Israel-based Ampal-American Israel Corporation signed an option exercise agreement with Merhav (M.N.F) Ltd. pursuant to which it has exercised an existing option to convert Ampal’s existing $22.249 million loan ($20 million plus accrued interest) into a 25% equity interest in a sugarcane ethanol production project in Colombia being developed by Merhav.
The purchase of the 25% equity stake and the conversion of the loan is subject to the initial disbursement of a loan from Banco do Brasil, the lender providing project financing to the project.
The Project encompasses approximately 10,000 hectares of land, and includes both agricultural and industrial sectors. All necessary permits, including environmental licenses and free trade zone approval, have been obtained by the project.
The Project is expected to start commercial production during 2012, and reach its full production capacity of 112 million liters (30 million gallons US) of ethanol annually in 2014. Colombia requires 10% ethanol blending in gasoline distributed in Colombia.
Merhav is a multinational corporation with interests in a range of sectors, including energy, infrastructure projects, and agriculture. Ampal and its subsidiaries acquire interests primarily in businesses located in the State of Israel or that are Israel-related. The Company is seeking opportunistic situations in a variety of industries, with a focus on energy, chemicals, communication and related sectors. The Company’s goal is to develop or acquire majority interests in businesses that are profitable and generate significant free cash flow that Ampal can control.