CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus supplement and the accompanying prospectus contain forward-looking statements related to our plans, expectations regarding
future events, business strategies and prospects that are subject to risks and uncertainties. These forward-looking statements are set forth under "Item 3. Key InformationD. Risk
Factors," "Item 4. Information on Fibria" and "Item 5. Operating and Financial Review and Prospects" in our 2015 Annual Report, which is incorporated by reference into this prospectus
supplement and the accompanying prospectus. Some of the matters discussed concerning our business operations and financial performance include forward-looking statements within the meaning of the U.S.
Securities Act of 1933, as amended, or the Securities Act, and the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act.
We
have based these forward-looking statements largely on our current expectations and estimates about future events and financial trends, which affect or may affect our business and
results of operations. Although we believe that these forward-looking statements are based upon reasonable assumptions, these statements are subject to several risks and uncertainties and are made in
light of information currently available to us. It is possible that our future performance may differ materially from our current assessments due to a number of factors, including the
following:
-
-
our direction and future operation;
-
-
the implementation of our principal operating strategies, including our potential participation in acquisition or joint venture transactions or
other investment opportunities;
-
-
general economic, political and business conditions, both in Brazil and in our principal export markets;
-
-
industry trends and the general level of demand for, and change in the market prices of, our products;
-
-
existing and future governmental regulation, including tax, labor, pension and environmental laws and regulations and import tariffs in Brazil
and in other markets in which we operate or to which we export our products;
-
-
the competitive nature of the industry in which we operate;
-
-
our level of capitalization, including the levels of our indebtedness and overall leverage;
-
-
the cost and availability of financing;
-
-
our compliance with the covenants contained in the instruments governing our indebtedness;
-
-
the implementation of our financing strategy and capital expenditure plans;
-
-
interest rate fluctuations, inflation and fluctuations in currency exchange rates, including the
real
and the U.S. dollar;
-
-
legal and administrative proceedings to which we are or may become a party;
-
-
the volatility of the prices of the raw materials we sell or purchase to use in our business;
-
-
the receipt of governmental approvals and licenses;
-
-
the cost and availability of adequate insurance coverage;
-
-
other statements included or incorporated in this prospectus supplement and the accompanying prospectus that are not historical; and
-
-
risk factors discussed herein under "Risk Factors" and also under "Item 3. Key InformationD. Risk Factors" of our
2015 Annual Report, which is incorporated by reference herein.
S-vii
Table of Contents
The
words "believe," "may," "could," "will," "should," "would," "estimate," "continue," "plan," "anticipate," "intend," "expect" and similar words are intended to identify estimates and
forward-looking statements. Estimates and forward-looking statements speak only as of the date they were made, and we undertake no obligation to update or to review any estimate and/or forward-looking
statement because of new information, future events or other factors. Estimates and forward-looking statements involve risks and uncertainties and are not guarantees of future performance. Our future
results may differ materially from those expressed in these estimates and forward-looking statements. In light of the risks and uncertainties described above, the estimates and forward-looking
statements discussed in this prospectus supplement and the accompanying prospectus might not occur and our future results and our performance may differ materially from those expressed in these
forward-looking statements due to, inclusive of, but not limited to, the factors mentioned above. As a result of these risks and uncertainties, investors should not base their decisions to invest in
this offering on these estimates or forward-looking statements.
S-viii
Table of Contents
SUMMARY
This summary highlights selected information about us and the notes that we are offering. It may not contain all of the
information that may be important to you. Before investing in the
notes, you should read this entire prospectus supplement, the accompanying prospectus and the documents incorporated by reference carefully for a more complete understanding of our business and this
offering, including our consolidated financial statements and the related notes incorporated by reference into this prospectus supplement, and the sections entitled "Risk Factors" included elsewhere
or incorporated by reference in this prospectus supplement.
Overview
We are the world's largest producer of market pulp, according to the independent consulting firm Hawkins Wright and the PPPC, with an annual
aggregate pulp production capacity of 5.3 million tons. This represented 22% of the world demand for bleached eucalyptus kraft market pulp, or BEKP, in 2015, according to the PPPC.
We
believe that our BEKP production costs are among the lowest in the world. During the nine-month period ended September 30, 2016, our pulp cash production cost per ton,
including logistics, was 11% less than the average in Brazil, the most competitive market for BEKP, and in the year ended December 31, 2015, it was 2% less than the average in Brazil, according
to Hawkins Wright. We believe that this important competitive advantage is principally due to: (1) our economies of scale; (2) advanced forestry techniques in managing the planting,
maintenance and harvesting of our forests; (3) modern industrial plants using state-of-the-art technology; (4) the comparatively short harvest cycle of our trees; and (5) the
relative low cost of our raw materials, including electricity and chemicals.
We
produce BEKP in three pulp mills, which are located in the States of Espírito Santo, Mato Grosso do Sul and São Paulo. In addition, we have a 50%
interest in Veracel Celulose S.A., or Veracel, a joint venture with the Swedish-Finnish company Stora Enso OYJ, or Stora Enso, which operates a pulp mill in the State of Bahia. The following
table presents information with respect to our pulp mills and their production for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production
|
|
|
|
|
|
|
|
For the nine-month periods
ended September 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended December 31,
|
|
|
|
|
|
Annual
Production
Capacity
|
|
Unit
|
|
Location
|
|
2016
|
|
2015
|
|
2015
|
|
2014
|
|
2013
|
|
|
|
|
|
(in thousands of tons)
|
|
Aracruz
|
|
Espírito Santo
|
|
|
2,340
|
|
|
1,660
|
|
|
1,728
|
|
|
2,328
|
|
|
2,356
|
|
|
2,346
|
|
Três Lagoas
|
|
Mato Grosso do Sul
|
|
|
1,300
|
|
|
970
|
|
|
929
|
|
|
1,248
|
|
|
1,276
|
|
|
1,272
|
|
Jacareí
|
|
São Paulo
|
|
|
1,100
|
|
|
767
|
|
|
817
|
|
|
1,047
|
|
|
1,085
|
|
|
1,080
|
|
Veracel(1)
|
|
Bahia
|
|
|
560
|
|
|
405
|
|
|
415
|
|
|
562
|
|
|
557
|
|
|
561
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
5,300
|
|
|
3,802
|
|
|
3,889
|
|
|
5,185
|
|
|
5,274
|
|
|
5,259
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Represents
50% of the production capacity of Veracel for the periods indicated.
Our
forestry base is broad and diversified. We have certified quality, environmental, occupational health and safety and forest management systems, and all of our units have been
certified by the Forest Stewardship Council® (FSC®), or the FSC, License Code FSC-C104120, and the Brazilian Forest Certification Programme (Cerflor) of the Programme for the
Endorsement of Forest Certification (PEFC). The FSC is not responsible for and does not endorse any financial claims on returns on investments. As of December 31, 2015, our forestry base was
comprised of approximately 969,000 hectares (owned or leased) located in seven Brazilian states, which does not account for areas covered by the forestry partnership programs (pursuant to which
we support the seedling, our partners
S-1
Table of Contents
are
responsible for the management of the forest, and we purchase the wood at the end of the harvesting cycle) and any forest base linked to the sale of forest assets (which are partnerships with
respect to land located in the southern portion of the State of Bahia and the City of Losango, in the State of Rio Grande do Sul). Approximately 568,000 hectares of our total forestry land consisted
of planted areas, approximately 338,000 hectares of conservation areas with native vegetation, or preserved areas, and 63,000 hectares related to other uses such as roads.
We
are the controlling shareholder of Portocel Terminal Especializado de Barra do Riacho S.A., or Portocel, in which we hold a 51% interest. Portocel operates a specialized
terminal of Barra do Riacho, located three kilometers from our Aracruz mill in the State of Espírito Santo, and it is a port from which we export a portion of our cellulose production.
The
export market is the principal destination for our production; our export sales volume accounted for 90% of our total BEKP sale volumes during the nine-month period ended
September 30, 2016 and in the year ended December 31, 2015. During the nine-month period ended September 30, 2016, 39% of our revenues came from sales in Europe, 30% from sales in
Asia, 20% from sales in North America and the remaining 11% came from sales in Latin America (including Brazil), as compared to 43%, 25%, 23% and 9%, respectively, in the corresponding period in 2015.
In the year ended December 31, 2015, 43% of our revenues came from sales in Europe, 25% from sales in North America, 24% from sales in Asia and the remaining 8% came from sales in Latin America
(including Brazil).
Our
strategy is to concentrate our sales in the markets for tissue paper and specialized papers, which generally present less volatility compared to the markets for printing and writing
papers. In 2015, approximately 50% of the BEKP volume we sold was used by our customers to produce tissue paper, approximately 36% to produce printing and writing paper and approximately 15% to
produce specialized papers. In the nine-month period ended September 30, 2016, in terms of sales volume, the tissue segment corresponded to 49% of Fibria's sales during the period, printing and
writing papers corresponded to 32% and specialty papers corresponded to 19% of Fibria's sales during the period.
The
table below presents some of our principal financial indicators as of and for the indicated periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of and For the Nine-Month
Periods Ended September 30,
|
|
As of and For the Years Ended
December 31,
|
|
|
|
2016
|
|
2015
|
|
2015
|
|
2014
|
|
2013
|
|
|
|
(in thousands of reais, except percentages)
|
|
Net revenues
|
|
|
7,081,010
|
|
|
7,096,052
|
|
|
10,080,667
|
|
|
7,083,603
|
|
|
6,917,406
|
|
Net income (loss)
|
|
|
1,755,134
|
|
|
(552,999
|
)
|
|
356,985
|
|
|
162,552
|
|
|
(697,582
|
)
|
Net margin(1)
|
|
|
24.8
|
%
|
|
(7.8
|
)%
|
|
3.5
|
%
|
|
2.3
|
%
|
|
(10.1
|
)%
|
Total indebtedness
|
|
|
14,192,339
|
|
|
12,526,264
|
|
|
12,743,832
|
|
|
8,326,519
|
|
|
9,773,097
|
|
Current loans and financings
|
|
|
1,509,772
|
|
|
1,077,006
|
|
|
1,072,877
|
|
|
965,389
|
|
|
2,972,361
|
|
Non-current loans and financings
|
|
|
12,682,567
|
|
|
11,449,258
|
|
|
11,670,955
|
|
|
7,361,130
|
|
|
6,800,736
|
|
Cash and cash equivalents, marketable securities and derivatives
|
|
|
3,572,295
|
|
|
2,948,356
|
|
|
1,729,696
|
|
|
777,773
|
|
|
1,923,791
|
|
Net indebtedness(2)
|
|
|
10,620,044
|
|
|
9,577,908
|
|
|
11,014,136
|
|
|
7,548,746
|
|
|
7,849,306
|
|
-
(1)
-
Net
margin is net income (loss)
divided by
net revenues.
-
(2)
-
Net
indebtedness consists of current and non-current loans and financing
less
cash and cash equivalents, marketable
securities and net derivatives (assets
less
liabilities). Net indebtedness is a non-IFRS measure which we disclose from time to time. Net indebtedness
as described in this
S-2
Table of Contents
prospectus
supplement is not a substitute for IFRS measures of indebtedness. For additional information, including the calculation of our net indebtedness, see "Summary Financial and Operating Data."
Our
joint-controlling shareholders are Votorantim S.A., and BNDES Participações S.A., or BNDESPar, which are also our largest shareholders and
together hold 58.5% of our total voting capital. Votorantim S.A. is a holding company for industrial assets of the Votorantim Group, one of the largest private conglomerates in Brazil, and
BNDESPar, an investment arm of the Brazilian National Bank for Economic and Social Development (
Banco Nacional de Desenvolvimento Econômico e
Social
), or BNDES, invests in various segments of the Brazilian economy. Votorantim S.A. and BNDESPar have entered into a shareholders' agreement with respect to their
interests in our company. For more information regarding this shareholders' agreement, see "Item 10. Additional InformationC. Material ContractsShareholders' Agreement
of Fibria" in our 2015 Annual Report. We believe that the support of our largest shareholders, in conjunction with our differentiated practices and transparent corporate governance, will continue to
contribute to our good reputation and consolidate our position as a global business leader in the pulp market.
Our Strengths
We are the world's largest producer of market pulp in terms of production capacity, according to Hawkins Wright and the PPPC, with an annual
aggregate pulp production capacity as of September 30, 2016 of 5.3 million tons and a focus on international markets. Based on information from the PPPC, we estimate that during 2015 we
supplied 22% of the world demand for BEKP, 17% of the world demand for bleached hardwood kraft market pulp and 9% of the world demand for chemical market pulp.
We
believe that our market leadership is based on the sustainability of our forest operations (reinforced by the shorter harvest cycle in Brazil as compared to other relevant countries),
state-of-the-art technology (including modern facilities and advanced cloning methods), high productivity, strong customer base and long-term relationships with our customers.
Our efficiently structured operations in Brazil result in relatively low cash production costs. We believe that we are one of the lowest-cost
producers of BEKP in the world. Our low production costs relative to many of our competitors are due to a number of factors, including:
-
-
significant economies of scale;
-
-
advanced forestry techniques in managing the planting, maintenance and harvesting of our forests;
-
-
modern industrial plants using state-of-the-art technology;
-
-
comparatively short harvest cycle of our trees; and
-
-
relatively low-cost raw materials, including electricity and chemicals.
Climate
and soil conditions in Brazil enable us to harvest our eucalyptus trees in an average of approximately six years after planting, while harvesting cycles of other forest species
in the southern United States, Canada and Scandinavia can last from 25 to 70 years. Harvesting cycles of our primary non-Brazilian competitors in the BEKP market located in Spain, Portugal and
Chile are 8 to 10 years.
S-3
Table of Contents
We have made significant investments in the adoption of modern designs, technologies and production processes available in our industry. The
advanced technology and production processes utilized by our pulp mills allow us to utilize a relatively small amount of raw materials, especially chemical substances, which consequently reduces our
production costs. In addition, our pulp mills have advantages over our competitors' older mills, principally in terms of reduced emissions and solid wastes, resulting in production processes that are
more optimized, efficient and environmentally viable. The Três Lagoas and Veracel pulp mills, two of the largest single-line pulp production facilities in the world, also have per-ton
pulp production costs that are among the lowest in the world as a result of their state-of-the-art technology, including modern processes and equipment associated with forestry efficiency, as well as
their close proximity to our forests.
The
Horizonte 2 Project, consisting of the construction of a new line of pulp production in Três Lagoas, in the State of Mato Grosso do Sul, is expected to start up in the
beginning of the fourth quarter of 2017 and is also designed to have modern and efficient process technologies for both pulp production and pollution control.
We began planting eucalyptus at the end of the 1960s, using seeds from the Rio Claro Forest Nursery, in the State of São Paulo.
At that time, four species were considered:
Eucalyptus grandis, Eucalyptus saligna, Eucalyptus urophylla
and
Eucalyptus
alba
. During the 1970s, specific varieties of
E. grandis
and
E. urophylla
proved to be the most suited to our environmental conditions and to the pulping process. However, since then, many trees of superior quality have been developed as a result of our breeding program and
commercial cloning, confirming that cloned forests result in significant gains in productivity, uniformity and quality of wood.
We
use a group of select clones in our forests. These clones are frequently substituted to ensure greater genetic variety. We use state-of-the-art breeding technologies in the
development of advanced generations of eucalyptus clones. These techniques involve selecting the best performing plants and the crossing among them for successive generations. Furthermore, we are
continually working on alternative silviculture methods to increase productivity in our forests.
The
combination of silviculture and genetic improvement is essential for maintaining sustainable production and the long-term health of these ecosystems, particularly in light of the
challenges arising
from climactic and economic uncertainties. The development of appropriate genotypes together with improvements arising from our silviculture practices for the efficient use of resources in these
forests, are necessary for sustaining the environmental services of these forests for future generations. As a result of our continuous progress, the current planted area that we use to supply our
pulp mills is half the area that would have been necessary 40 years ago, when forest productivity levels were much lower.
Product
development has also provided important advances by both designing new functionalities and testing an innovative process setup on an industrial scale to meet the demands of the
paper industry. These demands include not only improvements in the paper-making process and products, but also the replacement of more expensive fibers. The progress we have made allows us to offer
exclusive products to our customers, despite operating in a commodity market. Biorefinery is also an important item in our project portfolio. Our updated roadmap on biorefinery, along with the
establishment of strategic alliances, is paving the way for faster research and development of bioproducts and/or biofuels. Our ongoing projects and alliances envision different and more promising
alternatives, not only making use of forest biomass in nature, but also from the circling streams of the kraft process, such as those from lignin.
S-4
Table of Contents
Our operations are vertically integrated, from production of eucalyptus seedlings in nurseries for our extensive forests, through plantation and
forestry management (including harvesting, logging and wood transportation) to our production facilities, from which our products are transported to port terminals we operate for distribution to our
clients.
We
believe that our transportation and logistics activities are efficient and diversified. The strategic location of our facilities and their proximity to our forests allows us to have
low transportation costs for wood delivered to our production facilities and for finished products delivered to port terminals for
export. The average distance from our forests to our mills is less than that of many of our domestic and international competitors, resulting in logistical efficiencies (for example, certain of our
competitors in China meet their raw material needs with wood they import from Russia).
Portocel,
the port terminal we operate in the State of Espírito Santo, is located approximately three kilometers from our Aracruz pulp mill. This allows us to efficiently
export pulp produced at our Aracruz pulp mill and to receive and export pulp from the Veracel facility. In addition, we export pulp and paper products from a terminal and warehouse that we operate at
the port of Santos, in the State of São Paulo.
We have long-term relationships with leading global paper manufacturers, particularly in the tissue segment. As of September 30, 2016 and
December 31, 2015, most of our sales were made under contracts, some of which contain exclusivity provisions. We have traditionally focused on tissue and specialty paper producers that value
the high-quality pulp we produce and the reliability of supply that we provide. Some of those producers have been our customers since our inception.
We are committed to operating our businesses and resources in a sustainable manner in accordance with world-class sustainability standards. In
2016, we were included in the 2016/2017 portfolios of the Dow Jones Sustainability Indices, or DJSI, for global and emerging markets, which include a selection of companies with the best corporate
sustainability practices in the world (DJSI World) and in the emerging markets (DJSI Emerging Markets). We have been recognized by both DJSI World and DJSI Emerging Markets as a leading forestry and
pulp producer company. Since 2005, we have also been listed in the Corporate Sustainability Index (ISE)a list of companies whose shares are traded on the Brazilian Stock Exchange
(
BM&FBOVESPA S.A.Bolsa de Valores, Mercadorias e Futuros
), or the BM&FBOVESPA, that maintain an elevated commitment to improved
practices in the areas of sustainability and corporate governance.
We
believe sustainability is an essential component of our corporate strategy and have implemented corporate governance practices and a sustainability policy, which seek to align and
implement our sustainability strategy into our business model. We have a sustainability committee that advises our board of directors which is led by the chairman of our board of directors and
includes several
independent members. Our sustainability committee meets three times a year to evaluate our sustainability strategy and its implementation. We also have an internal sustainability commission, comprised
of a number of our company's managers, whose mission is to execute the strategy defined by our sustainability committee, and each of our units has a local relationship commission that evaluates the
requests from local stakeholders.
Recognizing
the importance of sustainability in our business strategy, we disclose our sustainability objectives and targets through the publication of an annual sustainability report.
Our sustainability efforts include, among other actions: (1) sustainable forestry management, with long-term targets to
S-5
Table of Contents
reduce
by up to one third the amount of land required for pulp production and to increase carbon sequestration from the atmosphere; (2) restoration of native forests and conservation of
biodiversity, with long-term targets to promote the environmental restoration of up to 40,000 hectares and to increase carbon sequestration from the atmosphere; (3) waste management, with
long-term targets to reduce industrial waste sent to landfills by 91%; (4) sustainable water management, with projects designed to achieve a reduction of water withdrawn from the total water
intake of industrial operations; and (5) renewable energy. We believe our sustainability practices make us one of the leading global companies committed to a balance between economic, social
and environmental issues. We will allocate the net proceeds from this offering to "Eligible Green Projects." See "Use of Proceeds" for more information.
Our Strategies
We intend to benefit from our competitive strengths to further increase our market share in the international pulp market. We have focused our
marketing efforts on the sale of BEKP to tissue manufacturers, a market segment that, in addition to being generally more stable than other market segments, has experienced global consumption growth
at an average annual rate of approximately 3.4% during the period from 2010 to 2015, according to RISI.
According
to a 2016 forecast by RISI, global tissue consumption is expected to grow at an annual rate of 3.7% from 2015 to 2020, with China accounting for approximately 40% of the total
tissue consumption growth during this period.
We
believe that we can further increase our market share by leveraging our long-term customer relationships and focusing on customer service and product customization. We continue to
strive to meet our customers' needs by supplying customized pulp products with specifications that facilitate their use in manufacturing specific paper products. We strive for a high degree of
customer satisfaction and are working to further improve our inventory management, which we believe will allow us to reduce our delivery cycles and better service our customers.
As of September 30, 2016 and December 31, 2015, our total consolidated indebtedness was R$14,192 million and
R$12,744 million, respectively, of which 89.4% and 91.6%, respectively, was long-term indebtedness. We continue to work on further reducing our financial leverage and generating free cash flow
in order to reduce the cost of financing our operations. We efficiently manage our working capital and implemented a successful liability management plan between 2009 and 2015, which included, among
others: (1) extending maturities of existing debt; (2) the disposition of certain interests and non-strategic assets; (3) the repurchase of certain notes through cash tender
offers and (4) the execution of certain long-term supply agreements that gave us greater flexibility to manage our working capital. In addition, we intend to generate free cash flow over the
long-term due to our size, cost structure and anticipated capital expenditure commitments. Our strategy of reducing our financial leverage and generating significant free cash flow is complemented by
our lack of significant short-term maturities and our capital structure, which has a strong liquidity position as evidenced by our cash position as of September 30, 2016 and our existing
revolving credit facility. This financial flexibility is designed to enable us to balance our deleveraging activities with our focus on growth, innovation and sustainability.
S-6
Table of Contents
We intend to maintain the focus on our low-cost operations through greater operating efficiencies and economies of scale. To this end, we intend
to continue to:
-
-
focus on reducing our wood costs by continuing to invest in the genetic improvement of our trees in order to increase eucalyptus yields;
-
-
benefit from the competitive advantage of climate and soil conditions in Brazil and the short harvest cycle of eucalyptus trees; and
-
-
improve the efficiency of our operations through further investment in harvesting equipment, production facilities and advanced information
technology.
Technological research and development has made it possible to improve our productivity while reducing the impact of our operations on the
environment. In the forestry area, an intense research program and the adoption of modern forestry practices have significantly increased our competitiveness. The genetic improvement of eucalyptus
trees has allowed us to plant superior clones, resulting in higher productivity. We currently use clonal seedlings in 100% of our planting activities. We have achieved better efficiency in clonal
seedling production as a result of pioneering vegetative propagation procedures. We believe that we use the most advanced technology for planting and harvesting trees and storing and transporting wood
with a completely mechanized system. In the decade ending December 31, 2010, the average annual amount of pulp we produced was 10.6 tons per hectare per year, compared to 6.4 tons per hectare
per year during the 1970s. We continue to work on improving our productivity and expect this approach will contribute to the reduction of the amount of land required by us for pulp production.
Productivity of new clones planted is expected to reach 15 tons of pulp per hectare per year by 2025.
