Two companies and one fund are front-runners to acquire a stake in Brazilian sugar and ethanol giant Santelisa Vale SA, local newspaper Valor Economico reported Friday.

The newspaper reported that offers from Bunge Ltd. (BG) and Louis Dreyfus, as well investment fund BTG, were the most attractive for Santelisa Vale.

The offers were discussed Thursday by the shareholders, Valor reported a person familiar with the negotiations as saying. A press officer for Santelisa Vale would not comment on the report.

Companies such as Cosan; Cargill Inc.; Archer Daniels Midland Co. (ADM); ETH Bioenergia, the energy unit of Brazilian conglomerate Odebrecht; GP Investments Ltd. (GPIV11.BR); and Sao Martinho S/A (SMTO3.BR) have also been assessing bids for Santelisa Vale, which has around 3 billion Brazilian reals ($1.2 billion) in debt, the newspaper reported.

Many Brazilian sugar and ethanol mills are facing a shortage of working capital due to high debt and a lack of credit.

Brazil is the No. 1 producer and exporter of sugar.

-By Tony Danby, Dow Jones Newswires; 55-11-2847-4523; anthony.danby@dowjones.com