“We are starting discussions with BNDES to raise debt,” CFO Alfredo Freitas tells LatinFinance. He expects to source about BRL1.2 billion, a small portion of which could be BNDES backed debt from local commercial banks.

“BNDES continues to be the most competitive source of financing in Brazil, considering costs, and more importantly, tenor,” says Freitas, adding that this is particularly true for start-ups with greenfield projects. He estimates that Brenco, which made headlines last year by raising $200 million from private donors including Bill Clinton and

Brenco has raised $280 million to date from private investors and is preparing for an eventual Bovespa IPO. “We have to be ready up until the final quarter of this year to access the market when conditions are right,” Freitas says, noting that such a transaction could raise $300 million - $400 million.

Brenco, headed by former Petrobras chief Henri Philippe Reichstul, has an initial BRL5.5bn investment plan calling for eight mills, the first of which could start crushing as soon as May 2009. It hopes to differentiate itself from the many ethanol competitors, Freitas says, by using byproducts for electricity cogeneration and committing to sustainable practices.