Moody’s assigns FS, notes B1

Moody’s Investors Service said it assigned a preliminary first-time B1 corporate family rating to FS Agrisolutions Industria de Biocombustiveis (FS). Simultaneously, Moody’s assigned a preliminary B1 rating to the proposed $500 million senior unsecured notes to be issued by FS Luxembourg Sarl guaranteed by FS.

“FS Agrisolutions Industria de Biocombustíveis’ (FS) (P)B1 rating incorporates its scale among the six largest ethanol producers in Brazil, being the largest on corn feedstock. FS is a low-cost producer with favorable access to corn feedstock and located in a region with a high demand for animal nutrition, co-product from the ethanol production process,” Moody’s said in a press release.

The proceeds will be used to refinance debt and invest in bioenergy, to increase corn-based ethanol production and make operational investments to acquire feedstock to produce corn-based ethanol.

Proceeds will also be used to plant trees, buy forests or make operational investments to support small producers of timber derived feedstocks via forward contracts to acquire biomass and funding for their initial capital investments.

The outlook is stable. “The stable outlook incorporates our expectation that FS will be able to increase EBITDA consistently in the next two harvests bringing leverage down to around 4x in March 2021, 3.3x in March 2022, and production capacity of 1.1 billion liters in 2020-21 and 1.4 billion liters after that,” the agency said.

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