By
continuing to focus on cutting-edge technological research and development, we aim to strengthen our position as one of the leading developers of technology in the forestry area,
maintain our position as a low-cost producer while meeting our standards of high quality production, increase the portfolio of products that we offer to our customers and maintain our reputation as an
environmentally friendly and socially responsible manufacturer, in particular by evaluating the possibility of increasing the value of our forestry biomass, of which bio-fuels is the most important.
For instance, in 2012, Fibria and Ensyn Corporation created a strategic alliance involving a 50/50 joint venture for the production of cellulosic liquid fuels and chemicals in Brazil and a
U.S.$20 million investment by us in Ensyn Corporation. Through this alliance we expect to combine the expertise of Fibria and Ensyn Corporation to produce renewable liquid fuels from cellulosic
feedstocks.
S-7
Table of Contents
Our Ownership Structure
Our current ownership and summary corporate structure are presented in the following chart:
-
(1)
-
Free
float includes 0.06% of treasury shares held by us.
Fibria
Celulose is incorporated under the laws of Brazil under the name Fibria Celulose S.A., as a publicly-held stock corporation with unlimited duration, operating under the
Brazilian corporate law. Our headquarters and principal executive offices are located at Rua Fidêncio Ramos, 302, Torre B, 3
rd
floor, Vila Olímpia,
04551-010, São Paulo, SP, Brazil, and our telephone number is +55 11 2138-4565. Our website address is www.fibria.com.br/ir. Information contained on our website is,
however, not incorporated by reference in, and should not be considered as part of, this prospectus supplement or the accompanying prospectus.
This
prospectus supplement contains certain of our trademarks, trade names and service marks, including our logo. Each trademark, trade name or service mark of any company appearing in
this prospectus supplement belongs to its respective holder.
Fibria Finance
Fibria Finance is a wholly-owned subsidiary of Fibria Celulose. Fibria Finance is an exempted company which was incorporated with limited
liability under the laws of the Cayman Islands on October 9, 2009. The registered office of Fibria Finance is at the offices of Intertrust Corporate Services (Cayman) Limited, 190 Elgin Avenue,
George Town, Grand Cayman KY1-9005, Cayman Islands. The headquarters of its sole shareholder, Fibria Celulose, is located at Rua Fidêncio Ramos, no. 302,
3
rd
Floor, Torre B, Edifício Vila Olímpia Corporate, Vila Olímpia, 04551-010, São Paulo, SP, Brazil. Fibria Finance was
registered with Company No. 231879 by the Registry of Companies of the Cayman Islands on October 9, 2009.
Since
its incorporation, Fibria Finance's authorized share capital consisted of 50,000 shares, par value U.S.$1.00 per share. As of the date of this prospectus supplement, 100 shares had
been issued as fully paid and non-assessable and are owned by Fibria Celulose.
S-8
Table of Contents
The
memorandum and articles of association of Fibria Finance provide for a board of directors composed of not less than one member. All directors of Fibria Finance are appointed by
Fibria Celulose. The directors of Fibria Finance are Marcelo Strufaldi Castelli, Guilherme Perboyre Cavalcanti and Henri Philippe van Keer. As directors of Fibria Finance, subject to compliance with
customary fiduciary duties of directors of Cayman Islands companies, they act in accordance with the best interests of Fibria Finance taking into account the interests of Fibria Celulose.
Under
Fibria Finance's memorandum and articles of association, Fibria Finance is permitted to engage in any act or activity that is not prohibited under any law for the time being in
force in the Cayman Islands.
Fibria
Finance is not required by Cayman Islands law to publish, and does not publish, financial statements for any period. However, if it publishes any financial statements in the
future, these financial statements will be sent to you upon request of Fibria Finance or the trustee. Fibria Finance does not have subsidiaries or hold any equity investments.
Recent Developments
Developments in the Horizonte 2 Project
60% Execution Completed
The execution of the Horizonte 2 Project, consisting of the ongoing construction of a new line of pulp production in Três Lagoas,
in the State of Mato Grosso do Sul, with a nominal production capacity of 1.95 million metric tons expected at completion of the project, and an energy surplus of 130 megawatts, is ahead of
schedule. The Horizonte 2 Project is expected to more than double the Três Lagoas mill's forestry base from 120,000 hectares to 307,000 hectares. This expansion is designed to increase
our supply of wood and reduce the distance between the forest and our mills, which is expected to lower our transportation costs, result in production synergies among our mills and decrease our need
for wood from third parties.
As
of September 30, 2016, we had incurred 38% of the financial execution related to the Horizonte 2 Project and 60% of the project was physically completed. We expect the new
production line to commence operations in the fourth quarter of 2017. We currently anticipate that the cost of completion of the Horizonte 2 Project will be R$7.5 billion. As of
September 30, 2016, we had invested approximately R$2.9 billion.
Finnvera (Finnish Export Credit Agency)
In May 2016, we, through our subsidiary Fibria-MS Celulose Sul Mato-Grossense Ltda., or Fibria-MS, entered into a loan agreement, or the
Finnish Export Credit Agreement, to finance and import equipment for the second pulp production line in the Horizonte 2 Project with Finnvera plc, as guarantor, and BNP Paribas
Fortis SA/NV, Finnish Export Credit Ltd., HSBC Bank USA, N.A. and Nordea Bank Finland plc, as lenders, for the U.S. dollar equivalent of €384 million
(U.S.$439 million using the exchange rate of May 11, 2016, the date of the agreement). The facility is secured by a pledge of the equipment being financed. During the nine-month period
ended September 30, 2016, U.S.$275 million (R$920 million) was disbursed in three tranches of U.S.$194 million, U.S.$67 million and U.S.$14 million, maturing
in December 2025 and with interest rates at semi-annual LIBOR plus 1.03% per annum for the first tranche and semi-annual LIBOR plus 1.08% per annum for the second and third tranches. As of
September 30, 2016, the remaining balance that has not yet been disbursed is the U.S. dollar equivalent to €140 million and will be disbursed to satisfy payments to the
suppliers of the project. On November 16, 2016 and December 15, 2016, the lenders disbursed an additional U.S.$36 million (equivalent then to R$124 million) and
U.S.$43 million (equivalent then to
S-9
Table of Contents
R$145 million),
respectively. See "Management's Discussion and Analysis of Financial Results for the Nine-Month Periods Ended September 30, 2016 and
2015DebtMaterial Financing Transactions."
Changes to Management
Board of Directors
On June 2, 2016, Mr. Julio Cesar Maciel Ramundo resigned as a member of our board of directors. Mr. Victor Guilherme Tito,
as Mr. Julio Cesar Maciel Ramundo's alternate, served as a director until August 9, 2016, when he resigned and was replaced by Mr. Ernesto Lozardo. On August 29, 2016,
Mr. Victor Guilherme Tito who had served as Mr. Ernesto Lozardo's alternate, resigned as an alternate member of the board of directors. As of the date of this prospectus supplement, no
alternate member of the board of directors has been elected to replace Mr. Tito.
The
following is a summary of the business experience, areas of expertise and principal outside business interests of our new director:
Ernesto Lozardo.
Mr. Ernesto Lozardo has been a member of our board of directors since August 2016. Currently, Mr. Ernesto
Lozardo is
president of the Institute for Applied Economic Research (IPEA), and professor of Economics at Fundação Getúlio Vargas, or FGV, in São
Paulo. He also served as advisor to the president of BNDES from September 2011 to June 2016. While at BNDES, he developed several financial instruments designed to finance Brazilian infrastructure
(such as the infrastructure bond). More recently, in partnership with several Brazilian financial specialists, he developed the "Brazilian Guaranteed Infrastructure Financial Note," known as GIFN,
which will be a forthcoming federal law project. He served as a member of the board of directors of UBRUNIMEDBanco Fator from 2009 to 2011, as a member of GV Projetos, FGV's
consulting group, from 2002 to 2010, Planning Director at Caixa Seguros from 2000 to 2002 (while participating in the creation of the new organizational structure and company growth policy which aimed
to sell its control, the company was purchased by CNP in 2002), President of the Public Data Processing Company (PRODESP) of the State of São Paulo in 1994, State Secretary for Economic
Planning and Management of the State of São Paulo from 1992 to 1994, member of the board of directors of Indústrias de Papel Simão S.A. from 1988 to
1992, Economic Director of Lozardo & Cruz DTVMDistribuidora de Títulos e Valores Mobiliários Ltda. from 1982 to1984 and Economic Director of
Distribuidora de Títulos e Valores Mobiliários do Estado de São Paulo Ltda. (DIVESP) from 1977 to 1979. He has been a Professor of Economics at
EAESPFGV since 1978. Mr. Lozardo holds a bachelor's degree in economics from Columbia University and in finance and banking from New York University.
Sustainability Committee
On March 7, 2016, Mr. Naomar Monteiro de Almeida Filho resigned as member of our Sustainability Committee.
At
a meeting held on May 19, 2016, our board of directors approved the nomination of Mrs. Maria Aparecida Silva Bento and Mr. João Carvalho de Miranda
as members of our Sustainability Committee.
S-10
Table of Contents
The
following table shows the new composition of our Sustainability Committee as of the date of this prospectus supplement:
|
|
|
Name
|
|
Position
|
José Luciano Duarte Penido
|
|
Coordinator
|
Ailton Alves Lacerda Krenak
|
|
Member
|
Carlos Alberto Oliveira Roxo
|
|
Member
|
Claudio Valladares Pádua
|
|
Member
|
João Carvalho de Miranda
|
|
Member
|
Maria Aparecida Silva Bento
|
|
Member
|
Sergio Besserman Vianna
|
|
Member
|
Sergio Eduardo Weguelin Vieira
|
|
Member
|
Maria Luiza de Oliveira Pinto e Paiva
|
|
Secretary
|
Finance Committee
On June 23, 2016, our board of directors replaced Mr. Guilherme Perboyre Cavalcanti as Coordinator of the Finance Committee, with
Mr. Sergio Augusto Malacrida Junior.
On
September 29, 2016, Mr. Victor Guilherme Tito resigned as member of our Finance Committee, and was replaced by Mr. Ernesto Lozardo.
The
following table shows the new composition of our Finance Committee as of the date of this prospectus supplement:
|
|
|
Name
|
|
Position
|
Sergio Augusto Malacrida Jr.
|
|
Coordinator
|
Ernesto Lozardo
|
|
Member
|
Marcos Barbosa Pinto
|
|
Member
|
Marcelo Campos Habibe
|
|
Secretary
|
Guilherme Perboyre Cavalcanti
|
|
Guest
|
Statutory Board of Officers
At a meeting of the board of directors held on September 1, 2016, our board of directors approved the replacement of Mr. Henri
Philippe Van Keer and Mr. Paulo Ricardo Pereira da Silveira as statutory officers without portfolio. At the same time, the board elected Mr. Wellington Angelo Loureiro Giacomin as an
officer without portfolio, in the areas of supply and logistics management, and also elected Mrs. Maria Luiza de Oliveira Pinto e Paiva as an officer without portfolio, in the areas of
sustainability and corporate relations management.
We
present below a brief biographical description of each new officer:
Wellington Angelo Loureiro Giacomin.
Mr. Giacomin was appointed to our statutory board of officers in September 2016. He is a
mechanical
technician from the Escola Técnica Federal do Estado do Espírito Santo, with an undergraduate degree in Mechanical Engineering and a graduate degree in Quality
Engineering from Universidade Federal do Espírito Santo (UFES). He received an MBA in Executive Management from IBMEC. Mr. Giacomin joined our Company in 1987. From 2012 to 2014
he was General Manager for Supplies, and in 2014 was appointed non-statutory officer for Logistics and Supplies at Fibria Celulose. Mr. Giacomin also serves on the board of Veracel as an
alternate member, and of Portocel as a full member, and is also an officer of Portocel and Fibria Terminais Portuários S.A., companies operating in the pulp-handling port sector,
and members of the same
S-11
Table of Contents
business
group as the Company. Mr. Giacomin holds a bachelor's degree in mechanical engineering from Universidade Federal do Espírito Santo (UFES).
Maria Luiza de Oliveira Pinto e Paiva.
Ms. Pinto was appointed to our statutory board of officers in September 2016. After earning
a degree in
Psychology from Pontifica Universidade Católica de São Paulo, Ms. Pinto specialized in Human Resources at the University of Michigan, and in Business and
Sustainability at Cambridge University, and she has taken a number of other courses in management, leadership and sustainability at other institutions. Since March 2015, Ms. Pinto has been the
non-statutory Sustainability and Corporate Relations officer at Fibria Celulose. Previously, from 2013 to 2015, she worked as a consultant in Sustainable Development and Organizational Development
and, between 2001 and 2012, held various positions with Banco Santander. Ms. Pinto has been a member of the Corporate Governance and Sustainability Committee of the Santander Group since 2013,
and a member of the Executive Committee of Instituto Akatu (a non-profit organization that aims to raise awareness regarding conscientious consumption) since 2013. Ms. Pinto holds a bachelor's
degree in psychology from Pontifica Universidade Católica de São Paulo.
Non-Statutory Board of Officers
At a meeting of the board of directors held on September 1, 2016, our board of directors approved the appointment of Henri Philippe Van
Keer, Mr. Paulo Ricardo Pereira da Silveira and Mr. Caio Eduardo Zanardo as "non-statutory officer for commerce and international logistics," "non-statutory officer for industrial and
engineering operations" and "non-statutory officer for forest management," respectively, and Mr. Adjarbas Guerra Neto as "Company's Compliance Officer" and "non-statutory officer for
governance, risk management and compliance."
Decisions Adopted by Our Shareholders at Our Annual Shareholders' Meeting Held on April 27, 2016
Approval of Annual Dividend Payment
On April 27, 2016, our shareholders approved the distribution of dividends in the amount of R$300 million related to our fiscal
year ended on December 31, 2015, of which R$81 million will be distributed to shareholders as the minimum compulsory dividend under the Brazilian Corporations Law, and
R$219 million will be distributed as an additional dividend under the Brazilian Corporations Law.
Changes to Our Fiscal Council
On April 27, 2016, our shareholders reelected Mauricio Aquino Halewicz and Gilsomar Maia Sebastião as members of our
fiscal council, Geraldo Gianini, as Mauricio Aquino Halewicz's alternate, and Antônio Felizardo Leocadio, as Gilsomar Maia Sebastião's alternate. Our shareholders also
appointed the following new member and alternate of our fiscal council: Raphael Manhães Martins, as a member of our fiscal council, and Domenica Einsenstein Noronha, as Raphael
Manhães Martins' alternate.
The
table below shows the new composition of our fiscal council as of the date of this prospectus supplement:
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Year First Elected
|
|
Position
|
Raphael Manhães Martins
|
|
45
|
|
2016
|
|
Member
|
Domenica Einsenstein Noronha
|
|
48
|
|
2016
|
|
Alternate
|
Mauricio Aquino Halewicz
|
|
43
|
|
2013
|
|
Member
|
Geraldo Gianini
|
|
65
|
|
2009
|
|
Alternate
|
Gilsomar Maia Sebastião
|
|
40
|
|
2013
|
|
Member
|
Antônio Felizardo Leocadio
|
|
44
|
|
2014
|
|
Alternate
|
S-12
Table of Contents
Capital Expenditures Budget
On April 27, 2016, our shareholders approved our capital expenditures budget for our 2016 fiscal year, in the aggregate amount of
R$8,189 million, mainly to be allocated to the Horizonte 2 Project for our 2016 fiscal year, and funded with cash from our operating activities and financings from third parties. In June 2016,
the capital expenditures budget was decreased to R$7,482 million. In September 2016, the estimated capital expenditures underwent further review, and was decreased to R$6,518 million. In
October 2016, the capital expenditures budget was again revised and decreased to R$6,235 million, of which 65.5% is allocated to the Horizonte 2 Project. See "Management's Discussion and
Analysis of Financial Results for the Nine-Month Periods Ended September 30, 2016 and 2015DebtCapital Expenditures."
Net Income Allocation
On April 27, 2016, our shareholders approved the allocation of our net income relating to the fiscal year ended on December 31,
2015, allocating R$17 million to our legal reserve, R$300 million to dividends distributed to shareholders, and R$25 million to be withheld and allocated in our investment
reserve.
Approval of Annual Global Compensation of Management and Fiscal Council
On April 27, 2016, our shareholders approved the annual compensation to be paid in 2016 to our directors and officers in the amount of
R$66 million, consisting of R$53 million in cash compensation and R$13 million in share-based compensation. Our shareholders also approved the annual compensation to be paid in
2016 to the members of the Fiscal Council, which will be between 10 percent and 20 percent of the average compensation paid to our officers, excluding benefits,
representation fees and profit participation stakes assigned to the officers, in accordance with the Brazilian Corporations Law.
Stock Option Plan
On April 28, 2016, our board of directors approved the granting of stock options pursuant to our "General Stock Option Plan for the
Granting of Options to Purchase Shares," which seeks to align our interests and the interests of our management team and to retain key members of our management team in the long term.
Export CreditsACC
For the nine-month period ended September 30, 2016, we paid certain export contracts (ACC) in the amount of U.S.$404 million
(R$1,387 million), for which the interest rates varied between 1.24% and 1.99% per annum.
Agribusiness Credit Receivable CertificatesCRA
In June 2016, we concluded the public distribution, in accordance with CVM Instruction No. 400, of 1.35 million agribusiness
credit receivable certificates, or CRAs, issued by Eco Securitizadora de Direitos Creditórios do Agronegócio S.A., or Eco Securitizadora, in the total amount of
R$1,350 million, in two tranches. The principal amount of the first tranche is R$880 million, bears interest at a rate of 97% of CDI per annum payable semi-annually commencing in
December 2016 and will mature in 2020. The principal amount of the second tranche is R$470 million, bears interest at a rate of IPCA
plus
5.9844%
per annum, payable annually commencing in December 2016 and will mature in 2023.
S-13
Table of Contents
In
August 2016, we concluded the public distribution, in accordance with CVM Instruction No. 476, of 374,000 CRAs, issued by Eco Securitizadora in the principal amount of
R$374 million, bearing interest at a rate of IPCA
plus
5.9844% per annum, payable annually commencing in August 2017 and will mature in 2023.
In
August 2016, we concluded the public distribution, in accordance with CVM Instruction No. 476, of 326,000 CRAs, issued by Eco Securitizadora in the principal amount of
R$326 million, bearing interest at a rate of 97% of CDI payable semi-annually commencing in March 2017 and will mature in 2020.
In
December 2016, we concluded the public distribution, in accordance with CVM Instruction No. 400, of 1.25 million agribusiness credit receivable certificates, or CRAs,
issued by Eco Securitizadora de Direitos Creditórios do Agronegócio S.A., or Eco Securitizadora, in the total amount of R$1,250 million, in two tranches.
The principal amount of the first tranche is R$756 million, bears interest at a rate of 99% of CDI per annum payable semi-annually commencing in June 2017 and will mature in 2022. The principal
amount of the second tranche is R$494 million, bears interest at a rate of IPCA
plus
6.1346% per annum, payable annually commencing in December
2017 and will mature in 2023. In accordance with the applicable regulations, the proceeds of each CRA issued by us will be used to finance our activities in connection with our agribusiness
activities, comprising of the production, trade, processing or manufacture of products or raw materials derived from forest materials, and used by us in the export of pulp and paper products. See
"Management's Discussion and Analysis of Financial Results for the Nine-Month Periods Ended September 30, 2016 and 2015DebtMaterial Financing Transactions."
Middle West Development Fund (FDCO)
In May 2016, we entered into a
real
-denominated loan agreement with the
Fundo de Desenvolvimento do
Centro-Oeste
, or FDCO, a Brazilian development fund, for up to R$831 million from Banco do Brasil, maturing in
December 2027 and bearing interest at a local currency rate of 8.0% per annum payable monthly commencing in June 2019. The loan is secured by a mortgage on the
property on which the Três Lagoas facility is located. As of September 30, 2016, R$424 million has been disbursed under this loan agreement. We will be able to draw on the
remaining balance of R$408 million through the end of 2016. See "Management's Discussion and Analysis of Financial Results for the Nine-Month Periods Ended September 30, 2016 and
2015DebtMaterial Financing Transactions."
Commercialization of Hardwood Pulp Produced by Klabin S.A.
In May 2016, we began acquiring hardwood pulp produced by Klabin S.A., or Klabin, in its Ortigueira plant, located in the State of
Paraná, pursuant to the offtake agreement entered into between the parties.
This
is a take-or-pay agreement, with a six-year term commencing from the beginning of plant operations (which may be extended upon agreement between the parties), with startup occurring
in March 2016. During the first four years of this six-year period, the acquisition of hardwood pulp will be a minimum volume of 900,000 tons of short fiber pulp (except if otherwise agreed between
the parties) and during the remaining two years, a gradual reduction of volume (phase out), equal to 75% and 50%, respectively, of the volume delivered in the fourth year of the agreement. The
purchase price of the volume from Klabin will be based on the average net price charged by us and the volume acquired may be sold to countries outside South America.
S-14
Table of Contents
Ratification of Certain Corporate Policies
On July 28, 2016, our board of directors ratified the following corporate policies: Information Disclosure Policy for the Capital
Markets, Dividend Policy, Ombudsman Policy, and Policy on Genetically Modified Eucalyptus. In addition, on July 28, 2016, our board approved revisions to the following corporate polices in
order to reflect recent updates in law and market practice: Policy of Authorities. Anti-corruption Policy, Policy of Transactions with Related Parties, Corporate Governance Policy, Risk Management
Policy, Policy For Trading in Securities, Market Risk Management Policy; and Indebtedness and Liquidity Management Policy. All of our corporate policies that were ratified and/or revised by the board
are available at our corporate headquarters.
Developments Related to the Political Environment in Brazil
On August 31, 2016, the Brazilian Senate approved the impeachment of then-president Dilma Rousseff, and Vice-President Michel Temer
assumed office as President. On September 12, 2016, the Brazilian House of Representatives expelled then-Speaker Eduardo Cunha from office and banned him from politics for eight years.
President Temer has announced his intention to implement certain important reforms, including to the labor laws and social security system, and certain other measures aimed at achieving higher rates
of economic growth and employment. We cannot predict whether these or other policies will be adopted by the Brazilian government and how these policies will affect the Brazilian economy or our
business and results of operations. In addition, we cannot predict whether and to what extent members of the executive branch of the Brazilian government or state-owned entities may become
increasingly involved in the ongoing corruption scandals in the country, which may make it more difficult to successfully implement new laws and regulations and increase political and economic
instability. Any increase in instability or new or amended policies that may be implemented by the government (or any failure to implement them) may have a material adverse effect on the Brazilian
economy and our financial condition and results of operations. See "Risk FactorsRisks Relating to BrazilBrazilian economic and political conditions and perceptions of these
conditions in the international market have a direct impact on our business and our access to international capital and debt markets, and could adversely affect our results of operations and financial
condition," in our 2015 Annual Report incorporated by reference in this prospectus supplement.
Partnership with CelluForce
On November 18, 2016, we acquired an 8.3% equity interest in CelluForce, Inc., or CelluForce, a company based in Montreal, Canada
that develops and produces cellulose nanocrystals, or CNC, for CAD$5.3 million. In connection with this acquisition, we obtained certain rights, including the right to appoint one member to the
board of directors of CelluForce, the right to be the exclusive distributor of CNC in South America (subject to certain exceptions) and a right of first refusal to participate in a joint venture with
CelluForce for the production of CNC in South America should CelluForce decide to produce CNC in South America.
Pulp Price Increases
Fibria from time to time announces its list price increases depending on market conditions. In December 2016, Fibria announced that as of
January 1, 2017, list pulp prices in Asia increased to U.S.$570 per ton, list pulp prices in Europe increased to U.S.$680 per ton and list pulp prices in the United States increased to U.S.$860
per ton.
