LatinFinance - January/February 2016 - 47

MARCELO HABIBE, FIBRIA

Issuer: Fibria
Finance Type/ Size: $400m upsize
to trade finance loan
Supporting Banks: BNP Paribas,
Natixis
Law Firms: White & Case,
Hughes Hubbard, Souza
Cescon, Schoenherr, Cerha
Hempel Spiegelfeld Hlawati

uncertainty has dominated markets.
The original transaction, a $500 million
triple-tranche pre-payment loan, was closed
in December 2014 with a syndicate of eleven
banks led by BNP Paribas and Natixis.
The deal was backed by cash flows from
contracts with buyers of Fibria's eucalyptus
cellulose.
A few months later, the company
began seeking financing for its $2.2 billion
expansion to the Três Lagoas pulp plant in
Mato Grosso do Sul, dubbed the Horizonte
2 project. The financial team pondered
available funding opportunities, and
decided to start by reopening the loan
signed in December.
The team was hopeful, but also
concerned about appealing to lenders.
"We thought that with conditions in Brazil
deteriorating, we wouldn't be able to
get more than $300 million, because the
sovereign credit risk had increased a lot,"
treasurer Marcelo Habibe tells LatinFinance.
"We were surprised by $515 million in
offered commitments from twelve banks;
we decided then to upsize the loan to $400
million, keep original terms, and add five
new lenders."
The borrower was able to maintain the
same terms as the original facility, which
comprised a five-year amortizing loan at
130 basis points over Libor with a four-year
grace period, a five-year bullet at 140 basis
points, and a six-year amortizing loan at 155
basis points.
The pricing speaks to the company's
improving credit profile, in spite of Brazil's
deteriorating economy. That, in turn, is
a combination of the company's dollar
revenues and the resilience of the pulp
and paper industry compared to other

"THE DYNAMICS OF
THIS INDUSTRY ARE
DIFFERENT FROM
OTHER COMMODITIES. WE EXPLAINED
TO THE BANKS THAT
INVESTING IN FIBRIA
WAS A KIND OF HEDGE
AGAINST BRAZIL'S
RISK"

commodities.
All Fibria's revenues are in dollars, and
around 85% of costs are in local currency.
"We may have to pay a bit more for the
15% we spend in dollars, but that's vastly
compensated by our revenues," says
Habibe. "China's economic slowdown
hasn't affected us either, because tissue
consumption has increased there by two
digits per year, while the price has also
climbed. The dynamics of this industry
are different from other commodities. We
explained to the banks that investing in
Fibria was a kind of hedge against Brazil's
risk."
The strong standing has also been
recognized by ratings agencies. While
swathes of Brazilian borrowers have been
downgraded this year, Standard & Poor's
elevated Fibria's ratings to BBB- from BB+ in
April, and Moody's upgraded the company
to Baa3 from Ba1 in November. Similarly,
equity investors have cheered the company
on: Fibria's share price increased by 53.8%

between January and mid-December.
Fibria is casting a wide net for the
remaining funds for the Horizonte 2
project, which will be 70% funded by debt.
The company issued 675 million reais ($177
million) in local agribusiness receivable
certificates, in addition to borrowing from
regional development agencies FDCO and
Sudeco, the Finnish export credit agency
Finnvera and the Brazilian development
bank BNDES. LF

LAW FIRM: LATIN AMERICA

CLEARY GOTTLIEB
Participation on a wide
variety of successful deals
across the region set this
practice apart
Cleary Gottlieb once again showed the
strength of its Latin America capital
markets franchise in 2015. The law firm
represented a slew of clients involved in a
broad range of stand-out transactions in the
region, including acquisitions, equity, debt,
liability management and restructuring.
Clarín's $170 million acquisition of a
Nextel stake, Pemex's issuance of Latin
America's first Euroclearable corporate
note and the United Mexican States' sale of
a €1.5 billion century bond are among the
firm's notable transactions in the region.
"One of the things that happens in times
of crisis or difficult markets is that people
try new things, like century bonds like
Petrobras and UMS did, like complicated
liability management transactions," says
Nick Grabar, partner at Cleary in New York.

LatAm Staff: 100
LatAm Offices: Buenos Aires and
São Paulo
Remarkable Deals: Various Pemex
issuances, including the Euroclear
bond, United Mexican States' century
euro bond, Dominican Republic's
$2.5bn LME

January/February 2016 - L ATINFINA NCE.COM 47


http://www.LATINFINANCE.COM

Table of Contents for the Digital Edition of LatinFinance - January/February 2016

Contents
LatinFinance - January/February 2016 - Cover1
LatinFinance - January/February 2016 - Cover2
LatinFinance - January/February 2016 - Contents
LatinFinance - January/February 2016 - 2
LatinFinance - January/February 2016 - 3
LatinFinance - January/February 2016 - 4
LatinFinance - January/February 2016 - 5
LatinFinance - January/February 2016 - 6
LatinFinance - January/February 2016 - 7
LatinFinance - January/February 2016 - 8
LatinFinance - January/February 2016 - 9
LatinFinance - January/February 2016 - 10
LatinFinance - January/February 2016 - 11
LatinFinance - January/February 2016 - 12
LatinFinance - January/February 2016 - 13
LatinFinance - January/February 2016 - 14
LatinFinance - January/February 2016 - 15
LatinFinance - January/February 2016 - 16
LatinFinance - January/February 2016 - 17
LatinFinance - January/February 2016 - 18
LatinFinance - January/February 2016 - 19
LatinFinance - January/February 2016 - 20
LatinFinance - January/February 2016 - 21
LatinFinance - January/February 2016 - 22
LatinFinance - January/February 2016 - 23
LatinFinance - January/February 2016 - 24
LatinFinance - January/February 2016 - 25
LatinFinance - January/February 2016 - 26
LatinFinance - January/February 2016 - 27
LatinFinance - January/February 2016 - 28
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LatinFinance - January/February 2016 - Cover3
LatinFinance - January/February 2016 - Cover4
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