Clean Energy Brazil PLC 09 April 2008 9 April 2008 CLEAN ENERGY BRAZIL PLC ("CEB", the "Company" or the "Group") INTERNALISATION OF INVESTMENT MANAGEMENT The announcement released by CEB yesterday referred to trading results for investee companies Usaciga and Unialco for the nine months to 31 January 2008 expressed in dollars rather than in cents per lb of sugar. In the nine months to 31 January 2008, Usaciga achieved an EBITDA of US2.54 cents/lb and net income of US1.74 cents/lb on turnover of US13.27 cents/lb and Unialco achieved an EBITDA of US1.61 cents/lb and net income of US1.23 cents/lb on turnover of US11.80 cents/lb (on an unaudited basis). The full text of the amended announcement is set out below: Clean Energy Brazil plc is pleased to announce a reorganisation of the Company under which CEB will take responsibility for the management of its investments. This change is geared toward improving returns on the Company's investments in the Brazilian sugar and ethanol markets and the Board believes such change will be beneficial for the shareholders in the Company. Highlights Since the IPO in December 2006, CEB has successfully invested a total of $214 million in operating assets in Brazil. The Company is now fully invested in established and greenfield businesses, is fully integrated - from cane to customer - and has profitable operations. The Board has therefore decided to reorganise CEB as a self-managed investment company focusing on the production of sugar, ethanol, electricity and other by-products from its sugar cane investments in Brazil. As part of the internalisation, the investment advisory agreement between CEB and Temple Capital Partners Limited ("TCP") will be terminated and CEB will acquire Temple Capital Partners Planejamento Empresarial Ltda ("TCP Brazil"), ensuring that all of the expertise available from that organization will now reside within CEB. In consideration for the termination of the investment advisory agreement with CEB, following an analysis of the supporting calculations performed by KPMG LLC at the request of the Board, TCP, whose shareholders include the initial investors in CEB, will receive a payment of $23 million to be satisfied by the issue of 11,800,000 new ordinary shares in CEB (the "TCP Consideration Shares"). As a result of the termination of the investment advisory agreement, the management and performance fees currently and potentially payable to TCP by CEB pursuant to such agreement will be saved. The issue of the TCP Consideration Shares will result in a dilution of 8% in respect of CEB shareholders (except for those CEB shareholders who are also TCP shareholders and who will, as a result of the termination of the investment advisory agreement, increase their respective shareholdings in CEB). Following the reorganisation, the reporting lines within the Company will be simplified: Marcelo Junqueira, currently a non-executive director of CEB and a director of TCP and TCP Brazil, will become Chief Executive Officer of CEB. Peter Thompson, a director of Czarnikow and Chairman of TCP, will become a non-executive director of CEB. The executive team has also been expanded to include Mr. John Sam Koutras, a former financial director of CMS Energy, who has recently been hired as CFO and Mr. Gilberto Mascioli, an executive from TCP Brazil, who has been recently appointed as COO. Current Trading Recent macro economic conditions have impacted positively on commodity prices with sugar prices rallying 30% during the last three months from around 10.00c per lb. Both domestic and international ethanol demand remains strong. It is anticipated that the 2007/08 crop period will achieve an overall sugar/ethanol price of 13.00c per lb sugar basis. This uplift in the sugar price has enabled CEB to hedge favourably the two subsequent crops. In the nine months to 31 January 2008, Usaciga achieved an EBITDA of US2.54 cents/lb and net income of US1.74 cents/lb on turnover of US13.27 cents/lb and Unialco achieved an EBITDA of US1.61 cents/lb and net income of US1.23 cents/lb on turnover of US11.80 cents/lb (on an unaudited basis). Antonio Monteiro de Castro, Chairman of Clean Energy Brazil plc, commented: "Clean Energy Brazil is now an established investor in the Brazilian sugar cane sector with good exposure both to the rapidly-growing domestic ethanol market and the developing international ethanol market. Since the IPO, we have invested a total of $214 million and now own investments in a number of operating assets which have been acquired at advantageous prices, are profitable and which we continue to improve. We are a fully integrated investor in the market - from cane to customer. Now is the right time to change to a self-managed investment company and to focus on maximising the operational returns from our investments." Ends Further enquiries: Clean Energy Brazil Tel: +55 11 3556 8750 Antonio Monteiro de Castro a.castro@cleanenergybrazil.com Marcelo Junqueira m.junqueira@cleanenergybrazil.com Numis Securities Limited Tel: +44 (0) 20 7260 1000 Jag Mundi Anthony Richardson Smith & Williamson Corporate Finance Limited Tel: +44 (0) 20 7131 4000 (Nominated Adviser) Azhic Basirov David Jones Fishburn