Banco do Nordeste do Brasil Financing
In December 2016, Fibria Celulose entered into a financing agreement with Banco do Nordeste do Brasil S.A. for aggregate principal amount
of approximately R$150 million, maturing in December 2023 and bearing interest at 12.95% per annum. The principal and interest are payable on the maturity date (bullet). On December 28,
2016 and December 29, 2016, Banco do Nordeste do Brasil S.A. disbursed R$77 million and R$32 million, respectively.
S-15
Table of Contents
THE OFFERING
The following summary contains basic information about the notes and the guarantee and is not intended to be complete.
It does not contain all of the information that is important to you. For
a more complete understanding of the notes, please refer to the section entitled "Description of the Notes" of this prospectus supplement and the sections entitled "Description of the Debt Securities"
and "Description of the Guarantee" in the accompanying prospectus.
|
|
|
Issuer
|
|
Fibria Overseas Finance Ltd.
|
Guarantor
|
|
Fibria Celulose S.A.
|
Notes offered
|
|
U.S.$700 million aggregate principal amount of 5.500% notes due 2027.
|
Guarantee
|
|
Fibria Celulose will fully, unconditionally and irrevocably guarantee all of the issuer's obligations under the
notes.
|
Maturity date
|
|
January 17, 2027.
|
Interest rate
|
|
The notes will bear interest at the annual rate of 5.500%, payable semi-annually in arrears on each interest payment
date.
|
Interest payment dates
|
|
January 17 and July 17, commencing on July 17, 2017.
|
Ranking
|
|
The notes and guarantee will be general unsecured senior obligations and will rank equal in right of payment with all of the
issuer and the guarantor's existing and future senior unsecured indebtedness. The notes and the guarantee will be (i) effectively subordinated to all of our and the guarantor's existing and future secured indebtedness to the extent of the value
of the assets securing such indebtedness and (ii) structurally subordinated to all of the existing and future liabilities of our subsidiaries.
|
|
|
As of September 30, 2016, we had R$14,192 million of outstanding indebtedness on a consolidated basis, of which
R$1,436 million was Fibria Celulose's secured indebtedness and R$8,989 million was indebtedness of our subsidiaries.
|
Change of control
|
|
Upon the occurrence of a Change of Control that results in a Ratings Decline (as defined in "Description of the Notes"), we
will be required to make an offer to purchase the notes at a price equal to 101% of their principal amount plus accrued and unpaid interest, if any, to the date of repurchase. See "Description of the NotesPurchase of Notes upon Change of
Control Event."
|
Optional redemption
|
|
The issuer or Fibria Celulose may, at its option, redeem the notes, in whole or in part, at any time, by paying the greater
of (i) 100% of the principal amount of the notes plus accrued interest and additional amounts, if any, to the date of redemption and (ii) the applicable "make-whole" amount, as described under "Description of the
NotesRedemptionOptional Redemption."
|
S-16
Table of Contents
|
|
|
Tax redemption
|
|
The issuer or Fibria Celulose may, at its option, redeem the notes, in whole but not in part, at 100% of their principal amount plus accrued
and unpaid interest and additional amounts, if any, to the redemption date, on or after or at any time upon the occurrence of specified events relating to taxes imposed by Relevant Jurisdictions (as defined in "Description of the NotesPayment
of Additional Amounts.").
|
Additional amounts
|
|
All payments of principal and interest in respect of the notes will be made without withholding or deduction for any taxes
or other governmental charges imposed by any Relevant Jurisdiction (as defined in "Description of the NotesPayment of Additional Amounts."), unless required by law. In the event we are required to withhold or deduct amounts for any taxes or
other governmental charges, we will pay such additional amounts as are necessary to ensure that the holders of the notes receive the same amount as such holders would have received without such withholding or deduction, subject to certain
exceptions.
|
Covenants of Fibria Celulose
|
|
The indenture limits the creation of liens by Fibria Celulose and its significant subsidiaries and permits Fibria Celulose
to consolidate or merge with, or transfer all or substantially all of its assets to, another person only if it complies with certain requirements. However, these covenants are subject to a number of important exceptions. For further information on
these covenants, including the definition of Significant Subsidiary, see "Description of the Debt SecuritiesCertain Covenants."
|
Events of default
|
|
For a discussion of certain events of default that will permit acceleration of the principal of the notes plus accrued
interest, see "Description of the NotesEvents of Default."
|
Substitution of issuer
|
|
Fibria Finance may, without the consent of the holders of the notes and subject to certain conditions, be replaced and
substituted by Fibria Celulose or any wholly-owned subsidiary of Fibria Celulose as principal debtor in respect of the notes.
|
Further issuances
|
|
We may, from time to time, without the consent of the holders of the notes, issue additional notes on terms and conditions
identical to those of the notes, which additional notes shall increase the aggregate principal amount of, and shall form a single series and vote together with the notes.
|
Use of proceeds
|
|
We expect the net proceeds from the sale of the notes to be approximately U.S.$685 million after deducting the
underwriting discount and the estimated expenses of the offering payable by us. We will use the net proceeds from the sale of the notes for Eligible Green Projects (as defined below). See "Use of Proceeds."
|
S-17
Table of Contents
|
|
|
Form and denomination
|
|
The notes will be issued in registered form in denominations of U.S.$2,000 and integral multiples of U.S.$1,000 in excess thereof. The notes
will be issued in the form of global notes in fully registered form without interest coupons. The global notes will be exchangeable or transferable, as the case may be, for definitive certificated notes in fully registered form without interest
coupons only in limited circumstances. See "Clearance and SettlementBook-Entry Issuance."
|
Listing
|
|
We intend to apply to list the notes on the NYSE. The listing application will be subject to approval by the
NYSE.
|
Settlement
|
|
The notes will be delivered in book-entry form through the facilities of DTC for the accounts of its participants, including
Euroclear and Clearstream.
|
Governing law
|
|
The indenture, the notes and the guarantee are governed by, and construed in accordance with, the laws of the State of New
York.
|
Trustee, registrar, paying agent and transfer agent
|
|
Deutsche Bank Trust Company Americas.
|
Risk Factors
|
|
Prospective investors should carefully consider all of the information contained, or incorporated by reference, in this
prospectus supplement prior to investing in the notes. In particular, we urge prospective investors to carefully consider the information set forth under "Risk Factors" for a discussion of risks and uncertainties relating to us, our subsidiaries, our
business and an investment in the notes.
|
S-18
Table of Contents
SUMMARY FINANCIAL AND OPERATING DATA
Our consolidated financial statements are prepared in accordance with IFRS. The following summary financial tables present summary financial
data at the dates and for each of the years indicated. The summary historical financial data as of December 31, 2015 and December 31, 2014, and for the years ended December 31,
2015, 2014 and 2013 has been derived from our audited consolidated financial statements and notes thereto included in our 2015 Annual Report, which is incorporated by reference to this prospectus
supplement. The summary historical financial data as of September 30, 2016 and for the three- and nine-month periods ended September 30, 2016 and 2015 and the notes thereto have been
derived from our unaudited condensed consolidated interim financial information and notes thereto, included in this prospectus supplement. Such unaudited condensed consolidated interim financial
information include, in the opinion of our management, all adjustments considered necessary to state fairly the results of operations and financial position for the periods and dates presented. The
results of operations for an interim period are not necessarily indicative of the results for the full year or any other interim period.
The
data presented below is only a summary and should be read in conjunction with our unaudited condensed consolidated interim financial information as of September 30, 2016 and
for the three- and nine-month periods ended September 30, 2016 and 2015 and the notes thereto included in this prospectus supplement, and our audited consolidated financial statements and the
notes thereto included in our 2015 Annual Report, as well as "Management's Discussion and Analysis of Financial Results for the Nine-Month Periods Ended September 30, 2016 and 2015" in this
prospectus
S-19
Table of Contents
supplement,
as well as "Item 5. Operating and Financial Review and Prospects" and "Item 3. Key InformationA. Selected Financial Data" included in our 2015 Annual Report.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine-Month Periods Ended
September 30,
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31,
|
|
Summary Consolidated Statement of Profit or Loss Data:
|
|
|
2016(1)
|
|
2016
|
|
2015
|
|
2015(1)
|
|
2015
|
|
2014
|
|
2013
|
|
|
|
(in thousands
of U.S.$)
|
|
(in thousands of reais)
|
|
(in thousands
of U.S.$)
|
|
(in thousands of reais)
|
|
Net revenues
|
|
|
2,181,323
|
|
|
7,081,010
|
|
|
7,096,052
|
|
|
3,105,375
|
|
|
10,080,667
|
|
|
7,083,603
|
|
|
6,917,406
|
|
Cost of sales
|
|
|
(1,545,363
|
)
|
|
(5,016,556
|
)
|
|
(4,246,565
|
)
|
|
(1,810,797
|
)
|
|
(5,878,209
|
)
|
|
(5,545,537
|
)
|
|
(5,382,688
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
635,960
|
|
|
2,064,454
|
|
|
2,849,487
|
|
|
1,294,578
|
|
|
4,202,458
|
|
|
1,539,066
|
|
|
1,534,718
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (expenses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
|
|
|
(106,441
|
)
|
|
(345,528
|
)
|
|
(312,558
|
)
|
|
(134,697
|
)
|
|
(437,253
|
)
|
|
(365,214
|
)
|
|
(347,538
|
)
|
General and administrative
|
|
|
(62,074
|
)
|
|
(201,507
|
)
|
|
(194,807
|
)
|
|
(81,825
|
)
|
|
(265,621
|
)
|
|
(265,077
|
)
|
|
(284,214
|
)
|
Equity in results of the joint venture
|
|
|
(234
|
)
|
|
(758
|
)
|
|
744
|
|
|
121
|
|
|
393
|
|
|
(622
|
)
|
|
|
|
Other operating income and expense, net
|
|
|
(54,172
|
)
|
|
(175,854
|
)
|
|
(83,070
|
)
|
|
7,500
|
|
|
24,347
|
|
|
749,462
|
|
|
807,481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(222,921
|
)
|
|
(723,647
|
)
|
|
(589,691
|
)
|
|
(208,901
|
)
|
|
(678,134
|
)
|
|
118,549
|
|
|
175,729
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before financial income and expenses
|
|
|
413,039
|
|
|
1,340,807
|
|
|
2,259,796
|
|
|
1,085,677
|
|
|
3,524,324
|
|
|
1,656,614
|
|
|
1,710,447
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial income
|
|
|
58,394
|
|
|
189,557
|
|
|
132,182
|
|
|
68,289
|
|
|
221,679
|
|
|
133,950
|
|
|
110,723
|
|
Financial expenses
|
|
|
(164,655
|
)
|
|
(534,503
|
)
|
|
(397,946
|
)
|
|
(175,526
|
)
|
|
(569,793
|
)
|
|
(1,040,597
|
)
|
|
(1,016,526
|
)
|
Result of derivative financial instruments, net
|
|
|
210,503
|
|
|
683,334
|
|
|
(889,479
|
)
|
|
(255,723
|
)
|
|
(830,128
|
)
|
|
(6,236
|
)
|
|
(215,313
|
)
|
Foreign exchange (gain) loss and indexation charges, net
|
|
|
454,415
|
|
|
1,475,123
|
|
|
(2,627,044
|
)
|
|
(772,295
|
)
|
|
(2,507,023
|
)
|
|
(721,842
|
)
|
|
(932,907
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
558,657
|
|
|
1,813,511
|
|
|
(3,782,287
|
)
|
|
(1,135,255
|
)
|
|
(3,685,265
|
)
|
|
(1,634,725
|
)
|
|
(2,054,023
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
971,696
|
|
|
3,154,318
|
|
|
(1,522,491
|
)
|
|
(49,578
|
)
|
|
(160,941
|
)
|
|
21,890
|
|
|
(343,576
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
(11,113
|
)
|
|
(36,076
|
)
|
|
(147,102
|
)
|
|
(210,784
|
)
|
|
(684,246
|
)
|
|
(46,280
|
)
|
|
(619,606
|
)
|
Deferred
|
|
|
(419,909
|
)
|
|
(1,363,108
|
)
|
|
1,116,594
|
|
|
370,332
|
|
|
1,202,172
|
|
|
186,942
|
|
|
265,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
540,673
|
|
|
1,755,134
|
|
|
(552,999
|
)
|
|
109,970
|
|
|
356,985
|
|
|
162,552
|
|
|
(697,582
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (losses) attributable to shareholders of the company
|
|
|
538,199
|
|
|
1,747,103
|
|
|
(563,286
|
)
|
|
105,411
|
|
|
342,185
|
|
|
155,584
|
|
|
(706,422
|
)
|
Net income attributable to non-controlling interest
|
|
|
2,474
|
|
|
8,031
|
|
|
10,287
|
|
|
4,559
|
|
|
14,800
|
|
|
6,968
|
|
|
8,840
|
|
-
(1)
-
Solely
for the convenience of the reader,
real
amounts for the nine-month period ended September 30, 2016 and
for year ended December 31, 2015 have been translated into U.S. dollars at the exchange rate as of September 30, 2016 of R$3.2462 to U.S.$1.00. See "Exchange Rates" for further
information on recent fluctuations in exchange rates. Such translations should not be construed as representations that the
real
amounts represent, or
have been or could be converted into, U.S. dollars at that or any other rate.
S-20
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30,
|
|
At December 31,
|
|
Summary Balance Sheet Data:
|
|
2016(1)
|
|
2016
|
|
2015(1)
|
|
2015
|
|
2014
|
|
2013
|
|
|
|
(in thousands of
U.S.$)
|
|
(in thousands of
reais)
|
|
(in thousands of
U.S.$)
|
|
(in thousands of reais)
|
|
Cash and cash equivalents
|
|
|
349,286
|
|
|
1,133,852
|
|
|
331,973
|
|
|
1,077,651
|
|
|
461,067
|
|
|
1,271,752
|
|
Marketable securitiescurrent
|
|
|
730,657
|
|
|
2,371,858
|
|
|
434,928
|
|
|
1,411,864
|
|
|
682,819
|
|
|
1,068,182
|
|
Trade accounts receivable, net
|
|
|
146,257
|
|
|
474,778
|
|
|
228,683
|
|
|
742,352
|
|
|
538,424
|
|
|
382,087
|
|
Accounts receivableland and building sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
902,584
|
|
Inventory
|
|
|
550,690
|
|
|
1,787,650
|
|
|
483,995
|
|
|
1,571,146
|
|
|
1,238,793
|
|
|
1,265,730
|
|
Assets held for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
589,849
|
|
Total current assets
|
|
|
1,966,221
|
|
|
6,382,746
|
|
|
1,682,145
|
|
|
5,460,578
|
|
|
3,261,177
|
|
|
5,807,001
|
|
Biological assets
|
|
|
1,331,939
|
|
|
4,323,741
|
|
|
1,267,635
|
|
|
4,114,998
|
|
|
3,707,845
|
|
|
3,423,434
|
|
Property, plant and equipment
|
|
|
3,693,941
|
|
|
11,990,534
|
|
|
2,905,978
|
|
|
9,433,386
|
|
|
9,252,733
|
|
|
9,824,504
|
|
Intangible assets
|
|
|
1,412,145
|
|
|
4,584,105
|
|
|
1,387,972
|
|
|
4,505,634
|
|
|
4,552,103
|
|
|
4,634,265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
9,878,205
|
|
|
32,066,629
|
|
|
9,067,210
|
|
|
29,433,978
|
|
|
25,593,980
|
|
|
26,750,172
|
|
Loans and financingscurrent(2)
|
|
|
465,089
|
|
|
1,509,772
|
|
|
330,502
|
|
|
1,072,877
|
|
|
965,389
|
|
|
2,972,361
|
|
Trade payables
|
|
|
413,625
|
|
|
1,342,709
|
|
|
205,784
|
|
|
668,017
|
|
|
593,348
|
|
|
586,541
|
|
Liabilities related to the assets held for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
470,000
|
|
Total current liabilities
|
|
|
1,082,596
|
|
|
3,514,323
|
|
|
910,387
|
|
|
2,955,299
|
|
|
2,099,230
|
|
|
4,448,355
|
|
Loans and financingsnon-current(3)
|
|
|
3,906,896
|
|
|
12,682,567
|
|
|
3,595,267
|
|
|
11,670,955
|
|
|
7,361,130
|
|
|
6,800,736
|
|
Derivative financial instruments
|
|
|
82,684
|
|
|
268,410
|
|
|
254,348
|
|
|
825,663
|
|
|
422,484
|
|
|
451,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
5,463,973
|
|
|
17,737,149
|
|
|
5,119,419
|
|
|
16,618,658
|
|
|
10,978,275
|
|
|
12,258,918
|
|
Total shareholders' equity
|
|
|
4,414,232
|
|
|
14,329,480
|
|
|
3,947,791
|
|
|
12,815,320
|
|
|
14,615,705
|
|
|
14,491,254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders' equity
|
|
|
9,878,205
|
|
|
32,066,629
|
|
|
9,067,210
|
|
|
29,433,978
|
|
|
25,593,980
|
|
|
26,750,172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Solely
for the convenience of the reader,
real
amounts for the nine-month period ended September 30, 2016 and
for year ended December 31, 2015 have been translated into U.S. dollars at the exchange rate as of September 30, 2016 of R$3.2462 to U.S.$1.00. See "Exchange Rates" for further
information on recent fluctuations in exchange rates. Such translations should not be construed as representations that the
real
amounts represent, or
have been or could be converted into, U.S. dollars at that or any other rate.
-
(2)
-
Includes
current portion of non-current loans and financings.
-
(3)
-
Excludes
current portion of non-current loans and financings.
S-21
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At and For the Nine-Month Periods
Ended September 30,
|
|
At and For the Year Ended December 31,
|
|
Other Financial and Operating Data:
|
|
2016(1)
|
|
2016
|
|
2015
|
|
2015(1)
|
|
2015
|
|
2014
|
|
2013
|
|
(in thousands of reais or U.S.$, as applicable, unless otherwise indicated)
|
|
(U.S.$)
|
|
(reais)
|
|
(U.S.$)
|
|
(reais)
|
|
Gross margin
|
|
|
|
|
|
29.2
|
%
|
|
40.2
|
%
|
|
|
|
|
41.7
|
%
|
|
21.7
|
%
|
|
22.2
|
%
|
Operating margin
|
|
|
|
|
|
18.9
|
%
|
|
31.8
|
%
|
|
|
|
|
35.0
|
%
|
|
23.4
|
%
|
|
24.7
|
%
|
Capital expenditures
|
|
|
(1,365,915
|
)
|
|
(4,434,034
|
)
|
|
1,275,788
|
|
|
726,362
|
|
|
2,357,915
|
|
|
1,591,002
|
|
|
1,286,684
|
|
Depreciation, amortization and depletion
|
|
|
432,151
|
|
|
1,402,850
|
|
|
1,410,356
|
|
|
582,909
|
|
|
1,892,238
|
|
|
1,873,994
|
|
|
1,863,161
|
|
Cash flow provided by (used in):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities
|
|
|
913,753
|
|
|
2,966,225
|
|
|
3,162,926
|
|
|
1,379,773
|
|
|
4,479,018
|
|
|
2,226,756
|
|
|
2,163,530
|
|
Investing activities
|
|
|
(1,701,295
|
)
|
|
(5,522,744
|
)
|
|
(2,163,526
|
)
|
|
(1,021,256
|
)
|
|
(3,315,200
|
)
|
|
(356,018
|
)
|
|
433,849
|
|
Financing activities
|
|
|
844,586
|
|
|
2,741,694
|
|
|
719,643
|
|
|
(262,658
|
)
|
|
(852,642
|
)
|
|
(2,643,993
|
)
|
|
(2,275,991
|
)
|
Net indebtedness(2)
|
|
|
3,271,531
|
|
|
10,620,044
|
|
|
9,577,908
|
|
|
3,392,932
|
|
|
11,014,136
|
|
|
7,548,746
|
|
|
7,849,306
|
|
Adjusted EBITDA(3)
|
|
|
904,858
|
|
|
2,937,350
|
|
|
3,714,092
|
|
|
1,643,980
|
|
|
5,336,687
|
|
|
2,791,607
|
|
|
2,795,674
|
|
Indebtedness ratio in R$(4)
|
|
|
|
|
|
2.33
|
|
|
|
|
|
|
|
|
2.06
|
|
|
2.70
|
|
|
2.81
|
|
Number of employees
|
|
|
|
|
|
4,407
|
|
|
4,232
|
|
|
|
|
|
4,197
|
|
|
4,294
|
|
|
4,192
|
|
Pulp nominal production capacity (thousands of tons)
|
|
|
|
|
|
5,300
|
|
|
5,300
|
|
|
|
|
|
5,300
|
|
|
5,300
|
|
|
5,300
|
|
Sales volumes (thousands of tons)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic market pulp
|
|
|
|
|
|
405
|
|
|
374
|
|
|
|
|
|
499
|
|
|
517
|
|
|
447
|
|
Export market pulp
|
|
|
|
|
|
3,514
|
|
|
3,436
|
|
|
|
|
|
4,619
|
|
|
4,788
|
|
|
4,751
|
|
Total market pulp
|
|
|
|
|
|
3,919
|
|
|
3,810
|
|
|
|
|
|
5,118
|
|
|
5,305
|
|
|
5,198
|
|
-
(1)
-
Solely
for the convenience of the reader,
real
amounts for the nine-month period ended September 30, 2016 and
for year ended December 31, 2015 have been translated into U.S. dollars at the exchange rate as of September 30, 2016 of R$3.2462 to U.S.$1.00. See "Exchange Rates" for further
information on recent fluctuations in exchange rates. Such translations should not be construed as representations that the
real
amounts represent, or
have been or could be converted into, U.S. dollars at that or any other rate.
