CMPC to Increase Guaiba Pulp Mill Capacity by 1.3 Million tpy

CMPC plans to build a new 1.3 million tpy bleached eucalyptus pulp production line at its Guaiba mill in Brazil, which it expects to have operational by the first quarter of 2015.

Dec. 6, 2012 - Santiago, Chile-based Empresas CMPC said that its Board of Directors today approved the expansion of the company's Guaiba mill, in the state of Rio Grande do Sul, Brazil.

"This investment is a milestone for CMPC, the largest in the company's history," said Mr. Hernan Rodriguez, CEO of CMPC. "The Guaiba II project will almost double our market share of global pulp and help us meet growing demand for high quality wood pulp from clients in all our markets."

"This important decision taken by the Board of Directors is another step in CMPC's internationalization, and takes our total investment in Brazil to US$4.5 billion," Rodriquez said.

According to CMPC, the project consists of the construction and operation of a new bleached eucalyptus pulp production line, with a total capacity of 1.3 million tons per year.

The new pulp production line will be in addition to the existing bleached eucalyptus line at the site, which currently has an annual capacity of 450,000 tons per year.

CMPC expects the new second line to begin producing pulp by the first quarter of 2015.

With this investment, CMPC will increase its pulp production capacity to 4.1 million tons per year.

Guaiba II will incorporate the latest technologies in the production of pulp, and will be 100% self-sufficient in terms of pulpwood supply, CMPC said.

CMPC said that it has obtained all state, municipal and environmental permits and authorizations necessary to carry out the expansion of the Guaiba plant.

INVESTMENT AND FINANCING

The expansion of Guaiba involves a total investment in industrial assets of approximately US$2.1 billion. In relation to the financing of this project, the Board agreed:

  1. To propose a capital increase for Empresas CMPC S.A. of up to US$750 million. This capital increase is expected to be carried out in two stages: US$500 million during the first half of 2013, and the remaining US$250 million within the following three years, according to the needs of the Company or the project. This capital increase will be considered in an extraordinary shareholder meeting on January 24, 2013.
  2. To authorize CMPC Celulose Riograndense Ltda., the Company's Brazilian unit, to obtain a credit worth up to BRL$2,510 million (approximately US$1.2 billion) with Banco Nacional do Desenvolvimiento Economico e Social de Brasil (BNDES). This facility is structured as a 10-year term loan with amortization of principal and interest payment on a monthly basis, starting after the investment plan is complete.
  3. To use funds from cash held by the Company, arrange for a bond offering of up to US$500 million in the local or international markets, and the eventual sale of non-core assets such as properties with real estate value as well as the Company's 7.7% stake in BICECORP S.A. The sale of the stake in BICECORP will be executed in an open and competitive process, to maximize the selling price of the shares.

Empresas CMPC produces pulp, paper, tissue, paper products and other forestry products throughout Latin America. The Company aims to deliver world-class products, from forestry to finished products, to its important global customer base. Its high quality timber and production facilities are strategically located in countries including Chile, Brazil, Argentina, Mexico, Colombia, Peru, Uruguay and Ecuador.

SOURCE: Empresas CMPC