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Other Resources / Risk Factors

Risks related to the business and industries

  • Unpredictable weather conditions, pest infestations and diseases may have an adverse impact on agricultural production and may reduce the volume and sucrose content (TRS) of sugarcane that we can grow or purchase in a given harvest.
  • Fluctuation in market prices could adversely affect our financial conditions and results of operations.
  • Ethanol prices are correlated to the price of sugar and are becoming closely correlated to the price of oil. Consequently, a decline in the price of sugar will adversely affect our ethanol and sugar businesses and decline in the price of oil may also adversely affect our ethanol business.
  • The expansion of our business through acquisitions pose risks that may reduce the benefits we anticipated in our transactions.
  • Adverse conditions may create delays in or the suspension of the construction of our Ivinhema mill and/or significantly increase the amount of its expected investments.
  • A significant increase in the price of the raw materials we use in our operations, or the shortage of such raw materials, could adversely affect the results of our operations.
  • Increased energy prices and frequent interruptions of energy supply could adversely affect our business.
  • Fluctuations in international trade and economic policies may affect the export of our products.
  • A worldwide economic downturn could weaken demand for our products or lower prices
  • Our business is seasonal, consequently our revenues may fluctuate significantly depending on the growing cycle of our crops.
  • Our dairy and beef cattle are vulnerable to diseases.
  • The insurance coverage policy we poses may not be sufficient to cover significant losses due to adverse weather conditions.
  • Fluctuations in market prices for our products could adversely affect our financial condition and results of operations.
  • A reduction in the market demand for ethanol or a change in governmental policies that reduce the amount of ethanol required to be mixed with gasoline may adversely affect our business.
  • Substantial infrastructure development by persons and entities outside our control is required in the sale and distribution of ethanol. These improvements may not occur on a timely basis, if at all.
  • Our ethanol business may be harmed by competition from alternative fuels, products and production methods.
  • A substantial portion of our assets is farmland that is highly illiquid. The price of our farms may be impacted by changes government policies such as price controls, export restrictions or the imposition of duties. 
  • We have agriculture partnerships relating to a significant portion of our sugarcane plantations and cannot guarantee that they will be renewed after our respective terms.
  • We may be subject to labor disputes that may adversely affect us.
  • We may not possess all of the permits and licenses required to operate our business, or we may fail to maintain the licenses and permits we currently hold. This could subject us to fines and other penalties, which could adversely affect the results of our operations.
  • We are subject to extensive environmental regulation. Concerns regarding climate change may result in even stricter environmental regulations.
  • Some of the agricultural commodities and food products that we produce contain genetically modified organisms. The use of GMOs in food has been met with varying degrees of acceptance in the markets in which we operate.
  • If our products become contaminated, they may be subject to product liability claims, product recalls and restrictions on exports that would adversely affect our business.
  • We may be adversely affected by unfavourable outcomes in pending legal proceedings.
  • Our principal shareholders have the ability to direct our business and affairs, and our interests could conflict with yours.
  • IFRS accounting standards related to biological assets require us to make numerous estimates in the preparation of our financial statement and therefor limit the comparability of our financial statements to similar issuers using U.S. GAAP.
  • Proposed new IFRS standards and amendments may have a significant effect on our financial statements.
  • Internal controls over financial reporting may not be effective and our independent registered public accounting firm may not be able to certify the effectiveness of our methods. This could have a significant and adverse effect on our business and reputation.
  • Certain of our subsidiaries have substantial indebtedness which could impair our financial condition and decrease the amount of dividends we receive.
  • The historical and pro forma financial information in this prospectus may not accurately predict the costs of our operations in the future.
  • We have a history of operating losses and negative cash flows which may continue and adversely affect our ability to meet our business and growth objectives.
  • The terms of the indebtedness of, and past breaches of financial ratio covenants by, certain of our subsidiaries impose significant restrictions on our operating and financial flexibility.
  • Fluctuations in interest rates could have a significant impact on the result of our operations, indebtedness and cash flow.
  • We may not be able to renew our credit lines when they mature, depriving them of needed liquidity.
  • There is a risk that we could be treated as a U.S. domestic corporation for U.S. federal income tax purposes, which could materially increase our U.S. federal income tax liability and subject any dividends we pay to U.S. federal withholding tax.

