Fibria advances the financing strategy for its expansion project at Três Lagoas Unit in Brazil

Fibria, world leader in eucalyptus pulp production, has revealed its financing strategy for the Horizonte 2 Project that will ensure the capacity increase at its Três Lagoas Unit in Mato Grosso do Sul, Brazil.

The R$ 7.7 billion investment (about $2.5 billion) is one of Brazil's largest private investments focusing on the export market. The Horizonte 2 Project also expects to tap other financing sources, such as export credit agencies (ECAs), the Brazilian Development Bank (BNDES) and the Midwest Development Fund (FDCO). In addition, some 40 percent of investment in the project should be made using the company's equity capital.

Fibria announced details of its contracting of $400 million Export Prepayment Facility Agreement and the launch of R$ 500 million offering of Agribusiness Receivables Certificates (CRAs).

According to Guilherme Cavalcanti, Fibria's chief financial and investor relations officer, the company's strong cash generation and the financing project developed will enable the company to keep its current leverage ratio in U.S. dollar under 2.0 times, even with the R$ 7.7 billion investment.

Fibria's new operations at Três Lagoas will have one of the lowest cash costs of pulp production in the world, and will reduce the company's average cost to $155 per ton. Today, Fibria already has one of the industry's lowest cash costs, which stood at $170 per ton in the second quarter of this year, compared to the average cost in Brazil of $214 per ton and in the United States of $ 421 per ton.

"The project gives us an unparalleled competiveness equation that combines wood supply, infrastructure and logistics, certifications, long-term clients and an excellent financing structure that is very difficult to replicate in the industry," says Marcelo Castelli, Fibria┬┤s CEO.

Horizonte 2 will have even cleaner production processes, with all of the energy consumed generated by the actual facility using the biomass resulting from the industrial process. The project will not only generate and consume its own power, but also produce surplus power of 120 MWh, which will complement the surplus power of 70 MWh already generated by the entire company today.

The project's industrial process will also feature the efficient use of water resources, with around 80% of the water withdrawn recycled and recirculated from 3.5 to 5 times in the production process before being treated and returned to the environment.

With the new mill, the average distance from the forest to supply the current production line and the new line at the Três Lagoas Unit, which will produce more than 3 million tons of pulp annually, will be only 95 kilometers.

With commissioning slated for the fourth quarter of 2017, the new production line will have annual pulp production capacity of 1.75 million tons. With the startup of the second mill at Três Lagoas, Fibria's total annual pulp production capacity, considering all of its units, will increase from the current 5.3 million tons to over 7 million tons. The pulp produced by Fibria in Três Lagoas will be transported by rail to the Port of Santos in the state of São Paulo to be exported to markets in Europe, North America and Asia, as well as sold in the domestic market.

Fibria has an annual pulp production capacity of 5.3 million in its industrial units in the cities of Aracruz (Espírito Santo), Jacareí (São Paulo) and Três Lagoas (Mato Grosso do Sul), and in Eunápolis (Bahia), where it operates the Veracel plant through a joint venture with Stora Enso.