comissão de
Valores Mobiliários.
The Brazilian Securities
Commission, equivalent to the U.S.’s
SEC.
|
§
|
DCF:
Discounted Cash
Flow. Represents the method
that estimates the free cash flow to be generated by future
operations,
duly adjusted to the risk by the discount
rate.
|
§
|
Debt-Free
Model: Calculation model
that considers only the projection of operating results, free
of
debt
payments.
|
§
|
DFP:
Demonstrações Financeiras
Padronizadas.
Standardized Financial
Statements.
|
§
|
EBIT:
Earnings Before Interest and
Taxes –
This figure represents a
company’s
income before payment of
interest and taxes.
|
§
|
EBITDA:
Earnings Before
Interest, Taxes,
Depreciation and Amortization –
This represents a
company’s
income before payment of
interest, taxes, depreciation and
amortization.
|
§
|
EIU:
Economist Intelligence Unit.
Source of economic and financial information to which we had
access in
carrying out
this
engagement.
|
§
|
Ibbotson
Associates: Source of
information regarding historical and expected data with respect
to capital
markets, to which we had access in preparing this Appraisal
Report.
|
§
|
IGP-M:
Índice
Geral de Preços de
Mercado. Brazilian
General Market
Price
Index.
|
§
|
IR/CS:
Imposto de Renda e
Contribuição Social.
Brazilian Federal Income Tax and Social
Contribution.
|
§
|
Perpetuity:
This is the present
value of the future cash flows, assuming constants at regular
intervals
forever.
|
§
|
p.y.:
per year
|
§
|
T-Bond:
Treasury Bonds. These are
bonds issued by the U.S.
Government.
|
Description
|
Amount (R$ thousands)
|
(+)
Variation in Working
Capital
|
42,271
|
(+)
Investments
(Industrial and Agricultural)
|
(705,077)
|
(-) Depreciation
|
705,077
|
(=)
Net Investment
in Perpetuity
(*)
|
42,271
|
(/)
Net Operating Income in
Perpetuity (*)
|
1,159,009
|
(=)
Reinvestment
Rate
|
3.6%
|
(x)
Return on Capital - WACC
(**)
|
7.8%
|
(=)
Expected Growth Rate
(**)
|
0.3%
|
Actual
Growth Rate
(**)
|
0.0%
|
(*)
Net Operating Income
(R$1,230,527 thousand) after the deduction of adjusted Income
tax and
Social Contribution (R$71,518 thousand), in perpetuity, as
shown on page
50 of this Report.
|
(**)
Actual
Rates
|
Telephone:
|
U.S.: (866)
215-3028
|
|
Brazil: (55)(11)
3012-6070
|
Telephone:
|
U.S.: (866)
215-3028
|
|
Brazil: (55)(11)
3012-6070
|
3.1
|
Memorandum
of Association of the Registrant, incorporated herein by reference
to
Exhibit 3.1 to the Registrant’s Registration Statement on Form F-1 (No.
333-144010) filed August 20, 2007.
|
3.2
|
Bye-laws
of the Registrant.
|
4.1
|
Form
of Class A Common Share Certificate incorporated herein by reference
to
Exhibit 4.1 to the Registrant’s Registration Statement on Form F-1 (No.
333-144010) filed August 20, 2007.
|
4.2
|
Form
of Class B Series 2 Common Share Certificate.*
|
5.1
|
Opinion
of Appleby, Bermuda counsel for the Registrant, as to the legality
of the
Class A Common Shares and Class B Series 2 Shares.
|
8.1
|
Opinion
of Souza, Cescon Avedissian, Barrieu & Flesch Advogados, Brazilian
counsel to the Registrant, as to Brazilian tax consequences of the
exchange offer.
|
8.2
|
Opinion
of Davis Polk & Wardwell, U.S. counsel for the Registrant, as to US
federal tax consequences of the exchange offer.
|
8.3
|
Opinion
of Appleby, Bermuda counsel for the Registrant, as to Bermuda tax
consequences of the exchange offer.
|
10.1
|
Indenture
dated as of October 25, 2004 among Cosan S.A. Indústria e Comércio, as
issuer, FBA—Franco Brasileira S.A. Açúcar e Álcool and Usina Da Barra
S.A.—Açúcar e Álcool, as guarantors, JPMorgan Chase Bank, as trustee,
JPMorgan Trust Bank Ltd., as principal paying agent and J.P. Morgan
Bank
Luxembourg S.A., as Luxembourg paying agent, incorporated herein
by
reference to Exhibit 10.1 to the Registrant’s Registration Statement on
Form F-1 (No. 333-144010) filed August 20,
2007.
|
10.2
|
Indenture
dated as of February 6, 2006 among Cosan S.A. Indústria e Comércio, as
issuer, FBA—Franco Brasileira S.A. Açúcar e Álcool and Usina Da Barra
S.A.—Açúcar e Álcool, as guarantors, JPMorgan Chase Bank, N.A., as
trustee, JPMorgan Trust Bank Ltd., as principal paying agent and
J.P.
