International Corporate Finance: Value Creation with Currency Derivatives in Global Capital Markets, + Website

CASE STUDY 14.1

Bio-Oils Energy S.L.

This case study accompanies Chapter 14 of International Corporate Finance.

The use of vegetable oils for engine fuels may seem insignificant today but such oils may become, in the course of time, as important as petroleum and the coal-tar products of the present time.

Rudolf Diesel, 1912

Christoph Schmid was sitting in his home office finishing reading a report on biofuels issued by the European Commission. He had found that report surfing on the Internet looking for interesting ideas to build up a new business. Just two months earlier, in November 2004, he had left his last venture, Jazztel pic, as one of the five founding partners and CFO. Jazztel today is one of the largest telecom operators in Spain. It reaches annual revenues in excess of €400 million and is listed on the Spanish stock exchange. After crunching a few numbers on potential biodiesel economics that he extracted from the report, he gave a call to Antonio Carro, his former partner and CEO of Jazztel. Christoph thought that, in the context of rapidly escalating oil prices and heightened concern about global warming, much attention will finally be redirected to renewable sources of energy such as wind power, solar power, and biofuels to create an enormous business opportunity. Antonio was thrilled about the idea, and they started immediately to work and to identifying key drivers of the biodiesel business.

THE PROMISE OF BIOFUELS

Biofuels are renewable sources of energy that ...