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Aracruz, VCP Sign Deal to Sell Guaiba Unit to CMPC

Oct. 8, 2009 - Aracruz Celulose S.A. and Votorantim Celulose e Papel S.A. (the combined companies are now know as Fibria) said that the management of Aracruz and representatives of Empresas CMPC S.A. (CMPC), based in Santiago, Chile, signed a contract for the transfer of ownership of the assets represented by the industrial installations, lands and forests collectively known as the Guaíba Unit, located in the municipality of Guaíba, in the state of Rio Grande do Sul, Brazil.

The deal includes:

  • a pulp mill with an annual production capacity of approximately 450,000 tons;
  • a paper mill, with an annual production capacity of around 60,000 tons;
  • land totalling an area of approximately 212,000 hectares (of which 32,000 hectares are leased, under partnerships);
  • licenses and authorizations for a project to expand the pulp mill, raising its production capacity to around 1.75 million tons per year.

The agreed sale price for the Guaíba Unit is US $1.430 billion, Aracruz said.

Payments are to be made in two installments, the first of which will be US $1 billion, to be made upon completion of the deal, set for December 15, 2009. The second payment, in the amount of US $430 million, is to be made 45 days after the first payment, with an interest rate of 7.5% p.a.

Aracruz said that despite selling the Guaíba Unit it has retained assets worth about US $180 million, represented by industrial equipment that had been purchased for the expansion of that unit and will now be used in a future expansion project that the company may undertake.

The timing and sequence of any future expansion projects will be subject to market conditions and the company’s commitment to the exercising of discipline in the expansion of the pulp and paper industry worldwide, Aracruz said.

At the same time, Aracruz is restructuring its debt liabilities, in order to align the maturity profile with its future cash generation.

Aracruz said the combination of these two events will reposition the company’s capital structure and debt profile, while creating conditions for the resumption of growth through high yield projects and the recovery of its investment grade rating.

SOURCE: Aracruz Celulose S.A.

See related story:
» » CMPC in Talks to Buy Aracruz Guaiba Unit for $1.4 Billion (9/24/2009)




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