Morgan Bank Luxembourg S.A., as Luxembourg paying agent, incorporated
herein by reference to Exhibit 10.2 to the Registrant’s Registration
Statement on Form F-1 (No. 333-144010) filed August 20,
2007.
|
10.3
|
Indenture
dated as of January 26, 2007 among Cosan Finance Limited, as issuer,
Cosan
S.A. Indústria e Comércio and Usina Da Barra S.A.—Açúcar e Álcool, as
guarantors, The Bank of New York, as trustee, The Bank of Tokyo-Mitsubishi
UFJ, Ltd., as principal paying agent and The Bank of New York Luxembourg
S.A., as Luxembourg paying agent, incorporated herein by reference
to
Exhibit 10.3 to the Registrant’s Registration Statement on Form F-1 (No.
333-144010) filed August 20, 2007.
|
10.4
|
Loan
Agreement dated as of June 28, 2005 among Cosan S.A. Indústria e Comércio,
as borrower, and International Finance Corporation, incorporated
herein by
reference to Exhibit 10.4 to the Registrant’s Registration Statement on
Form F-1 (No. 333-144010) filed August 20, 2007.
|
10.5
|
Commitment
to Offer Commercial Opportunities dated December 5, 2007 among Cosan
Limited, Cosan S.A. Indústria e Comércio and Rubens Ometto Silveira
Mello.
|
21.1
|
Subsidiaries
of the Registrant, incorporated herein by reference to Exhibit 21.1
to the
Registrant’s Registration Statement on Form F-1 (No. 333-144010) filed
August 20, 2007.
|
23.1
|
Consent
of Ernst & Young Auditores Independentes S.S.
|
23.2
|
Consent
of Appleby, Bermuda legal counsel of the Registrant (included in
Exhibits
5.1 and 8.3).
|
23.3
|
Consent
of Souza, Cescon Avedissian, Barrieu & Flesch Advogados, Brazilian
counsel to the Registrant (also refer to Exhibit 8.1).
|
23.4
|
Consent
of Davis Polk & Wardwell, U.S. legal counsel to the Registrant
(included in Exhibit 8.2).
|
99.1
|
Press
Release dated November 23, 2007.*
|
COSAN
LIMITED
|
|||
By:
|
/s/
Rubens Ometto Silveira Mello
|
||
Name:
|
Rubens
Ometto Silveira Mello
|
||
Title:
|
Chairman
and Chief Executive Officer
|
Name
|
Title
|
|
/s/
Rubens Ometto Silveira Mello
|
Chairman
and Chief Executive Officer
(principal
executive officer)
|
|
Rubens
Ometto Silveira Mello
|
||
Vice
Chairman
|
||
Marcus
Vinicios Pratini de
Moraes
|
||
/s/
Paulo Sérgio
de Oliveira
Diniz
|
Director
|
|
Paulo
Sérgio de Oliveira
Diniz
|
||
Director
|
||
Mailson
Ferreira da Nóbrega
|
||
/s/
Marcos
Marinho
Lutz
|
Director
|
|
Marcos
Marinho
Lutz
|
||
/s/
Pedro Isamu Mizutani
|
Director
|
|
Pedro
Isamu Mizutani
|
||
Director
|
||
George
E.
Pataki
|
||
/s/
Marcelo de Souza Scarcela Portela
|
Director
|
|
Marcelo
de Souza Scarcela Portela
|
||
Director
|
||
José
Alexandre
Scheinkman
|
||
/s/
Paulo Sérgio
de Oliveira
Diniz
|
Chief
Financial Officer (principal financial officer and principal accounting
officer)
|
|
Paulo
Sergio de Oliveira
Diniz
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/s/
Donald Puglisi
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Authorized
Representative in the United States
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Donald
Puglisi
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