Südzucker examines IPO for CropEnergies AG

Südzucker intends - if the stock exchange mood remains good - to publicly float its bioethanol division CropEnergies in the course of this year - Strong international growth - CropEnergies es-tablished as a brand and profitable.

Südzucker plans - if the mood in the stock exchange remains good - to publicly float its bioethanol division under the name CropEnergies AG this year.

CropEnergies is a successful manufacturer of bioethanol for the fuel sector and is the market leader in Europe. Through an IPO its international expansion is to be placed on a broader financial basis so as to utilize the excellent outlook for the bioethanol market, and in particular in Europe. Dr. Theo Spettmann, the chief executive of Südzucker AG states: «With the extension of the production facilities in Zeitz and the international expansion currently under way, CropEnergies is endeavouring to occupy a leading position in Europe.»

CropEnergies has an established business model. «The basic investment has been completed, the company is operating profitably,» adds CFO Thomas Kölbl. In the first quarter of the current business year (1 March - 31 May 2006) the CropEnergies division attained sales revenues of 30.8 million euros. Ordinary earnings - earnings before interest and taxes (EBIT) - amounted to 2.6 million euros.

The CropEnergies Group operates Europe»s largest bioethanol plant at the facility in Zeitz, Saxony-Anhalt, with an annual processing capacity of 700,000 tonnes of crops and a current bioethanol capacity of ca. 260,000 m³. The plant, which was commissioned in the spring of 2005, is outstanding thanks to its efficient continuous fermentation method coupled with an integrated, optimized energy concept.

With the enlargement of the existing facilities in Zeitz and the simultaneous diversification of the basic raw materials to include syrup from sugar beet, it is planned to attain a further capacity increase of ca. 100,000 m³ p.a. - to ca. 360,000 m³ p.a. of bioethanol - at the Zeitz facility.

In the future European expansion is to be underlined not simply by the extension of the Zeitz facility, but also with new sites in Belgium and France. The company has begun with the planning of a production facility in Belgium with an annual capacity of as much as 300,000 m³ for the manufacture of bioethanol from wheat and sugar beet syrup. In Dunkirk, France, it is planned to raise the annual capacity from its current level of ca. 30,000 m³ to ca. 100,000 m³. Furthermore, through the sale of bioethanol, produced by AGRANA, another company in the Südzucker Group, CropEnergies will be able to market additional volumes.

"With the IPO we intend to place CropEnergies on course to occupy the leading position in Europe in the growth market bioethanol by 2008/09 with an annual production capacity of over 750,000 m³ of bioethanol, and to secure the basis for further growth. Within a capital increase CropEnergies could receive an amount of over 200 million euro," says chief executive Dr. Theo Spettmann. With Dr. Lutz Guderjahn and Joachim Lutz, two experienced managers from the Südzucker Group who have played a decisive role in the bioethanol project from the very outset, the bioethanol activities will be headed by a highly capable team in the future.

Under the brand name CropEnergies the company markets bioethanol, above all for the production of ETBE, an octane booster made using ethanol and other raw materials, and as an additive for otto fuels. «The CropEnergies brand is already very well positioned in the bioethanol sector. As a logical consequence of this, the new bioethanol company will trade under the name CropEnergies AG,» is the reason stated by Dr. Theo Spettmann for the change of name. Under the brand name «CropPower85» the company will also be offering a quality fuel comprising approx. 85 % bioethanol and around 15 % petrol. CropEnergies also manufactures a high-value, protein-rich animal feed with the brand name «ProtiGrain» as a coproduct from the production of bioethanol.
Bioethanol is used to describe ethanol produced from biomass. Bioethanol is produced through the fermentation of vegetable raw materials containing sugar and starch. When used as a fuel bioethanol enhances motor performance by increasing the octane rating, and improves the CO2 audit. The European standard for otto fuels currently allows for the general addition of as much as 5 vol. per cent bioethanol as a direct petrol additive and the use of ETBE with as much as 15 vol. per cent.

At present the European political bodies are examining further limitations on volumes. Against the background of the favourable CO2 audit and the particular significance of bioethanol for a reduction in the dependence on fossil fuels and an improvement in the security of energy supplies, in the so-called Bio-fuel Directive (2003/30/EC from 8 May 2003) the EU has obliged its member states to ensure that the proportion of biofuels in overall fuel consumption within the EU rises to 5.75 % by 2010. In the implementation of this directive the German government is currently planning the introduction of an additive quota for petrol as of 1 January 2007 of initially 2 % bioethanol, which is to increase by 1 January 2010 to 3 % - per energy equivalent in each case. The corresponding draft legislation was submitted by the German government last week.

Deutsche Bank Aktiengesellschaft will act as the Sole Global Coordinator and Sole Bookrunner for the IPO. Other members of the issuing consortium are Citigroup Global Markets Limited and DZ Bank AG as Joint Lead Manager, as well as Landesbank Baden-Württemberg, Raiffeisen Centrobank AG, Austria, and Sal. Oppenheim jr & Cie. Kommanditgesellschaft auf Aktien as Co-Manager.

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