-
(2)
-
Net
indebtedness consists of current and non-current loans
less
cash and cash equivalents, marketable securities and
net derivatives (assets
less
liabilities). Net indebtedness is a non-IFRS measure which we disclose from time to time. Net indebtedness as described in
this prospectus supplement is not a substitute for IFRS measures of indebtedness. The following table sets forth a calculation of our net indebtedness:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30,
|
|
At December 31,
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
|
|
(in thousands of reais)
|
|
Loans and financingscurrent
|
|
|
1,509,772
|
|
|
1,072,877
|
|
|
965,389
|
|
|
2,972,361
|
|
Loans and financingsnon-current
|
|
|
12,682,567
|
|
|
11,670,955
|
|
|
7,361,130
|
|
|
6,800,736
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
1,133,852
|
|
|
1,077,651
|
|
|
461,067
|
|
|
1,271,752
|
|
Marketable securitiescurrent
|
|
|
2,371,858
|
|
|
1,411,864
|
|
|
682,819
|
|
|
1,068,182
|
|
Marketable securitiesnon-current
|
|
|
70,661
|
|
|
68,142
|
|
|
51,350
|
|
|
48,183
|
|
Derivative financial instrumentscurrent
|
|
|
(50,914
|
)
|
|
(275,992
|
)
|
|
(156,299
|
)
|
|
(84,256
|
)
|
Derivative financial instrumentsnon-current
|
|
|
46,838
|
|
|
(551,969
|
)
|
|
(261,164
|
)
|
|
(380,070
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net indebtedness
|
|
|
10,620,044
|
|
|
11,014,136
|
|
|
7,548,746
|
|
|
7,849,306
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(3)
-
We
calculate EBITDA as net income (loss)
plus/less
financial (income) expenses, net, income taxes and depreciation,
depletion and amortization. We calculate adjusted EBITDA as EBITDA
plus/less
equity, fair value of biological assets, loss (gain) on disposal of property,
plant and equipment, accrual for losses on ICMS credits and tax credits/reversal of provision for contingencies. EBITDA and adjusted EBITDA are not a measure of financial performance under Brazilian
GAAP, United States GAAP or IFRS, and should not be considered as alternatives to net income or as a measure of operating performance, operating cash flows or liquidity. EBITDA and adjusted EBITDA do
not have standardized meanings, and our definitions of EBITDA and adjusted EBITDA may not be comparable with those used by other companies. EBITDA
S-22
Table of Contents
and
adjusted EBITDA present limitations that limit their usefulness as measures of profitability, as a result of not considering certain costs arising from our business, which may affect,
significantly, our profits, as well as financial expenses, taxes and depreciation. For a more detailed discussion of EBITDA, see "Presentation of Financial and Other InformationSpecial
Note Regarding Non-GAAP Financial Measures." The table below reconciles EBITDA and adjusted EBITDA to our net income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the
12-Month
Period
Ended
September 30,
|
|
For the Nine-Month Period
Ended September 30,
|
|
For the Year Ended December 31,
|
|
|
|
2016
|
|
2016
|
|
2015
|
|
2015
|
|
2014
|
|
2013
|
|
|
|
(in thousands of reais)
|
|
Net income (loss)
|
|
|
2,665,117
|
|
|
1,755,134
|
|
|
(552,999
|
)
|
|
356,985
|
|
|
162,552
|
|
|
(697,582
|
)
|
Plus/Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial (income) expenses, net
|
|
|
(1,910,533
|
)
|
|
(1,813,511
|
)
|
|
3,782,287
|
|
|
3,685,265
|
|
|
1,634,725
|
|
|
2,054,023
|
|
Income taxes
|
|
|
1,850,750
|
|
|
1,399,184
|
|
|
(969,492
|
)
|
|
(517,926
|
)
|
|
(140,662
|
)
|
|
354,006
|
|
Depreciation, depletion and amortization
|
|
|
1,884,732
|
|
|
1,402,850
|
|
|
1,410,356
|
|
|
1,892,238
|
|
|
1,873,994
|
|
|
1,863,161
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
|
4,490,066
|
|
|
2,743,657
|
|
|
3,670,152
|
|
|
5,416,562
|
|
|
3,530,609
|
|
|
3,573,608
|
|
Plus/Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
1,109
|
|
|
758
|
|
|
(744
|
)
|
|
(393
|
)
|
|
622
|
|
|
|
|
Fair value of biological assets
|
|
|
(46,738
|
)
|
|
108,014
|
|
|
(29,831
|
)
|
|
(184,583
|
)
|
|
(51,755
|
)
|
|
(102,265
|
)
|
Loss (gain) on disposal of property, plant and equipment
|
|
|
(128,517
|
)
|
|
22,495
|
|
|
15,625
|
|
|
(135,387
|
)
|
|
75,171
|
|
|
(581,305
|
)
|
Accrual for losses on ICMS credits
|
|
|
261,487
|
|
|
74,701
|
|
|
61,084
|
|
|
247,870
|
|
|
88,445
|
|
|
91,192
|
|
Tax credits/reversal of provision for contingencies
|
|
|
(17,464
|
)
|
|
(12,275
|
)
|
|
(2,194
|
)
|
|
(7,382
|
)
|
|
(851,485
|
)
|
|
(185,556
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
4,559,943
|
|
|
2,937,350
|
|
|
3,714,092
|
|
|
5,336,687
|
|
|
2,791,607
|
|
|
2,795,674
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(4)
-
Indebtedness
ratio is the ratio of our net indebtedness as of the end of the applicable period divided by our Adjusted EBITDA for the then-most recently concluded
period of four consecutive fiscal quarters. For the nine-month period ended September 30, 2016, our indebtedness ratio is net indebtedness as of such date divided by Adjusted EBITDA for the
12-month period ended on such date.
S-23
Table of Contents
RISK FACTORS
Our 2015 Annual Report, which is incorporated by reference in this prospectus supplement, includes extensive risk
factors relating to our company, the pulp and paper industries and Brazil. Prospective purchasers of notes should carefully consider the risks discussed below and in our 2015 Annual Report, as well as
the other information included in or incorporated by reference into this prospectus supplement, before deciding to purchase any notes. Our business, results of operations, financial condition or
prospects could be negatively affected if any of these risks occurs, and as a result, the trading price of the notes could decline and you could lose all or part of your
investment.
The risk factors discussed below and in our 2015 Annual Report are not the only risks that we face, but are the risks that we currently consider to be material.
There may be additional risks that we currently consider immaterial or of which we are currently unaware, and any of these risks could have similar effects to those set forth below and in our 2015
Annual Report.
Risks Relating to the Notes and the Guarantee
We may incur additional indebtedness ranking equal to the notes and the guarantee
.
The
indenture will permit us and our subsidiaries to incur additional debt, including debt that ranks on an equal and ratable basis with our guarantee of the notes. If
we incur additional debt or guarantees that rank on an equal and ratable basis with our guarantee of the notes, the holders of that debt (and beneficiaries of those guarantees) would be entitled to
share ratably with the holders of the notes in any proceeds that may be distributed upon our insolvency, liquidation, reorganization, dissolution or other winding up. This would likely reduce the
amount of any liquidation proceeds that would be available to be paid to you.
The issuer has no operations of its own, and therefore its ability to make payments on the notes depends on
its receipt of payments from us.
Fibria Finance is our wholly-owned finance subsidiary that was incorporated on October 9, 2009 for the purpose of financing our
operations, including through the issuance of notes (and any additional notes). As a special purpose vehicle with no material assets or business operations, holders of the notes must rely solely on
the cash flow from our operations to pay amounts due in connection with the notes. The ability of the issuer to make payments of principal, interest and any other amounts due on the notes is
contingent on its receipt from us of amounts sufficient to make these payments and, in turn, on our ability to make these payments. In the event that we are unable to make such payments for any
reason, the issuer will not have sufficient resources to satisfy its obligations under the indenture or the notes.
The foreign exchange policy of Brazil may affect our ability to make money remittances outside Brazil in
respect of the guarantee.
Under existing regulations, Brazilian companies are not required to obtain authorization from the Brazilian Central Bank
(
Banco Central do Brasil
) in order to make payments in U.S. dollars outside Brazil under guarantees, such as to the holders of the notes. We cannot
assure you that these regulations will continue to be in force at the time we may be required to perform our payment obligations under the guarantee. If these regulations or their interpretation are
modified and an authorization from the Brazilian Central Bank is required, we would be obligated to seek an authorization from the Brazilian Central Bank to transfer the amounts under the guarantee
out of Brazil or, alternatively, make such payments with funds held by us outside Brazil. We cannot assure you that such an authorization will be obtained or that such funds will be available.
S-24
Table of Contents
The market price of the notes may be adversely affected by, among other things, developments in Brazilian and
international markets and any failure by us to allocate an amount equal to the net proceeds from the sale of the notes to Eligible Green Projects.
The market price of the notes will depend on many factors. The market price of the notes may be adversely affected by declines in the
international financial markets and world economic conditions. Brazilian securities markets are, to varying degrees, influenced by economic and market conditions in other emerging market countries,
especially those in Latin America. Although economic conditions are different in each country, investors' reaction to developments in one country may affect the securities markets and the securities
of issuers in other countries, including Brazil. For example, the market price of the notes may be adversely affected by political conditions in Brazil (see, for example, "SummaryRecent
DevelopmentsDevelopments Related to the Political Environment in Brazil") as well as political events elsewhere in the world, such as the United Kingdom's referendum vote in favor of
leaving the European Union. We cannot assure you that the market for Brazilian securities will not continue to be affected negatively by events elsewhere, particularly in emerging markets, or that
such developments will not have a negative impact on the market price of the notes.
In
addition, the market price of the notes may also be impacted if we do not meet, or continue to meet, the investment requirements of certain environmentally focused investors with
respect to the notes, which may also have consequences for certain investors with portfolio mandates to invest in green assets. There is currently no market consensus on what precise attributes are
required for a
particular project to be defined as "green" or "sustainable" and therefore no assurance can be provided to investors that the Eligible Green Projects will meet all investor expectations with regarding
environmental impact and sustainability performance. Accordingly, each potential purchaser of the notes should determine for itself the relevance of the information contained in this prospectus
supplement regarding the use of proceeds of the notes.
Judgments of Brazilian courts enforcing the guarantor's obligations under their guarantee would be payable
only in reais.
If proceedings are brought in the courts of Brazil seeking to enforce the guarantor's obligations under the guarantee, the guarantor would not
be required to discharge its obligations in a currency other than
reais
. Any judgment obtained against the guarantor in Brazilian courts in respect of
any payment obligations under the guarantee would be expressed in
reais
. We cannot assure you that this amount in
reais
will afford you full compensation
of the amount sought in any such litigation.
Brazilian bankruptcy laws may be less favorable to investors than bankruptcy and insolvency laws in other
jurisdictions.
If we are unable to pay our indebtedness, including our obligations under the guarantee, we may become subject to bankruptcy proceedings in
Brazil. The bankruptcy laws of Brazil currently in effect are significantly different from, and may be less favorable to creditors than, those of certain other jurisdictions. Noteholders may have
limited voting rights at creditors' meetings in the context of a court reorganization proceeding. In addition, any judgment obtained against us in Brazilian courts in respect of any payment
obligations under the guarantee normally would be expressed in the
real
equivalent of the U.S. dollar amount of such sum at the exchange rate in effect
on the date (1) of actual payment, (2) on which such judgment is rendered, or (3) on which collection or enforcement proceedings are started against us. Consequently, in the event
of our bankruptcy, all of our debt obligations, including the guarantee of the notes, which are denominated in foreign currency, will be converted into
reais
at the prevailing exchange rate on the date
of declaration of our bankruptcy by the court. We cannot assure investors that such rate of exchange
will afford full compensation of the amount invested in the notes plus accrued interest.
S-25
Table of Contents
Payments on the notes and the guarantee will be junior to our secured debt obligations and to the liabilities
of our subsidiaries, affiliates or joint ventures to their own creditors.
As of September 30, 2016, our total consolidated indebtedness amounted to R$14,192 million, R$1,436 million of which was
Fibria Celulose's secured indebtedness. The notes and the guarantee will constitute unsecured obligations of the issuer and the guarantor, respectively, and will rank equally in right of payment with
all of the other existing and future unsecured, unsubordinated indebtedness of the issuer and the guarantor, respectively. Although the holders of the notes will have a direct, but unsecured, claim on
our assets and property, payment on the guarantee will be subordinated to payments on our secured debt to the extent of the assets and property securing such debt.
We
conduct certain aspects of our business through subsidiaries, none of which are obligated under the notes or the guarantee (other than the issuer). Our subsidiaries are separate and
distinct legal entities and have no obligation (other than the issuer), contingent or otherwise, to pay any amounts due under the notes or the guarantee or to make any funds available therefor,
whether in the form of loans, dividends or otherwise.
The
claims of any creditor of any of our subsidiaries, affiliated companies or joint ventures would rank ahead of our ability to receive dividends and other cash flows from these
companies. As a result, claims of these creditors would rank ahead of our ability to access cash from these companies in order to satisfy our obligations under the guarantee. All of the material debt
of our subsidiaries is guaranteed by Fibria Celulose. As of September 30, 2016, R$8,989 million of our total consolidated indebtedness was indebtedness of our subsidiaries and Fibria
Celulose's portion of the indebtedness of Veracel. In addition, these subsidiaries, affiliated companies and joint ventures may be restricted by their own loan agreements, governing instruments and
other contracts from distributing cash to us to enable us to perform under the guarantee.
The guarantor's obligations under the guarantee are also subordinated to certain statutory preferences.
Under Brazilian law, the guarantor's obligations under its guarantee are also subordinated to certain statutory preferences. In the event of the
liquidation, bankruptcy or judicial reorganization of a guarantor, such statutory preferences, including post-petition claims, claims for salaries, wages, social security, taxes, court fees and
expenses and claims secured by collateral, among others, will have preference over any other claims, including claims by any investor in respect of the guarantee. In such a scenario, enforcement of
the guarantee may be unsuccessful, and noteholders may be unable to collect amounts that they are due under the notes.
Any reduction in our credit ratings could materially and adversely affect us.
The ratings of the notes address the likelihood of payment of principal at the maturity of the notes. The ratings also address the timely
payment of interest on each interest payment date. The ratings of the notes are not a recommendation to purchase, hold or sell the notes, and the ratings do not comment on market price or suitability
for any particular investor. We cannot assure you that the rating of the notes will remain for any given period of time or that the rating will not be lowered or withdrawn. The assigned ratings may be
raised or lowered depending, among other factors, on the rating agencies' respective assessment of our financial strength, as well as their assessment of Brazilian sovereign risk generally.
In
addition, credit ratings impact the interest rates we pay on funds that we borrow and the market's perception of our financial strength. If the ratings on the notes were reduced and
the market were to perceive any such reduction as a deterioration of our financial strength, our cost of borrowing would likely increase and our results of operations, cash flows and financial
condition could be materially adversely affected.
S-26
Table of Contents
We may be unable to purchase the notes upon a specified change of control event, which would result in
defaults under the indenture governing the notes
.
The
terms of the notes will require us to make an offer to repurchase the notes upon the occurrence of a specified change of control event at a purchase price equal to
101% of the principal amount of the notes, plus accrued interest to the date of the purchase. Any financing arrangements we may enter into may require repayment of amounts outstanding upon the
occurrence of a change of control event and limit our ability to fund the repurchase of your notes in certain circumstances. It is possible that we will not have sufficient funds at the time of the
change of control to make the required repurchase of notes or that restrictions in our credit facilities and other financing arrangements will not allow the repurchases. See "Description of the
NotesPurchase of Notes upon Change of Control Event."
We cannot assure investors that a judgment of a court for liabilities under the securities laws of a
jurisdiction outside Brazil would be enforceable in Brazil, or that an original action can be brought in Brazil against us for liabilities under applicable securities laws.
The issuer is incorporated under the laws of the Cayman Islands, and Fibria Celulose is incorporated under the laws of Brazil. Substantially all
of our assets are located in Brazil. All of the issuer's and all of our directors, executive officers and certain advisors named herein reside in Brazil. As a result, it may not be possible for
investors to effect service of process within the United States upon the issuer or us, or its or our directors, executive officers and advisors, or to enforce against the issuer or us, or its or our
directors, executive officers and advisors, in U.S. or Brazilian courts, any judgments predicated upon the civil liability provisions of applicable securities laws or predicated upon the laws of the
State of New York which is the governing law of the indenture, the notes and the guarantee. In addition, it may not be possible to bring an original action in Brazil against us for liabilities under
securities laws of the United States or other jurisdictions or to enforce the guarantee of Fibria Celulose if the indenture or the notes were to be declared void by a court applying the laws of the
State of New York. In addition, prior to the commencement of an insolvency procedure, creditors under indebtedness governed by Brazilian Law may be able to collect their credit more expeditiously than
creditors under indebtedness governed by other laws (such as the laws of the State of New York) if such indebtedness is not qualified as an extrajudicial executive title
(
título executivo extrajudicial
) under such laws or if such qualification is questioned in Brazilian courts. See "Service of Process and
Enforcement of Judgments."
An active trading market for the notes may not develop.
The notes constitute a new issue of securities, for which there is no existing market. The underwriters are not under any obligation to make a
market with respect to the notes, and we cannot assure you that trading markets will develop or be maintained, that holders of the notes will be able to sell their notes, or the price at which such
holders may be able to sell their notes. If an active trading market were to develop, the notes could trade at prices that may be higher or lower than the initial offering price depending on many
factors, including prevailing interest rates, our results of operations and financial condition, prospects for other companies in our industry, political and economic developments in and affecting
Brazil, the risk associated with Brazilian issuers of similar securities and the market for similar securities. If an active trading market for the notes does not develop or is interrupted, the market
price and liquidity of the notes may be materially adversely affected.
The guarantee may not be enforceable if deemed fraudulent and declared void.
The guarantee may not be enforceable under Brazilian law. While Brazilian law does not prohibit the granting of guarantees, in the event that we
were to become subject to a reorganization proceeding or to bankruptcy, our guarantee, if granted up to two years before the declaration of bankruptcy, may be deemed to have been fraudulent and
declared void, based upon our being deemed not to have received fair consideration in exchange for the guarantee.
S-27
Table of Contents
USE OF PROCEEDS
We estimate the net proceeds from the sale of the notes to be approximately U.S.$685 million after deducting the underwriting discount
and the estimated expenses of the offering payable by us.
We
will allocate an amount equal to the net proceeds to "Eligible Green Projects," that is, projects that we believe meet one or more of the Eligibility Criteria (as defined below),
including (i) existing projects financed during the two years preceding the issue date of the notes, (ii) projects committed to prior to the issue date of the notes but financed
following the issue date of the notes and (iii) projects committed to and financed after the issue date of the notes. Eligible Green Projects may be funded in whole or in part by net proceeds
from the sale of the notes. Payment of the principal and interest on the Notes will be made from our general funds and will not be directly linked to the performance of any Eligible Green Project.
Eligibility
Criteria means expenditures in any one of the following:
-
-
Sustainable Forest Management for Eucalyptus Plantations that Are Certified by
FSC®(1) or Cerflor (PEFC):
(i) producing and acquiring the seedlings, (ii) preparing the soil for the seedlings,
including subsoiling and harrowing, (iii) planting of seedlings, or (iv) protecting and maintaining the seedlings up to harvest.
-
-
Restoration of Native Forests and Conservation of
Biodiversity:
(i) acquiring new native Brazilian seedlings, (ii) planting native Brazilian seedlings in degraded land,
(ii) creating ecological corridors and mosaics in eucalyptus plantations so that they can serve as wildlife and flora habitat conservation, or (iii) funding studies that evaluate the
conservation of high conservation value (HCV) areas.
-
-
Waste Management:
(i) reducing
chemical usage and waste, (ii) increasing the efficiency of filtration and the removal of dregs, (iii) recovering fibers (for reuse) and minimizing fiber waste, (iv) installing a
dryer for the use of dry waste as biomass, (v) separating and recovering methanol waste (for reuse as fuel), (vi) reducing sedimentation in lagoons (for improved effluent treatment and
use in composting), or (vii) transforming industrial waste into subproducts.
-
-
Sustainable Water
Management:
(i) reducing consumption of water in industrial processes, or (ii) facilitating reuse of water in industrial processes.
-
-
Renewable Energy:
optimizing
biomass boiler efficiency (to increase energy generated from biomass).
While
the notes are outstanding, the proceeds from the notes will be allocated and managed by our finance team following specific recommendations from our sustainability team.
The
finance team will track the allocation of proceeds to Eligible Green Projects using management systems and spreadsheets, including a brief description of the relevant Eligible Green
Project, the regions in which it is located and the amount of proceeds allocated to such Eligible Green Project. On an annual basis, an amount equal to the net proceeds amount will be adjusted by the
amounts allocated to Eligible Green Projects. Pending allocation, net proceeds may be invested in cash, cash equivalents and/or marketable securities in accordance with our cash management policies.
Proceeds may be allocated to Fibria subsidiaries to fund one or more of the Eligible Green Projects in whole or in part.
Throughout
the life of the notes, Fibria will keep records in connection with the allocation of the net proceeds and will make publicly available on its website (see
www.fibria.com.br/en) information on the allocation of the net proceeds, to be renewed annually until full allocation of the net proceeds, and as necessary thereafter in the event of new developments.
This information will include, subject to
-
(1)
-
License
Code FSC-C100042, FSC-C100704, FSC-C110130.
S-28
Table of Contents
confidentiality
considerations, in relation to the projects to which we are subject, additional descriptions of select projects funded with the net proceeds and, to the extent possible, in addition to
its allocation
reporting, Fibria will report on the expected environmental impact of the projects. The contents of Fibria's website are not incorporated into this prospectus supplement or the accompanying
prospectus.
These
reports will be accompanied by:
-
a.
-
An
assertion by management that the net proceeds of this offering were allocated to Eligible Green Projects; and
-
b.
-
A
report from an external auditor in respect of its examination of management's assertion conducted in accordance with attestation standards established by the
International Standard on Assurance Engagements (ISAE) 3000.
The
underwriters make no assurances as to (i) whether the notes will meet investor criteria and expectations with regarding environmental impact and sustainability performance for
any investors, (ii) whether the use of the net proceeds will be used for Eligible Green Projects or (iii) the characteristics of the Eligible Green Projects, including their
environmental and sustainability criteria.
S-29
Table of Contents
CAPITALIZATION
The following table sets forth our consolidated debt and capitalization at September 30, 2016 based on our unaudited condensed
consolidated interim financial information as of September 30, 2016 prepared in accordance with IAS 34:
-
-
on an actual historic basis;
-
-
as adjusted to reflect:
-
(i)
-
the
disbursement of R$423 million on October 18, 2016 and the disbursement of R$412 million on December 13, 2016, pursuant to the
financing agreement entered into between Fibria-MS and BNDES in May 2016;
-
(ii)
-
the
disbursement of U.S.$36 million (equivalent then to R$124 million) on November 16, 2016 and the disbursement of U.S.$43 million
(equivalent then to R$145 million) on December 15, 2016, pursuant to the Finnish Export Credit Agreement entered into between Fibria-MS and Finnvera plc, as guarantor, BNP Paribas
Fortis SA/NV, Finnish Export Credit Ltd., HSBC Bank USA, N.A. and Nordea Bank Finland plc in May 2016;
-
(iii)
-
the
disbursement of R$50 million on December 13, 2016, R$10 million on December 27, 2016 and R$52 million on December 28,
2016, pursuant to the financing agreement entered into between Fibria and BNDES in October 2011;
-
(iv)
-
the
issuance of R$1,250 million aggregate principal amount of CRAs in December 2016 in accordance with CVM Instruction No. 400; and
-
(v)
-
the
disbursement of R$77 million on December 28, 2016 and R$32 million on December 29, 2016, pursuant to the financing agreement entered
into between Fibria Celulose and Banco do Nordeste do Brasil S.A. in December 2016.
See
"Management's Discussion and Analysis of Financial Results for the Nine-Month Periods Ended September 30, 2016 and 2015DebtMaterial Financing Transactions,"
"Management's Discussion and Analysis of Financial Results for the Nine-Month Periods Ended September 30, 2016 and 2015DebtBNDES Financings" and
"SummaryRecent Developments" for more information; and
-
-
as further adjusted for the issuance of the notes in this offering.
This
table should be read in conjunction with, and is qualified in its entirety by reference to, (1) our unaudited condensed consolidated interim financial information as of
September 30, 2016 and for the three- and nine-month periods ended September 30, 2016 and 2015 and the notes thereto included in this prospectus supplement, (2) our audited
consolidated financial statements and the notes thereto included in our 2015 Annual Report, which are incorporated by reference in this prospectus supplement, (3) the "Management's Discussion
and Analysis of Financial Results for the Nine-Month Periods Ended September 30, 2016 and 2015" section in this prospectus supplement and (4) "Item 5.
