Savola Group and other shareholders in its subsidiary United Sugar Co. Egypt (USCE – both directly and indirectly owned by Savola) signed a shareholders' agreement with the European Bank for Reconstruction and Development (EBRD) on 29 March 2016 where EBRD will invest USD100 million in USCE through: i) a fresh capital injection of USD50 million; and ii) converting existing debt of USD50 million to equity. Accordingly, USCE will see its share capital increase as new shares are issued for EBRD, which will own 46.3% of USCE post the deal. Meanwhile, Savola will see its effective stake in USCE drop to 33.0% from 61.5%. Accordingly, Savola will no longer fully consolidate USCE, but will account for it via the equity method. Until regulatory requirements are met and the new shares are issued to EBRD, the assets and liabilities of USCE will be classified as held for sale, and net income will be disclosed as income from discontinued operations in Savola's interim consolidated financial statements. The agreement also includes a put option in favor of EBRD and call option in favor of Savola on agreed terms (not disclosed at this point).   We are positive on the agreement as: i) the stake reduction is likely to be earnings accretive as it will reduce Savola’s share of losses in USCE’s; ii) the capital increase will strengthen USCE’s balance sheet; and iii) it provides impetus to Savola’s un-branded sugar commodity business in Egypt where foreign currency availability is a key business challenge. (Company disclosure, Hatem Alaa, Nada Amin)   Savola: SAR40.91 as of 29 March 2016, Rating: Buy, FV: SAR70.00 per share, MCap: USD5,825 million, SAVOLA AB / 2050.SE