Hedges Tel: +44 (0) 20 7839 4321 (Financial PR Adviser) ceb@fishburn-hedges.co.uk Andy Berry +44 (0) 7767 374421 Morgan Bone +44 (0) 7767 622967 CLEAN ENERGY BRAZIL PLC ("CEB", the "Company" or the "Group") INTERNALISATION OF INVESTMENT MANAGEMENT The Group had originally entered into contractual arrangements with its investment manager, Temple Capital Partners Limited ("TCP"). TCP in turn had entered into service agreements with Czarnikow Group Limited ("Czarnikow") and TCP Brazil. These arrangements gave the Group access to a team of professionals, enabling it to utilise their knowledge, relationships and understanding of the sugar cane sector in Brazil to implement the Group's investment strategy. The Company, through its subsidiaries, invests directly in Brazil's growing sugar and ethanol industry. The aim of the reorganisation is to allow CEB to rationalize the management of its investments and to enhance operational focus on its existing investments. As part of the reorganisation, the following will take place: 1. Termination of Investment Advisory Agreement The investment advisory agreement between Clean Energy Brazil Limited (a wholly-owned subsidiary of CEB) and TCP, pursuant to which TCP provides services to the Group (the "Investment Advisory Agreement"), will be terminated for a consideration of $23 million to be satisfied as set out below . The Investment Advisory Agreement, which has an initial term of ten years, was entered into at the time of the Company's admission to trading on AIM in December 2006. On termination of the Investment Advisory Agreement, CEB will be represented on the boards of its investee companies by employees of the Group rather than by representatives of TCP. The boards of CEB and TCP have agreed that, as consideration for the termination of the Investment Advisory Agreement and the management fees and performance fees that TCP is expected to be entitled to pursuant to the terms of such agreement, new ordinary shares in CEB will be allotted and issued to TCP. The current value of such management and performance fees has been agreed between the CEB and the TCP boards as being $23 million and an analysis of the supporting calculations has been performed by KPMG LLC at the request of the Board of the Company. In consideration for the termination of the agreement, 11,800,000 new ordinary shares of 1 pence each in the capital of the Company will be allotted and issued to TCP. Application has been made for these shares to be admitted to trading on AIM and this is expected to take place on 11 April 2008 ("Admission"). The issue of the TCP Consideration Shares will result in a dilution of 8% in respect of the shareholders of CEB (except for those CEB shareholders who are also TCP shareholders and who will, as a result of the termination of the investment advisory agreement, increase their respective shareholdings in CEB). Certain of the TCP shareholders, namely Agropecuaria Orlando Prado Diniz Junqueira ("Agrop"), Czarnikow and Numis Corporation Plc, have each undertaken to the Company that, except in certain limited circumstances, they will not dispose of the TCP Consideration Shares each of them respectively acquire (amounting in aggregate to approximately 7.56 million CEB ordinary shares) for a period of 2 years following Admission. 2. Acquisition of TCP Brazil CEB will acquire an 88% equity interest in TCP Brazil for a nominal consideration. Consequently, TCP Brazil will become responsible for the day-to-day management of the Company's investment activities. 3. Provision of Czarnikow's services Going forward, Czarnikow will continue to provide services directly to CEB's investee companies. 4. Board changes Mr Marcelo Junqueira, who is currently a non-executive director of the Company, and is a director of TCP and TCP Brazil, will be appointed as Chief Executive Officer of the Company and Mr Peter Shaun Duncan Thompson (aged 48), a director of Czarnikow and Chairman of TCP, will be appointed as a non-executive director of the Company. Mr Thompson holds 105,264 ordinary shares in the Company and warrants to subscribe for 179,104 ordinary shares. Once implemented, the reorganisation as outlined above will streamline the Group's operating structure, bringing the management of the business within the Group and making the Group's corporate structure more transparent. In turn, this will lower operating costs and remove the participation of TCP as the investment manager in the performance of the Group, for the benefit of the Company's shareholders. Related party transactions The termination of the Investment Advisory Agreement and the acquisition of TCP Brazil (although the acquisition is not material in the context of the Group as a whole) are related party transactions. The directors of CEB (with the exception of Marcelo Junqueira, who is a 20% shareholder in TCP, was a 94% shareholder in TCP Brazil and is a director of both companies) consider, having consulted with the Company's nominated adviser, that the terms of the transactions are fair and reasonable insofar as the Company's shareholders are concerned. This information is provided by RNS The company news service from the London Stock Exchange