S-30
Table of Contents
Operating
and Financial Review and Prospects" and "Item 3. Key InformationA. Selected Financial Data" included in our 2015 Annual Report.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2016
|
|
|
|
Actual
|
|
As Adjusted
|
|
As Further Adjusted
|
|
|
|
(in thousands
of U.S.$)(1)
|
|
(in thousands
of reais)
|
|
(in thousands
of U.S.$)(1)
|
|
(in thousands
of reais)
|
|
(in thousands
of U.S.$)(1)
|
|
(in thousands
of reais)
|
|
Indebtedness:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term loans and financings(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real
-denominated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured(3)
|
|
|
65,538
|
|
|
212,750
|
|
|
66,703
|
|
|
216,531
|
|
|
66,703
|
|
|
216,531
|
|
Unsecured
|
|
|
125,493
|
|
|
407,376
|
|
|
125,493
|
|
|
407,376
|
|
|
125,493
|
|
|
407,376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
191,031
|
|
|
620,126
|
|
|
192,196
|
|
|
623,907
|
|
|
192,196
|
|
|
623,907
|
|
Foreign-denominated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured(3)
|
|
|
20,844
|
|
|
67,662
|
|
|
21,025
|
|
|
68,251
|
|
|
21,025
|
|
|
68,251
|
|
Unsecured
|
|
|
253,214
|
|
|
821,984
|
|
|
253,214
|
|
|
821,984
|
|
|
253,214
|
|
|
821,984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
274,058
|
|
|
889,646
|
|
|
274,239
|
|
|
890,235
|
|
|
274,239
|
|
|
890,235
|
|
Long-term loans and financing(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real
-denominated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured(3)
|
|
|
364,448
|
|
|
1,183,070
|
|
|
651,585
|
|
|
2,115,175
|
|
|
651,585
|
|
|
2,115,175
|
|
Unsecured
|
|
|
951,556
|
|
|
3,088,943
|
|
|
1,370,254
|
|
|
4,448,120
|
|
|
1,370,254
|
|
|
4,448,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,316,004
|
|
|
4,272,013
|
|
|
2,021,839
|
|
|
6,563,295
|
|
|
2,021,839
|
|
|
6,563,295
|
|
Foreign-denominated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured(3)
|
|
|
382,993
|
|
|
1,243,271
|
|
|
468,820
|
|
|
1,521,882
|
|
|
468,820
|
|
|
1,521,882
|
|
Unsecured
|
|
|
2,207,899
|
|
|
7,167,283
|
|
|
2,207,899
|
|
|
7,167,283
|
|
|
2,907,899
|
|
|
9,439,623
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,590,892
|
|
|
8,410,554
|
|
|
2,676,719
|
|
|
8,689,165
|
|
|
3,376,719
|
|
|
10,961,505
|
|
Total indebtedness
|
|
|
4,371,985
|
|
|
14,192,339
|
|
|
5,164,993
|
|
|
16,766,602
|
|
|
5,864,993
|
|
|
19,038,942
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share capital
|
|
|
2,997,045
|
|
|
9,729,006
|
|
|
2,997,045
|
|
|
9,729,006
|
|
|
2,997,045
|
|
|
9,729,006
|
|
Share capital reserve
|
|
|
3,138
|
|
|
10,186
|
|
|
3,138
|
|
|
10,186
|
|
|
3,138
|
|
|
10,186
|
|
Treasury shares
|
|
|
3,197
|
|
|
(10,378
|
)
|
|
3,197
|
|
|
(10,378
|
)
|
|
3,197
|
|
|
(10,378
|
)
|
Statutory reserves
|
|
|
500,886
|
|
|
1,625,977
|
|
|
500,886
|
|
|
1,625,977
|
|
|
500,886
|
|
|
1,625,977
|
|
Other reserves
|
|
|
357,228
|
|
|
1,159,634
|
|
|
357,228
|
|
|
1,159,634
|
|
|
357,228
|
|
|
1,159,634
|
|
Retained earnings
|
|
|
538,199
|
|
|
1,747,103
|
|
|
538,199
|
|
|
1,747,103
|
|
|
538,199
|
|
|
1,747,103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity attributable to shareholders of the company
|
|
|
4,393,299
|
|
|
14,261,528
|
|
|
4,393,299
|
|
|
14,261,528
|
|
|
4,393,299
|
|
|
14,261,528
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capitalization(5)
|
|
|
8,765,284
|
|
|
28,453,867
|
|
|
9,558,292
|
|
|
31,028,130
|
|
|
10,258,292
|
|
|
33,300,470
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Solely
for the convenience of the reader,
real
amounts as of September 30, 2016 have been translated into U.S.
dollars at the exchange rate as of September 30, 2016 of R$3.2462 to U.S.$1.00. See "Exchange Rates" for further information on recent fluctuations in exchange rates. Such translations should
not be construed as representations that the
real
amounts represent, or have been or could be converted into, U.S. dollars at that or any other rate.
-
(2)
-
Includes
current portion of long-term loans and financings.
-
(3)
-
Our
secured debt is secured by certain of our property, plant and equipment.
-
(4)
-
Excludes
current portion of long-term loans and financings.
-
(5)
-
Corresponds
to total loans and financings plus equity attributable to shareholders of the company.
S-31
Table of Contents
EXCHANGE RATES
Since 1999, the Brazilian Central Bank has allowed the U.S. dollar-
real
exchange rate to float
freely, and, since then, the U.S. dollar-
real
exchange rate has fluctuated considerably. The Brazilian Central Bank has intervened occasionally to
control unstable movements in foreign exchange rates. We cannot predict whether the Brazilian Central Bank or the Brazilian government will continue to let the
real
float freely or will intervene in the
exchange rate market. The
real
may depreciate or appreciate
substantially against the U.S. dollar.
The
following table shows the selling exchange rate published by the Brazilian Central Bank for U.S. dollars, expressed in
reais
per U.S.
dollar for the periods and dates indicated. The information in the "Average" column represents the average of the exchange rates on the last day of each month during the years presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange Rates of R$ per U.S.$1.00
|
|
|
|
Period-End
|
|
Average(1)
|
|
High
|
|
Low
|
|
Year ended December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
|
1.8758
|
|
|
1.6709
|
|
|
1.9016
|
|
|
1.5345
|
|
2012
|
|
|
2.0435
|
|
|
1.9588
|
|
|
2.1121
|
|
|
1.7024
|
|
2013
|
|
|
2.3426
|
|
|
2.1741
|
|
|
2.4457
|
|
|
1.9528
|
|
2014
|
|
|
2.6562
|
|
|
2.3547
|
|
|
2.7403
|
|
|
2.1974
|
|
2015
|
|
|
3.9048
|
|
|
3.3387
|
|
|
4.1949
|
|
|
2.5754
|
|
Month
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July 2016
|
|
|
3.2390
|
|
|
3.2755
|
|
|
3.3388
|
|
|
3.2298
|
|
August 2016
|
|
|
3.2403
|
|
|
3.2097
|
|
|
3.2733
|
|
|
3.1302
|
|
September 2016
|
|
|
3.2462
|
|
|
3.2564
|
|
|
3.3326
|
|
|
3.1934
|
|
October 2016
|
|
|
3.1811
|
|
|
3.1861
|
|
|
3.2359
|
|
|
3.1193
|
|
November 2016
|
|
|
3.3967
|
|
|
3.3420
|
|
|
3.4446
|
|
|
3.2024
|
|
December 2016
|
|
|
3.2591
|
|
|
3.3523
|
|
|
3.4650
|
|
|
3.2591
|
|
January 2017 (through January 10, 2017)
|
|
|
3.1918
|
|
|
3.2271
|
|
|
3.2729
|
|
|
3.1918
|
|
Source:
Brazilian Central Bank.
-
(1)
-
Annually,
represents the average of the exchange rates on the last day of each month during the periods presented; monthly, represents the average of the end-of-day
exchange rates during the periods presented.
S-32
Table of Contents
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL RESULTS FOR THE
NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2016 AND 2015
The following discussion of our financial condition and results of operations should be read in conjunction with our
unaudited condensed consolidated interim financial information as of September 30, 2016 and for the three- and nine-month periods ended September 30, 2016 and 2015, and the notes thereto
included in this prospectus supplement, the information presented under the sections "Presentation of Financial and Other Information" and "Item 3. Key InformationSelected
Financial Data," "Item 5: Operating and Financial Review and Prospects," "Item 11: Quantitative and Qualitative Disclosures about Market Risk" and our audited consolidated financial
statements as of December 31, 2015 and December 31, 2014 and for the years ended December 31, 2015, 2014 and 2013 included in our 2015 Annual Report.
The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed
in the forward-looking statements as a result of various factors, including those set forth herein under "Cautionary Statement Regarding Forward-Looking Statements" and in "Item 3. Key
InformationD. Risk Factors" in our 2015 Annual Report.
The
following discussion and analysis of our financial condition and results of operations has been organized to present the following:
-
-
a brief overview of our company;
-
-
a discussion of our results of operations for the nine-month periods ended September 30, 2016 and 2015;
-
-
a discussion of our liquidity and capital resources, including our cash flows for the nine-month periods ended September 30, 2016 and
2015 and our material short-term and long-term indebtedness as of September 30, 2016;
-
-
a discussion of our off-balance sheet arrangements; and
-
-
a qualitative and quantitative discussion of the market risks we face.
Overview
We are the world's largest producer of market pulp, according to the independent consulting firm Hawkins Wright and the PPPC, with an annual
aggregate pulp production capacity of 5.3 million tons. This represented 22% of the world demand for BEKP in 2015, according to the PPPC.
We
believe that our BEKP production costs are among the lowest in the world. During the nine-month period ended September 30, 2016, our pulp cash production cost per ton,
including logistics, was 11% less than the average in Brazil, the most competitive market for BEKP, and in the year ended December 31, 2015, it was 2% less than the average in Brazil, according
to Hawkins Wright. We believe that this important competitive advantage is principally due to: (1) our economies of scale; (2) advanced forestry techniques in managing the planting,
maintenance and harvesting of our forests; (3) modern industrial plants using state-of-the-art technology; (4) the comparatively short harvest cycle of our trees; and (5) the
relative low cost of our raw materials, including electricity and chemicals.
We
produce BEKP in three pulp mills, which are located in the States of Espírito Santo, Mato Grosso do Sul and São Paulo. In addition, we have a 50%
interest in Veracel, a joint venture with the Swedish-Finnish company, Stora Enso, which operates a pulp mill in the State of Bahia.
S-33
Table of Contents
Results of Operations for the Nine-month Period Ended September 30, 2016 Compared with
Nine-month Period Ended September 30, 2015
The discussion below is based on our consolidated financial statements prepared in accordance with IFRS as issued by the IASB. The following
table sets forth certain items derived from our statements of operations for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine-Month Periods
Ended September 30,
|
|
Variation
|
|
|
|
2016
|
|
2015
|
|
Amount
|
|
Percentage
|
|
|
|
(in thousands of reais)
|
|
(%)
|
|
Statement of Profit or Loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
|
7,081,010
|
|
|
7,096,052
|
|
|
(15,042
|
)
|
|
(0.2
|
)%
|
Cost of sales
|
|
|
(5,016,556
|
)
|
|
(4,246,565
|
)
|
|
(769,991
|
)
|
|
18.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
2,064,454
|
|
|
2,849,487
|
|
|
(785,033
|
)
|
|
(27.5
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (expenses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling expenses
|
|
|
(345,528
|
)
|
|
(312,558
|
)
|
|
(32,970
|
)
|
|
10.5
|
%
|
General and administrative expenses
|
|
|
(201,507
|
)
|
|
(194,807
|
)
|
|
(6,700
|
)
|
|
3.4
|
%
|
Equity in results of the joint venture
|
|
|
(758
|
)
|
|
744
|
|
|
(1,502
|
)
|
|
(201.9
|
)%
|
Other operating income and expense, net
|
|
|
(175,854
|
)
|
|
(83,070
|
)
|
|
(92,784
|
)
|
|
111.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(723,647
|
)
|
|
(589,691
|
)
|
|
(133,956
|
)
|
|
22.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before financial income and expenses
|
|
|
1,340,807
|
|
|
2,259,796
|
|
|
(918,989
|
)
|
|
(40.7
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial income
|
|
|
189,557
|
|
|
132,182
|
|
|
57,375
|
|
|
43.4
|
%
|
Financial expenses
|
|
|
(534,503
|
)
|
|
(397,946
|
)
|
|
(136,557
|
)
|
|
34.3
|
%
|
Result of derivative financial instruments, net
|
|
|
683,334
|
|
|
(889,479
|
)
|
|
1,572,813
|
|
|
(176.8
|
)%
|
Foreign exchange (gain) loss and indexation charges, net
|
|
|
1,475,123
|
|
|
(2,627,044
|
)
|
|
4,102,167
|
|
|
(156.2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,813,511
|
|
|
(3,782,287
|
)
|
|
5,595,798
|
|
|
(147.9
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
3,154,318
|
|
|
(1,522,491
|
)
|
|
4,676,809
|
|
|
(307.2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
(36,076
|
)
|
|
(147,102
|
)
|
|
111,026
|
|
|
(75.5
|
)%
|
Deferred
|
|
|
(1,363,108
|
)
|
|
1,116,594
|
|
|
(2,479,702
|
)
|
|
(222.1
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
1,755,134
|
|
|
(552,999
|
)
|
|
2,308,133
|
|
|
(417.4
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to shareholders of the company
|
|
|
1,747,103
|
|
|
(563,286
|
)
|
|
2,310,389
|
|
|
(410.2
|
)%
|
Net income attributable to non-controlling interest
|
|
|
8,031
|
|
|
10,287
|
|
|
(2,256
|
)
|
|
(21.9
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) for the period
|
|
|
1,755,134
|
|
|
(552,999
|
)
|
|
2,308,133
|
|
|
(417.4
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-34
Table of Contents
The
following table sets forth our production and sales volumes, and net operating revenue by type of product:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the
Nine-Month
Periods Ended
September 30,
|
|
Variation
|
|
|
|
2016
|
|
2015
|
|
Amount
|
|
Percentage
|
|
Pulp production (in thousands of tons)
|
|
|
3,802
|
|
|
3,888
|
|
|
(86
|
)
|
|
(2.2
|
)%
|
Pulp sales volumes (in thousands of tons)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
|
405
|
|
|
373
|
|
|
32
|
|
|
8.6
|
%
|
Export
|
|
|
3,514
|
|
|
3,436
|
|
|
78
|
|
|
2.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,919
|
|
|
3,809
|
|
|
110
|
|
|
2.9
|
%
|
Net revenue (in millions of R$)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
|
703
|
|
|
564
|
|
|
139
|
|
|
24.6
|
%
|
Export
|
|
|
6,313
|
|
|
6,462
|
|
|
(149
|
)
|
|
(2.3
|
)%
|
Services
|
|
|
65
|
|
|
70
|
|
|
(5
|
)
|
|
(6.2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
7,081
|
|
|
7,096
|
|
|
(15
|
)
|
|
(0.2
|
)%
|
Average prices (in R$ per ton)
|
|
|
1,790
|
|
|
1,844
|
|
|
(54
|
)
|
|
(2.9
|
)%
|
Net Revenues
Our net revenues decreased by 0.2% to R$7,081 million in the nine-month period ended September 30, 2016 from
R$7,096 million in the corresponding period in 2015, mainly as a result of the following factors: a 2.3% decrease in net revenues from export sales to R$6,313 million in the nine-month
period ended September 30, 2016 from R$6,462 million in the corresponding period in 2015, which was partially offset by a 24.5% increase in net revenues from domestic sales to
R$703 million in the nine-month period ended September 30, 2016 from R$565 million in the corresponding period in 2015. The decrease in our net revenues from export sales was
mainly attributable to a 2.9% reduction in our average net pulp price in
reais
during the nine-month period ended September 30, 2016, due to a
16.9% depreciation of the average exchange rate of the
real
against the U.S. dollar during the nine-month period ended September 30, 2016 as
compared to the corresponding period in 2015. Our sales volume was 3,920 kilotons during the nine-month period ended September 30, 2016, compared to 3,810 kilotons in the corresponding period
in 2015.
Export
sales constituted 89.1% of our net revenue and 89.7% of our sales volume in the nine-month period ended September 30, 2016, compared to 91.1% and 90.2%, respectively, in
the corresponding period of 2015. During the nine-month period ended September 30, 2016, 38% of our total sales volume was exported to Europe, 32% to Asia, 20% to North America and 10% to Latin
America, as compared to 43%, 25%, 22% and 10%, respectively, in the corresponding period in 2015.
Cost of Sales
Our cost of sales increased by 18.1% to R$5,017 million in the nine-month period ended September 30, 2016 from
R$4,247 million in the corresponding period in 2015, mainly as a result of (i) a 39.6% increase in variable costs to R$2,568 million in the nine-month period ended
September 30, 2016 from R$1,840 million in the corresponding period in 2015, and (ii) a 13.3% increase in labor expenses to R$407 million in the nine-month period ended
September 30, 2016 from R$359 million in the corresponding period in 2015. Variable costs increased primarily as a result of expenses related to the purchase of hardwood pulp produced by
Klabin pursuant to a supply agreement, and increased expenses related to our pulp cash production cost due to a wider average transportation radius and a larger proportion of wood acquired from third
parties. The increase in labor expenses was primarily attributable to standard annual adjustments to employee compensation.
S-35
Table of Contents
The
pulp cash production cost is one of the main components of our cost of sales. Our pulp cash production cost consists principally of the cost of sales excluding depreciation,
depletion, amortization and freight. During the nine-month period ended September 30, 2016, the main components of our pulp cash production costs were, in order of magnitude: wood, chemicals,
maintenance, fuel and personnel, which represented approximately 49%, 20%, 12%, 7%, and 5%, respectively, of our total cash production cost. There were no significant differences in the composition of
our pulp cash production cost in the nine-month period ended September 30, 2016 as compared to the corresponding period in 2015.
Our
pulp cash production cost per ton increased by 10% to R$665 per ton during the nine-month period ended September 30, 2016 from R$604 per ton during the corresponding period in
2015, primarily due to an increase of R$40 per ton in wood costs (including transportation), R$18 per ton in variable costs (mainly the lower utilities results regarding electricity sales) and R$10
per ton due to the foreign exchange rate, which were partially offset by R$19 per ton of lower cost due to downtimes related to maintenance. Our pulp cash production cost per ton decreased by 3.6% to
R$638 per ton during the three-month period ended September 30, 2016 from R$662 per ton during the three-month period ended June 30, 2016. Our pulp cash production cost per ton decreased
by 3.2% to R$638 per ton during the three-month period ended September 30, 2016 from R$659 per ton in the corresponding period in 2015.
As
a result of the above, our gross profit decreased by 27.5% to R$2,064 million during the nine-month period ended September 30, 2016 from R$2,849 million in the
corresponding period in 2015. Our gross margin decreased to 29.2% in the nine-month period ended September 30, 2016 from 40.2% during the corresponding period in 2015.
Selling Expenses
Our selling expenses increased by 10.5% to R$346 million in the nine-month period ended September 30, 2016 from
R$313 million in the corresponding period in 2015, mainly due to a 9.9% increase in expenses related to the handling, storage and transportation of goods and sales commissions to
R$293 million in the nine-month period ended September 30, 2016 from R$267 million in the corresponding period in 2015 as a result of increased sales volume. As a percentage of
our net revenue, our selling expenses increased to 4.9% during the nine-month period ended September 30, 2016 from 4.4% in the corresponding period in 2015.
General and Administrative Expenses
Our general and administrative expenses increased by 3.4% to R$202 million in the nine-month period ended September 30, 2016 from
R$195 million in the corresponding period in 2015. This increase was mainly due to (i) a 5.5% increase in labor expenses to R$78 million in the nine-month period ended
September 30, 2016 from R$74 million in the corresponding period in 2015 as a result of standard annual adjustments to employee compensation. As a percentage of our net revenue, our
general and administrative expenses increased to 2.8% in the nine-month period ended September 30, 2016 from 2.7% during the corresponding period in 2015.
Equity in Results of the Joint Venture
We recorded equity in losses of our joint venture F&E Technologies of R$1 million in the nine-month period ended September 30,
2016 compared to equity in income of the joint venture, net of R$1 million in the corresponding period in 2015.
Other Operating Income and Expense, Net
Our other operating expense, net increased by 111.2% to R$176 million in the nine-month period ended September 30, 2016 from other
operating expense, net of R$83 million in the corresponding
S-36
Table of Contents
period
in 2015, primarily as a result of recognizing a loss of R$108 million in the fair value of the biological assets in the nine-month period ended September 30, 2016, against a gain
of R$30 million in the corresponding period in 2015. These factors were partially offset by a 55.8%, or R$53 million, decrease in expenses related to our employee variable compensation
program.
Net Financial Results
Our net financial results increased by 147.9%, or R$5,596 million, to a net financial income of R$1,814 million during the
nine-month period ended September 30, 2016 from a net financial expense of R$3,782 million in the corresponding period in 2015, primarily as a result of the impact of the exchange
variation on U.S. dollar-denominated debt to a gain of R$1,750 million in the nine-month period ended September 30, 2016 from a loss of R$3,254 million in corresponding period in
2015, due to a 16.87% depreciation of the U.S. dollar against the
real
in the nine-month period ended September 30, 2016. Our U.S.
dollar-denominated debt accounted for 89% of our total consolidated indebtedness as at September 30, 2016.
The
34.3% increase in our financial expenses was mainly attributable to the increase in the level of gross debt as well as to the increase in interest rates in Brazil, which resulted in
an increase in financial expenses in connection with our
real
-denominated debt.
The
R$1,573 million increase in our result of derivative financial instruments, net and the R$4,102 million increase in our foreign exchange income during the nine-month
period ended September 30, 2016, were mainly due to the 16.87% appreciation of the
real
against the U.S. dollar during the nine-month period
ended September 30, 2016, compared to the 49.57% depreciation of the
real
against the U.S. dollar during the corresponding period in 2015.
Income Taxes
Brazilian corporate statutory income tax and social contribution rate is 34%. The effective tax rate applicable to our income before tax and
social contribution was 44.4% and 63.7% for the nine-month periods ended September 30, 2016 and 2015, respectively.
The
decrease in the effective rate during the nine-month period ended September 30, 2016, when compared to the effective interest rate during the corresponding period in 2015, was
mainly attributable to a reduction in the tax effect on the credit from the
Reintegra
Program and the net foreign exchange gains/losses recognized by
our foreign subsidiaries that use the
real
as the functional currency. As the
real
is not used for tax
purposes in the foreign country, this net foreign exchange gain is not recognized for tax purposes in the foreign country nor is it subject to tax in Brazil. The tax effect of this exempt loss was
R$295 million in the nine-month period ended September 30, 2016 and an income of
R$452 million in the corresponding period in 2015, reflecting the appreciation of the
real
in relation to these foreign currencies (primarily the
U.S. dollar and the Euro).
Net Income (Loss)
As a result of the above, our net loss decreased by 417.4% to a net income of R$1,755 million during the nine-month period ended 2016
from a net loss of R$553 million during the corresponding period in 2015. As a percentage of net revenue, our net income was 24.8% during the nine-month period ended September 30, 2016
compared to 7.8% during the corresponding period in 2015.
Liquidity and Capital Resources
Our primary sources of liquidity have historically been cash flows from operating and financing activities and short-term and long-term
borrowings. We believe these sources will continue to be the principal means with which we will meet our cash flow needs.
S-37
Table of Contents
Our
material cash requirements include the following:
-
-
working capital;
-
-
debt service; and
-
-
capital expenditures.
As
of September 30, 2016, our cash and cash equivalents and our marketable securities were R$3,576 million, of which 75.1% were denominated in
reais
and invested in both public and private
financial assets and the remaining 24.9% were denominated in U.S. dollars and invested mainly in time
deposits.
