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Solazyme Loan for Brazil Plant Cuts Borrowing Cost

Solazyme Inc., a U.S. biofuel company, lowered its borrowing costs with a 245.7 million-real ($120 million) loan from Brazil’s national development agency BNDES for a plant it’s building in the South American country.

The funding “represents a sharp reduction in the cost of capital compared to typical clean-technology financings,” Laurence Alexander, an analyst with Jefferies Group Inc. in New York, said in a research note today. It’s “a significant milestone for both Solazyme and the biochemicals industry.”

Solazyme Bunge Renewable Oils, a joint venture with Bunge Ltd., is paying about 4 percent interest for the eight-year loan, South San Francisco, California-based Solazyme said in a statement yesterday.

Alexander rates Solazyme a buy, with a 12-month price target of $23. Shares fell 9.2 percent to $6.88 at the close in New York.

Solazyme makes oils from sugar-consuming algae that are processed into fuel and specialty chemicals.

The companies broke ground in June on the commercial-scale plant, which is expected to be begin production in the fourth quarter. The facility is adjacent to Bunge’s Moema sugar-cane mill in Sao Paulo state.

The funding is part of a joint program between the development agency, formally Banco Nacional de Desenvolvimento Economico e Social, and the country’s research-financing agency FINEP to encourage investment in sugar-based energy and chemical projects.

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