 

Risks associated with the countries in which we operate

  • We operate our business in emerging markets. The results of our operations and financial conditions are dependent upon economic conditions in those countries in which they operate, and any decline in economic conditions could harm our results of operations or financial condition.
  • The economies of the countries in which we operate may be adversely affected by the deterioration of other global markets.
  • Governments have a high degree of influence in the economies in which we operate which could adversely affect our results of operations or financial condition.
  • Currency exchange rate fluctuations relative to the U.S. dollar in the countries in which we operate our businesses may adversely impact the results of our operations and our financial condition.
  • Inflation in some of the countries in which we operate, along with governmental measures to combat inflation, may have a significant negative effect on the economies of those countries and, as a result, on our financial condition and results of operations
  • Disruption of transportation and logistics services or insufficient investment in public infrastructure could adversely affect our operating results. 

 

Risks Related to Argentina

  • Argentine economic and political conditions and perceptions of these conditions in the international market may have a direct impact on our business and our access to international capital and debt markets. This could adversely affect the results of our operations and financial condition.
  • The economy of Argentina may be affected by its government’s limited access to financing from international markets. 
  • The lack of financing for Argentine companies may have an adverse effect on the results of our operations in Argentina and on the market price of our common shares.
  • Government intervention in Argentina may have a direct impact on our prices and sales.
  • Government measures to pre-empt or respond to social unrest may adversely affect the Argentine economy and our business.
  • Disputes between the Argentine government and the agricultural sector may adversely affect the Argentine economy and our business.
  • The Argentine government may order salary increases to be paid to employees in the private sector, which would increase our operating costs.
  • An increase in export duties and controls may have an adverse impact on our sales.
  • Exchange controls could restrict the inflow and outflow of funds in Argentina.

 

Risks Related to Brazil

  • Brazilian economic and political conditions and perceptions of these conditions in international markets have a direct impact on our business and our access to international capital and debt markets and could adversely affect our results of operations and financial condition.
  • Changes in Brazilian tax laws may increase our tax burden.
  • Widespread corruption and fraud relating to ownership of real estate may adversely affect our business, especially its land transformation business.
  • Social movements and the possibility of expropriation may affect the normal use of, damage, or deprive them of the use of or fair value of our properties.
  • Recent changes in Brazilian rules concerning foreign investment in rural properties may adversely affect our investments.
  • The Brazilian government has exercised, and continues to exercise, significant influence over the Brazilian economy.
  • Our business in Brazil is subject to governmental regulations.
  • Government laws and regulations in Brazil concerning the burning of sugarcane could have a material adverse impact on our business or financial performance.

 

 

Risks related to the Offering

  • There is no existing market for our shares, and we do not know whether one will develop to provide you with adequate liquidity. If our stock price fluctuates after this offering, you could lose a significant part of your investment.
  • The initial public offering price per common share is substantially higher than our net tangible book value per common share immediately after the offering, and you will incur immediate and substantial dilution.
  • Sales of substantial amounts of our shares in the public market, or the perception that these sales may occur, could cause the market price of its shares to decline.
  • Transformation into a public company may increase our costs and disrupt the regular operations of its business.
  • As a foreign private issuer, we are permitted to rely on exemptions from certain NYSE corporate governance standards applicable to U.S. issuers, including the requirement that a majority of an issuer’s directors consist of independent directors. This may afford less protection to holders of our common shares.

 

Risks Related to Investment in a Luxembourg Company

  • We are a Luxembourg corporation (“société anonyme”) and it may be difficult for you to obtain or enforce judgments against them or its executive officers and directors in the United States.
  • You may have more difficulty protecting your interests than you would as a shareholder of a U.S. corporation.
  • You may not be able to participate in equity offerings, and you may not receive any value for rights that we may grant.