The
fair value of derivative financial instruments represented a net liability balance of R$4 million as of September 30, 2016 and R$828 million as of
December 31, 2015.
As
of September 30, 2016, we had a positive working capital balance (including our cash and cash equivalents, marketable securities, current loans and financings and derivative
instruments) of R$2,868 million compared to R$2,505 million as of December 31, 2015. We do not expect to have any difficulty in meeting our short-term obligations since our
current assets as of September 30, 2016 were equivalent to 1.8 times our current liabilities. We believe that we will be able to access either the capital or banking markets, if necessary.
Sources of Funds
Net Cash Flows from Operating Activities
Our net cash flows provided by operating activities decreased by 6.2% to R$2,966 million in the nine-month period ended
September 30, 2016 from R$3,163 million in the corresponding period in 2015, due to: (1) a decrease in taxes payable of R$367 million during the nine-month period ended
September 30, 2016 compared to an increase in taxes payable of R$9 million in the corresponding period in 2015; and (2) a decrease in trade accounts receivables of
R$168 million during the nine-month period ended September 30, 2016 compared to a decrease in trade accounts receivables of R$209 million in the corresponding period in 2015,
partially offset by recording income
before taxes of R$3,154 million during the nine-month period ended September 30, 2016 compared to a loss of R$1,522 million in the corresponding period in 2015.
Uses of Funds
Net Cash Flows from Investing Activities
Our net cash used in investing activities increased by R$3,359 million to R$5,523 million in the nine-month period ended
September 30, 2016 from R$2,164 million in the corresponding period in 2015, due to the combined effect of: (1) investments in property, plant, equipment, intangible assets and
forests in the amount of R$4,434 million (of which R$2,897 million are related to the Horizonte 2 Project) during the nine-month period ended September 30, 2016, compared to
R$1,276 million in the corresponding period in 2015; (2) investments in marketable securities of R$954 million during the nine-month period ended September 30, 2016,
compared to R$602 million in the corresponding period in 2015; and partially offset by (3) derivative transactions settled in the amount of R$141 million during the nine-month
period ended September 30, 2016, compared to R$306 million in the corresponding period in 2015.
Net Cash Flows from Financing Activities
Our net cash provided by financing activities, which include short-term and long-term secured and unsecured borrowings and debt repayments,
increased by 281% to R$2,742 million in the nine-month period ended September 30, 2016 from R$720 million provided in the corresponding period in 2015.
S-38
Table of Contents
This
increase in our net cash provided by financing activities was primarily a result of:
(1) new
loans and financings of R$5,225 million during the nine-month period ended September 30, 2016, mainly related to (i) three public issuances of
CRAs in an aggregate amount of R$2,050 million during the nine-month period ended September 30, 2016 (see "DebtMaterial Financing Transactions");
(ii) the U.S. dollar Finnish Export Credit Agreement of which U.S.$275 million was disbursed during the nine-month period ended September 30, 2016 (see
"DebtMaterial Financing Transactions") and (iii) the
real
-denominated loan agreement entered into with the FDCO in May
2016 of which R$424 million was disbursed during the nine-month period ended September 30, 2016 (see "DebtMaterial Financing Transactions"). We expect to use a
portion of these funds to finance the Horizonte 2 Project at our Três Lagoas Unit located in the State of Mato Grosso do Sul; and partially offset by
(2) (i)
the repayment of principal of loans and financings in the amount of R$2,176 million during the nine-month period ended September 30, 2016 compared to
R$1,095 million in the corresponding period in 2015; and (ii) the distribution of R$304 million as dividends to shareholders during the nine-month period ended
September 30, 2016 compared to R$149 million in the corresponding period in 2015.
Debt
As of September 30, 2016, our total outstanding consolidated indebtedness was R$14,192 million consisting of
R$1,510 million of short-term indebtedness, including current portion of long-term indebtedness (or 11% of our total consolidated indebtedness), and R$12,682 million of long-term
indebtedness (or 89% of our total consolidated indebtedness). Our
real
-denominated indebtedness as of September 30, 2016 was
R$4,892 million (or 34% of our total consolidated indebtedness), and our foreign currency-denominated indebtedness was R$9,300 million (or 66% of our total consolidated indebtedness). As
of September 30, 2016, R$2,707 million (or 19%) of our debt was secured mainly by the Aracruz and Jacareí units.
Our
total outstanding consolidated indebtedness as of September 30, 2016 consists primarily of (1) R$5,163 million of export prepayment facilities denominated in
U.S. dollars (36% of our total consolidated indebtedness), (2) R$2,774 million in loans under CRAs (20% of our total consolidated indebtedness), (3) R$2,281 million of
senior notes denominated in U.S. dollars placed in the international capital markets (16% of our total consolidated indebtedness), (4) R$1,574 million in loans from BNDES (11% of our
total consolidated indebtedness), (5) R$836 million in loans with Finnvera (Finnish Export Credit Agency) (6% of our total consolidated indebtedness), (6) R$670 million in
loans under credit export notes (
notas de crédito à exportação
), or NCE (5% of our total
consolidated indebtedness), (7) R$455 million in loans under real-denominated trade financings (3% of our total consolidated indebtedness) including advances on foreign exchange
contracts (
adiantamento sobre contrato de câmbio
), or ACC, and advances against presentation of drafts
(
adiantamento sobre cambiais entregue
), or ACE, and (8) R$440 million in other financings (3% of our total consolidated
indebtedness), including working capital lines of credit and investment financing lines (
Financiamento de Máquinas e
Equipamentos
FINAME, CRA, FINEP, FDCO and
Fundo Constitucional de Financiamento do Centro-Oeste
FCO).
We
maintain short-term lines of credit denominated in
reais
with a number of financial institutions in Brazil. As of September 30,
2016, we also maintained one U.S. dollar-denominated revolving line of credit in an aggregate principal amount of U.S.$280 million and two
real
-denominated revolving lines of credit in an aggregate
principal amount of R$850 million. We believe that we will continue to be able to
obtain sufficient credit to finance our working capital needs based on current market conditions and our liquidity position.
The
following discussion briefly describes material financing transactions entered into by our company since December 31, 2015. For a summary of the terms of our material
outstanding
S-39
Table of Contents
indebtedness
as of December 31, 2014, see "Item 5. Operating and Financial Review and ProspectsB. Liquidity and Capital ResourcesDebt" in our 2015 Annual
Report.
Material Financing Transactions
In May 2016, we, through our subsidiary Fibria-MS, entered into the Finnish Export Credit Agreement to finance and import equipment for the
second pulp production line in the Horizonte 2 Project with Finnvera plc, as guarantor, and BNP Paribas Fortis SA/NV, Finnish Export Credit Ltd., HSBC Bank USA, N.A. and Nordea
Bank Finland plc, as lenders, for the U.S. dollar equivalent of €384 million (U.S.$439 million using the exchange rate of May 11, 2016, the date of the
agreement). The facility is secured by a pledge of the equipment being financed. During the nine-month period ended September 30, 2016, U.S.$275 million (R$920 million) was
disbursed in three tranches of U.S.$194 million, U.S.$67 million and U.S.$14 million, maturing in December 2025 and with interest rates at semi-annual LIBOR plus 1.03% per annum
for the first tranche and semi-annual LIBOR plus 1.08% per annum for the second and third tranches. As of September 30, 2016, the remaining balance that had not yet been disbursed is the U.S.
dollar equivalent to €140 million and will be disbursed to satisfy payments to the suppliers of the project. On November 16, 2016 and December 15, 2016, the
lenders disbursed an additional U.S.$36 million (equivalent then to R$124 million) and U.S.$43 million (equivalent then to R$145 million), respectively.
In
May 2016, we entered into a
real
-denominated loan agreement with the FDCO, a Brazilian development fund, for up to R$831 million
from Banco do Brasil, maturing in December 2027 and bearing interest at a local currency rate of 8.0% per annum payable monthly commencing in June 2019. The loan is secured by a mortgage on the
property on which the Três Lagoas facility is located. As of September 30, 2016, R$424 million has been disbursed under this loan agreement. We will be able to draw on the
remaining balance of R$408 million through the end of 2016.
In
June 2016, we concluded the public distribution, in accordance with CVM Instruction No. 400, of 1.35 million CRAs, issued by Eco Securitizadora in the total amount of
R$1,350 million, in two tranches. The principal amount of the first tranche is R$880 million, bears interest at a rate of 97% of CDI per annum payable semi-annually commencing in
December 2016 and will mature in 2020. The principal amount of the second tranche is R$470 million, bears interest at a rate of IPCA
plus
5.9844%
per annum, payable annually commencing in December 2016 and will mature in 2023.
In
August 2016, we concluded the public distribution, in accordance with CVM Instruction No. 476, of 374,000 CRAs, issued by Eco Securitizadora in the principal amount of
R$374 million, bearing interest at a rate of IPCA plus 5.9844% per annum, payable annually commencing in August 2017 and will mature in 2023.
In
August 2016, we concluded the public distribution, in accordance with CVM Instruction No. 476, of 326,000 CRAs, issued by Eco Securitizadora in the principal amount of
R$326 million, bearing interest at a rate of 97% of CDI payable semi-annually commencing in March 2017 and will mature in 2020.
In
December 2016, we concluded the public distribution, in accordance with CVM Instruction No. 400, of 1.25 million agribusiness credit receivable certificates, or CRAs,
issued by Eco Securitizadora de Direitos Creditórios do Agronegócio S.A., or Eco Securitizadora, in the total amount of R$1,250 million, in two tranches.
The principal amount of the first tranche is R$756 million, bears interest at a rate of 99% of CDI per annum payable semi-annually commencing in June 2017 and will mature in 2022. The principal
amount of the second tranche is R$494 million, bears interest at a rate of IPCA plus 6.1346% per annum, payable annually commencing in December 2017 and will mature in 2023.
In
accordance with the applicable regulations, the proceeds of each CRA issued by us will be used to finance our activities in connection with our agribusiness activities, comprising of
the production,
S-40
Table of Contents
trade,
processing or manufacture of products or raw materials derived from forest materials, and used by us in the export of pulp and paper products.
In
December 2016, Fibria Celulose entered into a financing agreement with Banco do Nordeste do Brasil S.A. for aggregate principal amount of approximately R$150 million,
maturing in December 2023 and bearing interest at 12.95% per annum. The principal and interest are payable on the maturity date (bullet). On December 28, 2016 and December 29, 2016,
Banco do Nordeste do Brasil S.A. disbursed R$77 million and R$32 million, respectively.
BNDES Financings
BNDES has been an important source of debt financing for our capital expenditures. As of September 30, 2016, our outstanding BNDES loans
amounted to R$1,574 million, representing 11% of our total consolidated indebtedness. We have used the proceeds from these
real
-denominated loans
mainly to finance increases in our production capacity and silviculture projects. Loans from BNDES are secured by liens on our property, plant and equipment and guaranteed by bank guarantees. As of
September 30, 2016, (i) 54% of the aggregate principal amount of our loans with BNDES bore interest at the Brazilian nominal long-term interest rate (
Taxa de
Juros de Longo Prazo
), or TJLP, (ii) 36% of the aggregate principal amount of our loans with BNDES were indexed to UMBNDES (
Unidade
Monetária BNDES
, a weighted average exchange variation on a basket of currencies, predominantly U.S. dollars) plus a spread, (iii) 8% of the aggregate
principal amount of our loans with BNDES were indexed to a fixed rate and (iv) 2% of the aggregate principal amount of our loans with BNDES bore interest at the SELIC rate. As of
September 30, 2016, the TJLP was 7.5% per annum and the SELIC rate was 14.00%.
In
May 2016, we, through our subsidiary Fibria-MS, entered into a real-denominated financing agreement, with Fibria as guarantor and BNDES as lender, in the aggregate principal amount of
R$2,348 million, in four tranches, maturing in May 2026, with the proceeds of the loan to be used to finance the Horizonte 2 Project. The first tranche bears interest at a rate of SELIC plus
2.66% per annum, the second and third tranches each bear interest at a rate of TJLP plus 2.26% per annum, and the fourth tranche bears interest at a rate indexed to TJLP. Interest shall be paid
quarterly between May 2016 and November 2018, and monthly commencing in December 2018. The principal amount will be amortized monthly, commencing in December 2018. The facility is secured by a
mortgage of the Três Lagoas plant and contains a cross-default provision in connection with a financing agreement between Fibria-MS and Banco do Brasil S/A. On October 18, 2016
and December 13, 2016, BNDES disbursed R$423 million and R$412 million, respectively.
We
expect BNDES to remain a significant source of financing of our capital expenditures in the future. The table below sets forth the breakdown of our BNDES loans by interest rate and
maturity as of September 30, 2016.
|
|
|
|
|
|
|
|
|
|
As of September 30, 2016
|
|
Index
|
|
Total amount
|
|
Maturity
|
|
|
|
(in thousands of reais)
|
|
|
|
TJLP
|
|
|
850
|
|
|
2024
|
|
UMBNDES
|
|
|
566
|
|
|
2023
|
|
|
|
|
|
|
|
|
|
Fixed rate
|
|
|
122
|
|
|
2022
|
|
SELIC
|
|
|
36
|
|
|
2024
|
|
Total
|
|
|
1,574
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-41
Table of Contents
Debt Maturity Profile
At September 30, 2016, our total outstanding short-term indebtedness was R$1,510 million. The table below sets forth the maturity
of our total outstanding long-term indebtedness as of September 30, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2016
|
|
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
2025
|
|
2026
|
|
2027
|
|
Total
|
|
|
|
(in thousands of reais)
|
|
Foreigndenominated
|
|
|
177
|
|
|
1,324
|
|
|
2,609
|
|
|
924
|
|
|
991
|
|
|
142
|
|
|
111
|
|
|
2,029
|
|
|
104
|
|
|
|
|
|
|
|
|
8,411
|
|
Real
denominated
|
|
|
78
|
|
|
415
|
|
|
211
|
|
|
1,451
|
|
|
882
|
|
|
105
|
|
|
916
|
|
|
73
|
|
|
47
|
|
|
47
|
|
|
47
|
|
|
4,272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
255
|
|
|
1,739
|
|
|
2,820
|
|
|
2,375
|
|
|
1,873
|
|
|
247
|
|
|
1,027
|
|
|
2,102
|
|
|
151
|
|
|
47
|
|
|
47
|
|
|
12,683
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Covenant Compliance
Many of the instruments governing our indebtedness require that we comply with certain financial covenants and other covenants that restrict our
ability to take certain actions or undertake certain types of transactions. As of September 30, 2016, we were in compliance with all such financial covenants, and as of the date of this
prospectus supplement, we were in compliance with all such other covenants.
For
a summary of the principal financial and other covenants contained in the instruments governing our indebtedness as of December 31, 2015, see "Item 5: Operating and
Financial Review and ProspectsB. Liquidity and Capital ResourcesDebtCovenants" in our 2015 Annual Report. The financial covenants under the instruments governing
our indebtedness entered into after December 31, 2015 are similar to those described under "Item 5: Operating and Financial Review and ProspectsB. Liquidity and
Capital ResourcesDebtCovenants" in our 2015 Annual Report.
Capital Expenditures
During the nine-month period ended September 30, 2016, we made capital expenditures of R$4,434 million, as compared to
R$1,276 million during the corresponding period in 2015. This increase was mainly due to the Horizonte 2 Project. See "Item 4. D. Property, Plant and
EquipmentExpansionHorizonte 2 Project" in our 2015 Annual Report and "SummaryRecent DevelopmentsDevelopments in the Horizonte 2 Project."
The
table below sets forth a breakdown of our most significant capital expenditures for the periods indicated:
|
|
|
|
|
|
|
|
|
|
For the
Nine-Month
Period Ended
September 30,
|
|
|
|
2016
|
|
2015
|
|
|
|
(in thousands of
reais)
|
|
Industrial Expansion
|
|
|
2,820
|
|
|
68
|
|
Forest Expansion
|
|
|
82
|
|
|
45
|
|
|
|
|
|
|
|
|
|
Subtotal Expansion
|
|
|
2,902
|
|
|
113
|
|
Safety/Environment
|
|
|
18
|
|
|
16
|
|
Forestry Renewal
|
|
|
1,085
|
|
|
947
|
|
Maintenance, IT, R&D, Modernization
|
|
|
309
|
|
|
201
|
|
|
|
|
|
|
|
|
|
Subtotal Maintenance
|
|
|
1,412
|
|
|
1,164
|
|
Pulp logistics
|
|
|
120
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,434
|
|
|
1,276
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-42
Table of Contents
On
April 27, 2016, our shareholders approved our capital expenditures budget for our 2016 fiscal year, in the aggregate amount of R$8,189 million for our 2016 fiscal year
and funded with cash from our operating activities and financings from third parties, of which 66.0% is allocated to the Horizonte 2 Project, 25.5% is allocated to maintenance and other capital
expenses and 8.5% is allocated to pulp logistics. In June 2016, the capital expenditures budget was decreased to R$7,482 million. In September 2016, the estimated capital expenditures underwent
further review, and was decreased to R$6,518 million. In October 2016, the capital expenditures budget was again revised and decreased to R$6,235 million, of which 65.5% is allocated to
the Horizonte 2 Project, 34.0% is allocated to maintenance and other capital expenditures and 1.5% is allocated to pulp logistics.
Off-Balance Sheet Arrangements
We participate in a number of off-balance sheet arrangements, mainly related to guarantees and take or pay contracts. As of September 30,
2016, we had a number of outstanding swap transactions as described under "Quantitative and Qualitative Disclosures About Market Risk." For information on our off-balance sheet
arrangement as of December 31, 2015, see "Item 11. Quantitative and Qualitative Disclosures about Market Risk" in our 2015 Annual Report.
Quantitative and Qualitative Disclosures About Market Risk
We are exposed to various market risks, including changes in foreign currency exchange rates and interest rates. Market risk is the potential
loss arising from adverse changes in market rates and prices, such as foreign currency exchange rates and interest rates.
Foreign Currency Risk
Our foreign currency exposure gives rise to market risks associated with exchange rate movements against the U.S. dollar. The vast majority of
our debt is denominated in U.S. dollars. Our revenues are either denominated in U.S. dollars or linked to U.S. dollars (domestic pulp sales are denominated in
reais
but linked to U.S. dollar prices),
thus our U.S. dollar-denominated debt works to a certain extent as a natural hedging for this exposure. In our
income statement, revenues are translated into
reais
at the prevailing exchange rate at the time of the sale. On the other hand, our debt is translated
into
reais
taking into account the closing foreign currency rate. The difference between those rates may generate a mismatch from the conversion of our
revenues and debt into
reais
. In order to minimize the effect of the currency mismatch on our financial covenants measurement, we were able to amend
those contracts under which those covenants are established to perform these measurements in U.S. dollar terms.
In
2013, the U.S. Dollar appreciated by 14.6% against the
real
. In 2014, mainly as a result of Brazil's macroeconomic scenario and general
global economic uncertainty, the U.S. Dollar appreciated by 13.4% against the
real
. In 2015, the worsening in Brazil's economic, political and fiscal
conditions resulted in the rating agencies S&P, Fitch and Moody's downgrading the Brazil sovereign rating below investment grade. As a result, the U.S. Dollar appreciated by 47% against the
real
in
2015. The
real
strengthened during 2016, including as a result of improved political conditions
in Brazil, with the U.S. Dollar depreciating 19.4% against the
real
in 2016. In the three-month period ended September 30, 2016, our results were
negatively impacted by a appreciation of the
real
during the period (the average
real
/U.S. Dollar
exchange rate during the three-month period ended September 30, 2016 was R$3.25 per U.S.$1.00, as compared to R$3.54 per U.S.$1.00 during the three-month period ended September 30,
2015). In addition, during the three-month period ended December 31, 2016, there was a appreciation of the
real
compared with the corresponding
period in 2015 (the average
real
/U.S. Dollar exchange rate during the three-month period ended December 31, 2016 was R$3.29 per U.S.$1.00, as
compared to R$3.84 per U.S.$1.00 during the three-month period ended December 31, 2015), which we expect will negatively impact our results for the three-month period ended December 31,
2016 as compared to the corresponding period in 2015.
S-43
Table of Contents
The following table presents the carrying amount of our assets and liabilities denominated in U.S. dollars:
|
|
|
|
|
|
|
|
|
|
As of September 30, 2016
|
|
As of December 31, 2015
|
|
|
|
(in millions of reais)
|
|
Assets in foreign currency
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
890
|
|
|
1,068
|
|
Marketable securities
|
|
|
|
|
|
|
|
Trade accounts receivable
|
|
|
393
|
|
|
674
|
|
|
|
|
|
|
|
|
|
|
|
|
1,283
|
|
|
1,742
|
|
Liabilities in foreign currency
|
|
|
|
|
|
|
|
Loans and financings
|
|
|
9,300
|
|
|
10,215
|
|
Trade payables
|
|
|
232
|
|
|
76
|
|
Derivative financial instruments
|
|
|
231
|
|
|
1,082
|
|
|
|
|
|
|
|
|
|
|
|
|
9,763
|
|
|
11,373
|
|
|
|
|
|
|
|
|
|
Liability exposure
|
|
|
(8,480
|
)
|
|
(9,631
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sensitivity Analysis
Our principal foreign exchange risk, considering the nine-month period ended September 30, 2016 for the evaluation, is our U.S. dollar
exposure. We adopted as base scenario the fair value considering the market yield as of September 30, 2016.
To
calculate the base scenario, we used the exchange rate as of September 30, 2016 of R$3.246 per U.S.$1.00. As these amounts are already recognized in our consolidated financial
statements, there are no additional effects to be reflected in our statement of profit or loss in this scenario. The base scenario was stressed considering an additional 25% and 50% with respect to
the base scenario.
Therefore,
the following table presents the change in the fair value of derivatives, loans and marketable securities, in the above mentioned adverse exchange rate scenarios.
|
|
|
|
|
|
|
|
|
|
Impact of an appreciation/depreciation of the real
against the U.S. Dollar on the fair value
|
|
|
|
Depreciation of
the exchange
rate to R$4.058
|
|
Depreciation of
the exchange
rate to R$4.869
|
|
|
|
(in thousands of reais)
|
|
Derivative financial instruments
|
|
|
768,171
|
|
|
1,574,280
|
|
Loans and financing
|
|
|
2,183,685
|
|
|
4,367,370
|
|
Marketable securities
|
|
|
207,121
|
|
|
414,241
|
|
|
|
|
|
|
|
|
|
Total impact
|
|
|
3,158,977
|
|
|
6,355,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow and Interest Rate Risk
Our net income and operating cash flows are substantially independent of changes in market interest rates because we have no significant
interest-bearing assets. Our cash and cash equivalents are mostly denominated in
reais
and are based on the CDI rate. As of September 30, 2016,
the CDI rate was 14.13% per annum.
Our
debt is primarily denominated in U.S. dollars and to a lesser extent in
reais
. As of September 30, 2016, R$9,300 million
(or 65.5%) of our total consolidated indebtedness was
S-44
Table of Contents
denominated
in U.S. dollars and the remaining R$4,892 million (or 34.5%) of our total consolidated indebtedness was denominated in
reais
. Our
U.S. dollar-denominated debt has exposure to fixed rates (mainly our series of senior notes outstanding) and LIBOR rates (mainly export prepayment agreements). Our
real
-denominated debt has exposure to
fixed rates, to CDI and to TJLP.
As
of September 30, 2016, R$10,897 million (or 76.8% of our total consolidated indebtedness) of our loans and financings bore interest at floating rates, including LIBOR,
TJLP, CDI and UMBNDES. Loans and financings bearing interest at fixed rates represented 23.2% of our total consolidated indebtedness as of September 30, 2016, and are primarily related to our
senior notes outstanding.
The
table below provides information about our significant interest rate-sensitive instruments and classify our exposures by currency and type of interest rate (floating or fixed).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2016
|
|
|
|
2016
|
|
2017
|
|
2018
|
|
After 2018
|
|
Total
|
|
|
|
(in thousands of reais)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Floating-rate denominated in
reais
|
|
|
40
|
|
|
|
|
|
|
|
|
|
|
|
40
|
|
Fixed-rate denominated in U.S. dollars
|
|
|
203
|
|
|
|
|
|
|
|
|
|
|
|
203
|
|
Marketable securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
890
|
|
Floating-rate denominated in
reais
|
|
|
890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed-rate denominated in U.S. dollars
|
|
|
2,372
|
|
|
6
|
|
|
6
|
|
|
59
|
|
|
2,443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total exposed assets
|
|
|
3,505
|
|
|
6
|
|
|
6
|
|
|
59
|
|
|
3,576
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Floating-rate debt denominated in
reais
|
|
|
148
|
|
|
493
|
|
|
381
|
|
|
3,309
|
|
|
4,331
|
|
Floating-rate debt denominated in U.S. dollars
|
|
|
83
|
|
|
484
|
|
|
1,324
|
|
|
4,674
|
|
|
6,565
|
|
Fixed-rate debt denominated in
reais
|
|
|
11
|
|
|
46
|
|
|
34
|
|
|
470
|
|
|
561
|
|
Fixed-rate debt denominated in U.S. dollars
|
|
|
499
|
|
|
|
|
|
|
|
|
2,236
|
|
|
2,735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total exposed liabilities
|
|
|
741
|
|
|
1,023
|
|
|
1,739
|
|
|
10,689
|
|
|
14,192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Financial Instruments
Most of our revenue is denominated in U.S. dollars. We have U.S. dollars/
reais
currency options
(zero cost collars) to protect our short term cash flow from unfavorable exchange rate movements. We also have interest rate swaps and cross-currency swaps to hedge our indebtedness. Our interest rate
swaps mitigate our exposure to fluctuations in LIBOR and our cross-currency swaps mitigate our exposure to
real
-denominated indebtedness by swapping
such debt to U.S. dollar-denominated debt.
As
of September 30, 2016, our main derivatives were as follows:
-
-
Swaps in which we receive three-month LIBOR and pay a fixed interest rate, with notional amount of U.S.$605 million as of
September 30, 2016 and final maturity date in May 2019. This swap was contracted to fix the cost of the underlying loan and reduce our cash flow risk. As of September 30, 2016, the sum
of the fair values of these swaps resulted in a net liability of R$17 million.
-
-
Cross-currency swaps in which we receive CDI and pay in U.S. dollars at a fixed rate in order to mitigate our exposure to a
real
-denominated debt, converting it to U.S. dollar-denominated debt. The notional amount of these cross-currency swaps as of September 30, 2016
was U.S.$319 million, and the longest maturity was August 2020. As of September 30, 2016, the sum of fair values of these swaps resulted in a net liability of R$294 million.
S-45
Table of Contents
-
-
Cross-currency swaps in which we receive TJLP in
reais
and pay in U.S. dollars at a fixed rate.
The total notional amount is U.S.$49 million, and the longest maturity is December 2017. As of September 30, 2016, the sum of the fair values of those swaps resulted in a net liability
of R$80 million.
-
-
Cross-currency swaps in which we receive
reais
at a fixed rate and pay U.S. dollars at a fixed
rate. The notional amount of this cross-currency swap is U.S.$89 million, with the longest maturity in July 2019. As of September 30, 2016, the sum of the fair values of these swaps
resulted in a net liability of R$89 million.
-
-
An option based strategy known as zero cost collar, which provides a floor and a cap to the foreign currency rate between the U.S. dollar and
the
real
. The instrument is used to protect our U.S. dollar revenue below a given threshold in
reais
. As
of September 30, 2016, the notional amount was U.S.$1,475 million, and the sum of the fair values resulted in a net asset of R$249 million.
-
-
An embedded derivative, in which we receive a fixed U.S. dollar rate and pay a floating U.S. dollar rate (U.S. Consumer Price Index). The
embedded derivative arises from the Forestry Partnership and Standing Timber Supply Agreements with Parkia Participações S.A. The value of the adjustment regarding
the fair value of those embedded derivative in the nine-month period ended September 30, 2016 was a gain of R$227 million. See "Item 4. Information on FibriaA.
History and Development of FibriaDisposition of forestry assets and land" in our 2015 Annual Report.
The
following table provides the notional and the fair value of our financial derivatives as of September 30, 2016:
|
|
|
|
|
|
|
|
|
|
As of September 30, 2016
|
|
|
|
Notional amount
|
|
Fair value
|
|
|
|
(in thousands of
U.S. dollars)
|
|
(in thousands of reais)
|
|
Swap CDI × U.S.$
|
|
|
319
|
|
|
(294
|
)
|
Swap LIBOR 3M × Fixed
|
|
|
605
|
|
|
(17
|
)
|
Swap TJLP × U.S.$
|
|
|
49
|
|
|
(80
|
)
|
Swap BRL × U.S.$
|
|
|
89
|
|
|
(89
|
)
|
Zero Cost Collar
|
|
|
1,475
|
|
|
249
|
|
|
|
|
|
|
|
|
|
Swap USD × CPI (embedded derivative)
|
|
|
824
|
|
|
227
|
|
|
|
|
|
|
|
|
|
|
|
|
3,361
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
further information concerning risks associated with the foregoing, see note 9(a) of our unaudited condensed consolidated interim financial information included in this
prospectus supplement.
S-46
Table of Contents
DESCRIPTION OF THE NOTES
The following description of the particular terms of the notes supplements and modifies the description of the general
terms and provisions of debt securities and the Indenture (as defined below) set forth in the accompanying prospectus under the heading "Description of the Debt Securities," which you should read in
conjunction with this prospectus supplement. If the description of the terms of the notes in this prospectus supplement differs in any way from that in the accompanying prospectus, you should rely on
the information contained in this prospectus supplement. You will find the definitions of capitalized terms used in this section under "Certain Definitions" in the accompanying prospectus
under the heading "Description of the Debt Securities." In this description and in the related section entitled "Description of the Debt Securities" in the accompanying prospectus, references to
"Fibria Celulose" mean Fibria Celulose S.A. only and do not include any of its subsidiaries.
These descriptions are a summary of the material terms of the notes and the Indenture, including a supplement to that Indenture concerning the notes. This summary
does not restate the terms of the notes or
the Indenture in their entirety. We urge you to read the notes and the Indenture because they, and not this description, define your rights as investors. You may obtain a copy of the Indenture and the
form of the supplemental indenture and the notes by contacting us as described in the accompanying prospectus under "Where You Can Find More Information."
General
Fibria Overseas Finance Ltd. ("
Fibria Finance
") will issue the notes pursuant to an
indenture, dated as of May 12, 2014 (the "
Indenture
"), among Fibria Finance, as issuer, Fibria Celulose, as guarantor, and Deutsche Bank Trust
Company Americas, as trustee (which term includes any successor as trustee under the Indenture), registrar, transfer agent and paying agent, and a second supplemental indenture, to be dated the
delivery date of the notes, among Fibria Finance, as issuer, Fibria Celulose, as guarantor, and Deutsche Bank Trust Company Americas, as trustee, registrar, transfer agent and paying agent.
The
notes:
-
-
will be a series of Fibria Finance's debt securities described in the accompanying prospectus;
-
-
will be senior unsecured obligations of Fibria Finance;
-
-
will initially be issued in an aggregate principal amount of U.S.$700 million (subject to our right to issue additional notes of this
series as described under "Further Issuances");
-
-
will mature at 100% of their principal amount on January 17, 2027;
-
-
will be subject to optional redemption or tax redemption as described under "Redemption";
-
-
will be issued in minimum denominations of U.S.$2,000 and integral multiples of U.S.$1,000 in excess thereof;
-
-
will be represented by one or more registered notes in global form and may be exchanged for notes in definitive form only in limited
circumstances; and
-
-
will be unconditionally guaranteed on a senior unsecured basis by Fibria Celulose.
Interest
on the notes:
-
-
will accrue at the rate of 5.500%
per annum
;
-
-
will accrue from the date of issuance or from the most recent date to which interest has been paid;
S-47
Table of Contents
-
-
will be payable in cash semi-annually in arrears on January 17 and July 17 beginning on July 17, 2017;
-
-
will be payable to the holders of record on the January 15 and July 15 immediately preceding the related interest payment dates;
and
-
-
will be computed on the basis of a 360-day year comprised of twelve 30-day months.
Principal
of, premium, if any, interest and any additional amounts on the notes will be payable at the office of the trustee and at the offices of the paying agents, and the transfer of
the notes will be registrable at the office of the trustee and registrar and at the offices of the transfer agents.
Fibria Celulose Guarantee
Fibria Celulose has agreed in the Indenture that it will fully, unconditionally and irrevocably guarantee, on a senior unsecured basis, the
obligations of Fibria Finance under the notes and the Indenture. The obligations of Fibria Celulose under the guarantee will rank:
-
-
equal in right of payment to all other existing and future senior unsecured debt of Fibria Celulose, subject to certain statutory preferences
under applicable law, including labor and tax claims;
-
-
senior in right of payment to Fibria Celulose's subordinated debt; and
-
-
effectively subordinated to the debt and other liabilities (including subordinated debt and trade payables) of Fibria Celulose's subsidiaries
(other than Fibria Finance) and jointly controlled companies and to secured debt of Fibria Celulose to the extent of the value of the assets securing such secured debt.
As
of September 30, 2016, Fibria Celulose and its subsidiaries had total consolidated indebtedness of R$14,192 million (U.S.$4,372 million), of which
R$1,436 million (U.S.$442 million) was secured indebtedness.
Ranking
The notes will constitute senior unsecured obligations of Fibria Finance. The notes will rank at least
pari
passu
in priority of payment with all other existing and future senior unsecured indebtedness of Fibria Finance.
Redemption
We will not be permitted to redeem the notes before their stated maturity, except as set forth below. The notes will not be entitled to the
benefit of any sinking fund, meaning that we will not deposit money on a regular basis into any separate account to repay the notes. In addition, you will not be entitled to require us to repurchase
your notes from you before the stated maturity, except as set forth under "Purchase of Notes upon Change of Control Event."
Optional Redemption
The notes will be redeemable, at the option of Fibria Finance or Fibria Celulose, in whole or in part, at any time and from time to time, at a
redemption price equal to the greater of (1) 100% of the principal amount of the notes to be redeemed and (2) the sum of the present values of each remaining scheduled payment of
principal and interest thereon (excluding interest accrued to the date of redemption) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) using a discount rate equal to the treasury rate plus 0.50%, plus accrued and unpaid interest on the principal amount of the notes to the date of redemption.
S-48
Table of Contents
The
following terms are relevant to the determination of the redemption price for the notes:
"
Treasury rate
" means, with respect to any redemption date, the rate
per annum
equal to
the semi-annual equivalent yield to maturity or interpolated yield to maturity of the comparable treasury issue. In determining the treasury rate, the price for the comparable treasury issue
(expressed as a percentage of its principal amount) will be assumed to be equal to the comparable treasury price for such redemption date.
"
Comparable treasury issue
" means the United States Treasury security or securities selected by an independent investment banker as having
an actual or interpolated maturity comparable to the remaining term of the notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the remaining term of such notes.
"
Independent investment banker
" means one of the reference treasury dealers appointed by us.
"
Comparable treasury price
" means (A) the arithmetic average of the reference treasury dealer quotations for such redemption date
after excluding the highest and lowest reference treasury dealer quotations, or (B) if we obtain fewer than four reference treasury dealer quotations, the arithmetic average of all reference
treasury dealer quotations for such redemption date.
"
Reference treasury dealer quotations
" means, with respect to each reference treasury dealer and any redemption date, the arithmetic
average, as determined by us, of the bid and asked prices for the comparable treasury issue (expressed in each case as a percentage of its principal amount) quoted in writing to us by such reference
treasury dealer at approximately 3:30 p.m. (New York City time) on the third business day preceding such redemption date.
"
Reference treasury dealers
" means at least four primary U.S. government securities dealers in New York City, New York designated by
Fibria Finance or Fibria Celulose not later than the third business day preceding such redemption date.
"
Remaining scheduled payments
" means the remaining scheduled payments of the principal and interest that would be due after the applicable
redemption date but for such redemption.
Tax Redemption
Fibria Celulose, Fibria Finance or any such successor may, at its option, redeem all, but not less than all, of the notes,
if:
-
-
as a result of a change in, or amendment to, any laws, rules or regulations of a Relevant Jurisdiction (as defined below in
"Payment of Additional Amounts"), or any amendment to or change in an official interpretation, administration or application of such laws, rules or regulations (including a holding by a
court of competent jurisdiction), which change or amendment becomes effective or is announced on or after the later of the issue date or the date a Relevant Jurisdiction becomes a Relevant
Jurisdiction:
-
-
Fibria Celulose or any successor has or will become obligated to pay Additional Amounts as described above under
"Payment of Additional Amounts" in excess of the Additional Amounts Fibria Celulose or any such successor would be obligated to pay if payments were subject to withholding or deduction at
a rate of 15% or at a rate of 25% in case the holder of the notes is resident in a tax haven jurisdiction for Brazilian tax purposes (i.e., countries which do not impose any income tax or which
impose it at a maximum rate lower than 17% or where the laws impose restrictions on the disclosure of ownership composition or securities ownership); or
S-49
Table of Contents
-
-
Fibria Finance or any successor has or will become obligated to pay any Additional Amounts as described above under
"Payment of Additional Amounts" in excess of the Additional Amounts Fibria Finance or any such successor would be obligated to pay if payments were subject to withholding or deduction at
a rate of 0%; and
-
-
in each such case, the obligation cannot be avoided by Fibria Celulose or Fibria Finance or their respective successors, as applicable, after
taking reasonable measures to avoid it. For this purpose, "reasonable" measures do not include any change in the jurisdiction of incorporation or organization or location of the principal executive
office or registered office of Fibria Celulose or Fibria Finance or their respective successors, as applicable.
If
the notes are redeemed, the redemption price for notes will be equal to the principal amount of the notes being redeemed plus accrued interest due on the date fixed for redemption.
Furthermore, we must give you between five business days and 60 business days' notice before redeeming the notes.
See
"Description of the Debt SecuritiesOptional Tax Redemption" in the accompanying prospectus for the additional requirements and limitations that apply to the Tax
Redemption.
Open Market Purchases
Subject to any restrictions described in the prospectus supplement, we or our affiliates may at any time purchase debt securities from investors
who are willing to sell from time to time, either in the open market at prevailing prices or in private transactions at negotiated prices. Debt securities that we or they purchase may, in our
discretion, be held, resold or canceled, but will only be resold in compliance with applicable requirements or exemptions under the relevant securities laws.
Purchase of Notes upon Change of Control Event
Not later than 30 days following a Change of Control that results in a Ratings Decline, Fibria Celulose, acting on behalf of Fibria
Finance, will make directly or by a Designated Affiliate an Offer to Purchase all outstanding notes at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest
thereon and additional amounts, if any, to, but excluding, the purchase date.
An
"
Offer to Purchase
" must be made by written offer to the holders (a copy of which shall be delivered to the trustee), which will
specify the principal amount of notes subject to the offer and the purchase price. The offer must specify an expiration date (the "
Expiration Date
") not
less than 30 days or more than 60 days after the date of the offer and a settlement date for purchase (the "
Purchase Date
") not more than
five business days after the Expiration Date. The offer will contain instructions and materials necessary to enable holders to tender notes pursuant to the offer. Fibria Celulose will comply with
Rule 14e-1 under the Exchange Act (to the extent applicable) and all other applicable laws in making any Offer to Purchase, and the above procedures will be deemed modified as necessary to
permit such compliance.
A
holder may tender all or any portion of its notes pursuant to an Offer to Purchase, subject to the requirement that if a holder tenders only a portion of its notes, the remaining notes
must be no less than U.S.$2,000 in principal amount and in integral multiples of U.S.$1,000 in excess thereof. Holders shall be entitled to withdraw notes tendered up to the expiration of the offer.
On the Purchase Date, the purchase price will become due and payable on each note accepted for purchase pursuant to the Offer to Purchase, and interest on notes purchased will cease to accrue on and
after the Purchase Date.
Fibria
Celulose will not be required to make an Offer to Purchase upon a Change of Control that results in a Ratings Decline if (1) a third party makes the Offer to Purchase in
the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to an
S-50
Table of Contents
Offer
to Purchase made by Fibria Celulose and purchases all notes properly tendered and not withdrawn under the Offer to Purchase, or (2) a notice of redemption for all outstanding notes has
been given pursuant to the Indenture unless and until there is a default in payment of the applicable redemption price. Notwithstanding anything to the contrary contained herein, an Offer to Purchase
may
be made in advance of a Change of Control, conditioned upon the consummation of such Change of Control and the occurrence of such Rating Decline, if a definitive agreement is in place for the Change
of Control at the time the Offer to Purchase is made.
In
the event that the holders of not less than 90% of the aggregate principal amount of the outstanding notes accept a Change of Control Offer and Fibria Celulose or a third party
purchases all the notes held by such holders, Fibria Finance and Fibria Celulose will have the right, on not less than 30 nor more than 60 days' prior notice to the holders (with a copy to the
trustee), given not more than 30 days following the purchase pursuant to the Change of Control Offer described above, to redeem all of the notes that remain outstanding following such purchase
at the purchase price equal to that in the Change of Control Offer plus, to the extent not included in the Change of Control Offer payment, accrued and unpaid interest and additional amounts, if any,
on the notes that remain outstanding, to, but excluding, the date of redemption.
"
Change of Control
" means:
(1) the
direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions,
of all or substantially all of the assets of Fibria Celulose and its subsidiaries, taken as a whole, to any Person (including any "person" (as that term is used in Section 13(d)(3) of the
Exchange Act)) other than to one or more of the Permitted Holders; or
(2) the
consummation of any transaction (including without limitation, any merger or consolidation) the result of which is that any Person (including any "person" (as that
term is used in Section 13(d)(3) of the Exchange Act) but excluding any of the Permitted Holders) becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act) of more than 50% of the outstanding Voting Stock of Fibria Celulose, measured by voting power rather than number of shares.
"
Designated Affiliate
" means, at any time, one or more Persons designated by Fibria Celulose to be the purchaser of notes under an Offer
to Purchase.
"
Investment Grade
" means BBB- or higher by Standard & Poor's, Baa3 or higher by Moody's or BBB- or higher by Fitch,
or the equivalent of such global ratings by Standard & Poor's, Moody's or Fitch.
"
Permitted Holder
" means each of (1) Votorantim Participações S.A. or any affiliate thereof
and (2) BNDES Participações S.A. or any affiliate thereof.
"
Person
" means any corporation, partnership, joint venture, trust, limited liability company or unincorporated organization.
"
Rating Agency
" means each of (1) Standard & Poor's, (2) Moody's and (3) Fitch, or their respective
successors; provided that if any of Standard & Poor's, Moody's or Fitch ceases to rate the notes or fails to make a rating on the notes publicly available, Fibria Celulose will appoint a
replacement for such Rating Agency that is a "nationally recognized statistical rating organization" within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act.
"
Ratings Decline
" means that at any time within 90 days after the earlier of the date of public notice of a Change of Control and
the date on which Fibria Celulose or any other Person publicly declares its intention to effect a Change of Control, (1) in the event the notes are assigned an Investment Grade rating by at
least two of the Rating Agencies prior to such public notice or
S-51
Table of Contents
declaration,
the rating assigned to the notes by at least two of the Rating Agencies is below an Investment Grade rating; or (2) in the event the ratings assigned to the notes by at least two
of the Rating Agencies prior to such public notice or declaration are below an Investment Grade rating, the rating assigned to the notes by at least two of the Rating Agencies is decreased by one or
more categories (
i.e.
, notches);
provided
that, in each case, any such Ratings Decline is expressly
stated by the applicable Rating Agencies to have been the result of the Change of Control.
"
Voting Stock
" means, with respect to Fibria Celulose as of any date, the Capital Stock of Fibria Celulose that is at the time entitled to
vote generally in the election of the Board of Directors of Fibria Celulose and in respect of other matters presented at shareholders' meetings of Fibria Celulose.
Payment of Additional Amounts
All payments in respect of the notes issued thereunder and the related guarantee, if any, will be made without withholding or deduction for or
on account of any present or future taxes, duties, assessments, or other governmental charges of whatever nature imposed or levied by or on behalf of any jurisdiction in which Fibria Celulose or
Fibria Finance or any successor thereto is organized or is a resident for tax purposes (a "
Relevant Jurisdiction
"), unless Fibria Celulose or Fibria
Finance, as applicable, is compelled by law to deduct or withhold such taxes, duties, assessments or
governmental charges. In such event, Fibria Celulose or Fibria Finance, as applicable, will pay to each holder such additional amounts as may be necessary in order that every net payment made by
Fibria Celulose or Fibria Finance, as applicable, on each note or the related guarantee after such withholding or deduction will not be less than the amount then due and payable on such note or the
related guarantee. Notwithstanding the foregoing, neither Fibria Celulose nor Fibria Finance will have to pay additional amounts:
-
i.
-
to,
or to a third party on behalf of, a holder or beneficial owner who is liable for such taxes, duties, assessments or governmental charges in respect of such note
by reason of its having some present or former connection with a Relevant Taxing Jurisdiction, other than the mere holding of the note and the receipt of payments with respect to the note or the
related guarantee;
-
ii.
-
in
respect of any tax, assessment or other governmental charge that would not have been so imposed but for the presentation by a holder for payment on a date more
than 30 days after the date on which such payment became due and payable or the date on which payment thereof is made, whichever occurs later;
-
iii.
-
in
respect of any tax, duty, assessment or other governmental charge to the extent that such tax, duty, assessment or other governmental charge would not have been
imposed but for the failure of a holder or beneficial owner to comply with any certification, identification or other reporting requirements concerning the nationality, residence, identity or
connection with a Relevant Taxing Jurisdiction, if (a) such compliance is required or imposed by law as a precondition to exemption from all or a part of such tax, duty, assessment or other
governmental charge and (b) Fibria Celulose or Fibria Finance, as applicable, has given the holders at least 30 days' notice that holders will be required to comply with such
requirement;
-
iv.
-
in
respect of any estate, inheritance, gift, sales, transfer, excise or personal property or similar tax, assessment or governmental charge;
-
v.
-
where
such withholding or deduction is imposed on a payment to an individual and is required to be made pursuant to any law implementing or complying with, or
introduced in order to conform to, any European Union Directive on the taxation of savings;
-
vi.
-
in
respect of any tax, assessment or other governmental charge that would have been avoided by such holder presenting the relevant note (if presentation is required)
or requesting that
S-52
Table of Contents
Notwithstanding
anything to the contrary in the preceding paragraph, Fibria Celulose, Fibria Finance and any paying agent, the trustee, the principal paying agent or any other person
will be entitled to make any deduction or withholding without any liability, and will not be required to pay any additional amounts with respect to any such deduction or withholding, imposed on or in
respect of any note pursuant to Section 1471 through Section 1474 of the Code ("
FATCA
"), any treaty, law, regulation or other official
guidance enacted by any jurisdiction in which we are organized, or in which payments on the notes are made, or any successor jurisdiction or any political subdivision or authority therein or thereof
having power to tax (each such jurisdiction, a "
Taxing Jurisdiction
"), implementing FATCA, or any agreement between us, the trustee, the principal
paying agent or a paying agent and the United States, a Taxing Jurisdiction, or any authority of any of the foregoing implementing FATCA.
See
"Description of the Debt SecuritiesPayment of Additional Amounts" in the accompanying prospectus.
Covenants
Limitation on Liens
Unless otherwise specified in the applicable prospectus supplement, Fibria Celulose will covenant that for so long as any debt securities remain
outstanding under the applicable indenture, Fibria Celulose will not, and will not permit any Significant Subsidiary to, create or suffer to exist any Lien upon any of its property or assets now owned
or hereafter acquired by it or on any Capital Stock of any Significant Subsidiary securing any Indebtedness of Fibria Celulose or any Significant Subsidiary, other than a Permitted Lien, without in
any such case effectively providing that the outstanding debt securities (together with, if Fibria Celulose so determines, any other Indebtedness of Fibria Celulose) are secured equally and ratably
with or prior to such secured Indebtedness for so long as such Indebtedness is so secured.
"
Permitted Liens
" means:
-
(1)
-
any
Lien existing on the date of the applicable indenture, and any extension, renewal or replacement (and any subsequent extensions, renewals or replacements)
thereof or of any Lien referred to in clauses (2), (3), (4) or (11) below;
provided, however
, that the aggregate principal amount
of Indebtedness so secured is not increased, other than any increase reflecting premiums, fees and expenses in connection with such extension, renewal or replacement;
-
(2)
-
any
Lien on any property or assets (including Capital Stock of any person) securing Indebtedness incurred solely for purposes of financing the acquisition,
construction or improvement of such property or assets including related transaction fees and expenses after the date of the applicable indenture;
provided
that (a) the aggregate principal amount
of Indebtedness secured by the Liens will not exceed (but may be less than) the cost
(
i.e
., purchase price) of the property or assets so acquired, constructed or improved and (b) the Lien is incurred before, or within
365 days after the completion of, such acquisition, construction or improvement and does not encumber any other property or assets of Fibria Celulose or any Significant Subsidiary;
S-53
Table of Contents
-
(3)
-
any
Lien securing Indebtedness for the purpose of financing all or part of the cost of the acquisition, construction or development of a project;
provided
that (a) the Lien in respect of such
Indebtedness is limited to assets (including Capital Stock of the project entity), rights and/or
revenues of such project, (b) the aggregate principal amount of Indebtedness secured by the Liens will not exceed (but may be less than) the cost (i.e., purchase price) of the project,
and (c) the Lien is incurred before, or within 365 days after the completion of, that acquisition, construction or development and does not apply to any other property or assets of
Fibria Celulose or any Significant Subsidiary;
-
(4)
-
any
Lien existing on any property or assets of any person before that person's acquisition by, merger into or consolidation with Fibria Celulose or any Subsidiary
after the date of the applicable indenture;
provided
that (a) the Lien is not created in contemplation of or in connection with such acquisition,
merger or consolidation, (b) the Indebtedness secured by the Liens may not exceed the Indebtedness secured on the date of such acquisition, merger or consolidation, in each case, taking into
account any accrued interest or monetary variation, (c) the Lien will not apply to any other property or assets of Fibria Celulose or any of its Subsidiaries and (d) the Lien will secure
only the Indebtedness that it secures on the date of such acquisition, merger or consolidation;
-
(5)
-
any
Lien imposed by law that was incurred in the ordinary course of business, including carriers', warehousemen's and mechanics' liens and other similar encumbrances
arising in the ordinary course of business, in each case for sums not yet due or being contested in good faith by appropriate proceedings;
-
(6)
-
any
pledge or deposit made in connection with workers' compensation, unemployment insurance or other similar social security legislation, any deposit to secure
appeal bonds in proceedings being contested in good faith to which Fibria Celulose or any Subsidiary is a party, good faith deposits in connection with bids, tenders, contracts (other than for the
payment of Indebtedness) or leases to which Fibria Celulose or any Subsidiary is a party or deposits for the payment of rent, in each case made in the ordinary course of business;
-
(7)
-
any
Lien in favor of issuers of surety bonds or letters of credit issued pursuant to the request of and for the account of Fibria Celulose or any Subsidiary in the
ordinary course of business;
-
(8)
-
any
Lien securing taxes, assessments and other governmental charges, the payment of which are not yet due or are being contested in good faith by appropriate
proceedings and for which such reserves or other appropriate provisions, if any, have been established as required by GAAP;
-
(9)
-
minor
defects, easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business and encumbrances consisting of
zoning restrictions, licenses, restrictions on the use of property or assets or minor imperfections in title that do not materially impair the value or use of the property or assets affected thereby,
and any leases and subleases of real property that do not interfere with the ordinary conduct of the business of Fibria Celulose or any Subsidiary, and which are made on customary and usual terms
applicable to similar properties;
-
(10)
-
any
rights of set-off of any person with respect to any deposit account of Fibria Celulose or any Subsidiary arising in the ordinary course of business and not
constituting a financing transaction;
-
(11)
-
any
Lien granted to secure borrowings from, directly or indirectly, (a) Banco Nacional de Desenvolvimento Econômico e
SocialBNDES, Banco do Nordeste do Brasil S.A. or any other Brazilian governmental development bank or credit agency or (b) any international or
S-54
Table of Contents
multilateral
development bank, government-sponsored agency, export-import bank or agency, or official export-import credit insurer;
-
(12)
-
any
Liens securing obligations under hedging agreements not for speculative purposes;
-
(13)
-
any
Lien on the inventory or receivables and related assets of Fibria Celulose or any Subsidiary securing the obligations of such person under any lines of credit
or working capital facility or in connection with any structured export or import financing or other trade transaction; provided that the aggregate amount of receivables securing Indebtedness will not
exceed (a) with respect to transactions secured by receivables from export sales, 80% of Fibria Celulose's consolidated gross revenues from export sales for the most recently concluded period
of four consecutive fiscal quarters; or (b) with respect to transactions secured by receivables from domestic sales, 80% of such Person's consolidated gross revenues from sales for the most
recently concluded period of four consecutive fiscal quarters; provided, further, that Advance Transactions will not be deemed transactions secured by receivables for purpose of the above calculation;
-
(14)
-
Liens
securing obligations owed by any Subsidiary of Fibria Celulose to Fibria Celulose or one or more Subsidiaries of Fibria Celulose and/or by Fibria Celulose to
one or more such Subsidiaries; and
-
(15)
-
in
addition to the foregoing Liens set forth in clauses (1) through (14) above or otherwise permitted by this covenant, Liens securing Indebtedness of
Fibria Celulose or any Subsidiary (including, without limitation, guarantees of Fibria Celulose or any Subsidiary) that does not in aggregate principal amount, at any time of determination, exceed
15.0% of Consolidated Total Assets.
Holders
of the notes will also benefit from a covenant contained in the Indenture affecting our ability to merge with other entities. You should read the information under the heading
"Description of the Debt SecuritiesCertain Covenants" in the accompanying prospectus.
Additional Limitations on Fibria Finance
The supplemental indenture governing the notes contains the following covenants:
-
-
Fibria Finance will not engage in any business or conduct any operations, other than to finance the operations of Fibria Celulose and its
subsidiaries, activities that are reasonably ancillary thereto (including, without limitation, on-lending of funds, repurchases of Indebtedness not prohibited by the Indenture, and entering into
transactions involving Hedging Obligations not for speculative purposes relating to such Indebtedness) and cash management measures and short term investments;
-
-
Fibria Finance will not incur any Indebtedness other than (1) the notes and (2) any other indebtedness which (i) ranks
equally with the notes or (ii) is subordinated to the notes;
-
-
Fibria Finance will not consolidate with or merge with or into, or convey, transfer or lease all or substantially all of its assets to any
person, except (i) to the extent that it complies with the conditions set forth in "Description of the Debt SecuritiesCertain Covenants of Fibria CeluloseMergers and
Similar Transactions" (substituting "Fibria Finance" for "Fibria Celulose" therein) in the accompanying prospectus or (ii) with an affiliate of Fibria Finance solely for the purpose of
reincorporating Fibria Finance in another jurisdiction (so long as reincorporation does not materially adversely affect the rights of the holders of the notes);
S-55
Table of Contents
-
-
Fibria Finance will not redeem any of its shares; and
-
-
Fibria Finance will not incur any Liens on any of its assets, except for any Liens imposed by operation of law.
In
addition, Fibria Celulose will covenant to continue to own, directly or indirectly, a majority of the Voting Stock of Fibria Finance. In connection with a substitution of Fibria
Finance as issuer, upon the execution of the applicable Issuer Substitution Documents, neither Fibria Finance nor the Substituted Issuer will be subject to the covenants set forth in this
"Additional Limitations on Fibria Finance."
Events of Default
Holders of the notes will have rights if an event of default occurs and is not cured or waived. The supplemental indenture governing the notes
provides that the term "
Event of Default
" with respect to the notes means any of the following:
-
(1)
-
failure
to pay any interest on the notes on the date when due, which failure continues for a period of 30 days; or failure to pay any principal of (including
premium, if any, on) any of the notes on the date when due upon its Stated Maturity, upon redemption, or otherwise;
-
(2)
-
Fibria
Celulose or Fibria Finance fails to comply with any of its other covenants or agreements in respect of the notes or the Indenture (other than those referred
to in the foregoing clause (1)) and such failure continues for a period of 60 days after Fibria Celulose or Fibria Finance receives a notice of default from the trustee or holders of 25%
of the principal amount of the outstanding notes;
-
(3)
-
Fibria
Celulose or any of its Significant Subsidiaries defaults under any mortgage, indenture or instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by Fibria Celulose or any such Significant Subsidiary (or the payment of which is guaranteed by Fibria Celulose or any such Significant
Subsidiary) whether such Indebtedness or guarantee exists on the date of the Indenture or is created after the date of the Indenture, which default (a) is caused by failure to pay principal of
(and premium, if any, on) or interest on such Indebtedness after giving effect to any grace period provided in such Indebtedness on the date of such default ("
Payment
Default
") or (b) results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of any such Indebtedness or
guarantee, as applicable, together with the principal amount of any other such Indebtedness or guarantee under which there has been a Payment Default or the maturity of which has been so accelerated,
totals U.S.$100.0 million (or the equivalent thereof at the time of determination) or more in the aggregate;
-
(4)
-
one
or more final judgments or decrees for the payment of money in excess of U.S.$100.0 million (or the equivalent in another currency at the time of
determination, if applicable) in the aggregate are rendered against Fibria Celulose or any of its Significant Subsidiaries and are not paid (whether in full or in installments in accordance with the
terms of the judgment) or otherwise discharged (and otherwise not covered by an insurance policy or policies issued by reputable and creditworthy insurance companies) and, in the case of each such
judgment or decree, either (1) an enforcement proceeding has been commenced by any creditor upon such judgment or decree and is not dismissed within 60 days following commencement of
such enforcement proceedings or (2) there is a period of 60 days following such judgment during which such judgment or decree is not discharged, waived or the execution thereof stayed;
-
(5)
-
Fibria
Celulose or any of its Significant Subsidiaries pursuant to or within the meaning of any Bankruptcy Law: (1) commences a voluntary case or
files a request or petition for a writ of
S-56
Table of Contents
If
a responsible officer of the trustee receives written notice of an Event of Default with respect to the notes, the trustee shall give the holders of the notes notice of such Event of
Default as and to the extent provided in the Indenture;
provided
,
however
, that in the case of any
default of the character specified in clause (3) above, no such notice to such holders shall be given until at least 30 days after the occurrence thereof.
Covenant Defeasance
If Fibria Finance satisfies the requirements for covenant defeasance, the following provisions of the Indenture and the notes would no longer
apply:
-
-
certain covenants applicable to the series of debt securities described herein and in the prospectus;
and
-
-
the second, third, fourth, fifth (solely with respect to Fibria Celulose's Significant Subsidiaries), sixth (solely with respect to Fibria
Celulose's Significant Subsidiaries), seventh and eighth Events of Default described above under "Events of Default."
Payments of Principal and Interest
If any payment is due on the notes on a day that is not a business day, payment will be made on the day that is the next business day. Payments
postponed to the next business day in this situation will be treated under the Indenture as if they were made on the original payment date. Postponement of this kind will not result in a default under
the notes or the Indenture, and no interest will accrue on the postponed amount from the original payment date to the next day that is a business day.
S-57
Table of Contents
Further Issuances
Fibria Finance may from time to time, without notice to or consent of the noteholders, create and issue an unlimited principal amount of
additional notes having the same terms and conditions as the initial notes in all respects, except that the issue date, the issue price and the first payment of interest thereon may differ;
provided, however
, that unless such additional notes are issued under a separate CUSIP, such additional notes will be fungible with the initial notes
for U.S. federal income tax purposes or, if such additional notes are not fungible with the initial notes for U.S. federal income tax purposes, neither the initial notes nor the additional notes are
issued with more than a
de minimis
amount of original issue discount for U.S. federal income tax purposes. Any such additional notes will form a
single series and vote together with the previously outstanding notes for all purposes hereof.
Notices
For so long as notes in global form are outstanding, notices to be given to holders will be given to the depositary, in accordance with its
applicable policies as in effect from time to time. If notes are issued in individual definitive form, notices to be given to holders will be deemed to have been given upon the mailing by first class
mail, postage prepaid, of such notices to holders of the notes at their registered addresses as they appear in the registrar's records.
Trustee
Deutsche Bank Trust Company Americas is the trustee, security registrar, paying agent and transfer agent under the Indenture. So long as no
Event of Default has occurred and is continuing, Fibria Finance may remove the trustee and appoint a new trustee, subject to the terms and conditions of the Indenture.
The
Indenture contains provisions for the indemnification of the trustee and for its relief from responsibility. The obligations of the trustee to any holder are subject to such
indemnities, immunities and rights as are set forth in the Indenture.
Except
during the continuance of an Event of Default, the trustee need perform only those duties that are specifically set forth in the Indenture and no others, and no implied covenants
or obligations will be read into the Indenture against the trustee. In case an Event of Default has occurred and is continuing and a responsible officer of the trustee has received written
notification thereof, the trustee will exercise those rights and powers vested in it by the Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise
or use under the circumstances in the conduct of such person's own affairs. No provision of the Indenture will require the trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of its duties thereunder, or in the exercise of any of its rights or powers if it has reasonable grounds for believing that repayment of such funds or adequate security
and/or indemnity against such risk or liability is not assured to it.
Fibria
Celulose and its affiliates may from time to time enter into normal banking and trustee relationships with the trustee and its affiliates.
Governing Law and Submission to Jurisdiction
The notes and the Indenture will be governed by, and construed in accordance with, the laws of the State of New York.
Each
of the parties to the Indenture will submit to the non-exclusive jurisdiction of any New York state or U.S. federal court sitting in the Borough of Manhattan in The City of New York
for purposes of all
legal actions and proceedings instituted in connection with the notes and the Indenture. Each of Fibria Finance and Fibria Celulose has appointed National Corporate Research, Ltd., 10 East
S-58
Table of Contents
40th Street,
10th Floor, New York, New York 10016, as its authorized agent upon which process may be served in any such action.
Currency Indemnity
U.S. dollars are the sole currency of account and payment for all sums payable by Fibria Finance or Fibria Celulose under or in connection with
the notes, including damages. Any amount received or recovered in a currency other than U.S. dollars (whether as a result of, or of the enforcement of, a judgment or order of a court of any
jurisdiction, in the winding-up or dissolution of Fibria Celulose, Fibria Finance or otherwise) by any holder of a note in respect of any sum expressed to be due to it from Fibria Finance or Fibria
Celulose will only constitute a discharge of Fibria Finance or Fibria Celulose, as the case may be, to the extent of the U.S. dollar amount which the recipient is able to purchase with the amount so
received or recovered in that other currency on the date of that receipt or recovery (or, if it is not practicable to make that purchase on that date, on the first date on which it is practicable to
do so). If that U.S. dollar amount is less than the U.S. dollar amount expressed to be due to the recipient under any notes, Fibria Finance or Fibria Celulose, as the case may be, will indemnify such
holder against any loss sustained by it as a result; and if the amount of U.S. dollars so purchased is greater than the sum originally due to such holder, such holder will, by accepting notes, be
deemed to have agreed to repay such excess. In any event, Fibria Finance or Fibria Celulose as the case may be, will indemnify the recipient against the cost of making any such purchase.
For
the purposes of the preceding paragraph, it will be sufficient for the holder of notes to certify in a satisfactory manner (indicating the sources of information used) that it would
have suffered a loss had an actual purchase of U.S. dollars been made with the amount so received in that other currency on the date of receipt or recovery (or, if a purchase of U.S. dollars on such
date had not been practicable, on the first date on which it would have been practicable, it being required that the need for a change of date be certified in the manner mentioned above). These
indemnities constitute a separate and independent obligation from the other obligations of Fibria Finance and Fibria Celulose, will give rise to a separate and independent cause of action, will apply
irrespective of any indulgence granted by any holder of notes and will continue in full force and effect despite any other judgment, order, claim or proof for a liquidated amount in respect of any sum
due under any notes.
S-59
Table of Contents
CLEARANCE AND SETTLEMENT
Book-Entry Issuance
Except under the limited circumstances described in the accompanying prospectus, all notes will be book-entry notes. This means that the actual
purchasers of the notes will not be entitled to have the notes registered in their names and will not be entitled to receive physical delivery of the notes in definitive (paper) form. Instead, upon
issuance, all the notes will be represented by one or more fully registered global notes.
Each
global note will be deposited directly with DTC, a securities depositary, and will be registered in the name of DTC's nominee. Global notes may also be held indirectly with
Clearstream, Luxembourg and Euroclear, as indirect participants of DTC. For background information regarding DTC and Clearstream, Luxembourg and Euroclear, see "The Depository Trust
Company" and "Clearstream, Luxembourg and Euroclear" below. No global note representing book-entry notes may be transferred except as a whole by DTC to a nominee of DTC, or by a nominee
of DTC to another nominee of DTC. Thus, DTC will be the only registered holder of the notes and will be considered the sole representative of the beneficial owners of the notes for purposes of the
Indenture. For an explanation of the situations in which a global note will terminate and interests in it will be exchanged for physical certificates representing the notes, see "Legal Ownership of
Debt SecuritiesGlobal Securities" in the accompanying prospectus.
The
registration of the global notes in the name of DTC's nominee will not affect beneficial ownership and is performed merely to facilitate subsequent transfers. The book-entry system
is used because it eliminates the need for physical movement of securities certificates. The laws of some jurisdictions, however, may require some purchasers to take physical delivery of their notes
in definitive form. These laws may impair the ability of beneficial holders to transfer the notes.
In
this prospectus supplement, unless and until definitive (paper) notes are issued to the beneficial owners as described in the accompanying prospectus, all references to
"
registered holders
" of notes shall mean DTC. Fibria Celulose, Fibria Finance, the trustee and any paying agent, transfer agent or registrar may treat
DTC as the absolute owner of the notes for all purposes.
Primary Distribution
Payment Procedures
Payment for the notes will be made on a delivery versus payment basis.
Clearance and Settlement Procedures
DTC participants that hold securities through DTC on behalf of investors will follow the settlement practices applicable to United States
corporate debt obligations in DTC's Same-Day Funds Settlement System. Notes will be credited to the securities custody accounts of these DTC participants against payment in the same-day funds, for
payments in U.S. dollars, on the settlement date.
Secondary Market Trading
We understand that secondary market trading between DTC participants will occur in the ordinary way in accordance with DTC's rules. Secondary
market trading will be settled using procedures applicable to United States corporate debt obligations in DTC's Same-Day Funds Settlement System.
The Depository Trust Company
The policies of DTC will govern payments, transfers, exchange and other matters relating to the beneficial owner's interest in the notes held by
that owner. None of the trustee, any paying agent,
S-60
Table of Contents
transfer
agent or registrar, nor we have any responsibility for any aspect of the actions of DTC or any of their direct or indirect participants. None of the trustee, any paying agent, transfer agent
or registrar, nor we have any responsibility for any aspect of the records kept by DTC or any of their direct or indirect participants. In addition, none of the trustee, any paying agent, transfer
agent or registrar, nor we supervise DTC in any way. DTC and their participants perform these clearance and settlement functions under agreements they have made with one another or with their
customers.
Investors should be aware that DTC and its participants are not obligated to perform these procedures and may modify them or discontinue them at any time. The description of the clearing systems in
this section reflects our understanding of the rules and procedures of DTC as they are currently in effect. DTC could change its rules and procedures at any time.
DTC
has advised us as follows:
-
-
DTC is:
-
-
a limited purpose trust company organized under the laws of the State of New York;
-
-
a member of the Federal Reserve System;
-
-
a "clearing corporation" within the meaning of the Uniform Commercial Code; and
-
-
a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act.
-
-
DTC was created to hold securities for its participants and to facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes to accounts of its participants. This eliminates the need for physical movement of certificates.
-
-
Participants in DTC include securities brokers and dealers, banks, trust companies and clearing corporations and may include certain other
organizations. DTC is partially owned by some of these participants or their representatives.
-
-
Indirect access to the DTC system is also available to banks, brokers, dealers and trust companies that have relationships with participants.
-
-
The rules applicable to DTC and DTC participants are on file with the SEC.
Clearstream, Luxembourg and Euroclear
Clearstream, Luxembourg has advised that: (i) it is a duly licensed bank organized as a
société anonyme
incorporated
under the laws of Luxembourg and is subject to regulation by the Luxembourg Commission for
the supervision of the financial sector (
Commission de surveillance du secteur financier
); (ii) it holds securities for its customers and
facilitates the clearance and settlement of securities transactions among them, and does so through electronic book-entry transfers between the accounts of its customers, thereby eliminating the need
for physical movement of certificates; (iii) it provides other services to its customers, including safekeeping, administration, clearance and settlement of internationally traded securities
and lending and borrowing of securities; (iv) it interfaces with the domestic markets in over 30 countries through established depositary and custodial relationships; (v) its customers
include worldwide securities brokers and dealers, banks, trust companies and clearing corporations and may include certain other professional financial intermediaries; (vi) its U.S. customers
are limited to securities brokers and dealers and banks; and (vii) indirect access to the Clearstream, Luxembourg system is also available to others that clear through Clearstream, Luxembourg
customers or that have custodial relationships with its customers, such as banks, brokers, dealers and trust companies.
Euroclear
has advised that: (i) it is incorporated under the laws of Belgium as a bank and is subject to regulation by the Belgian Banking and Finance Commission
(
Commission Bancaire et
S-61
Table of Contents
Financière
) and the National Bank of Belgium (
Banque Nationale de Belgique
); (ii) it holds securities for
its participants and facilitates the clearance and settlement of securities transactions among them; (iii) it does so through simultaneous electronic book-entry delivery against payments,
thereby eliminating the need for physical movement of certificates; (iv) it provides other services to its participants, including credit, custody, lending and borrowing of securities and
tri-party collateral management; (v) it interfaces with the domestic markets of several countries; (vi) its customers include banks, including central banks, securities brokers and
dealers, banks, trust companies and clearing corporations and certain other professional financial intermediaries; (vii) indirect access to the Euroclear system is also available to others that
clear through Euroclear customers or that have custodial relationships with Euroclear customers; and (viii) all securities in Euroclear are held on a fungible basis, which means that specific
certificates are not matched to specific securities clearance accounts.
Clearance and Settlement Procedures
We understand that investors that hold their notes through Clearstream, Luxembourg or Euroclear accounts will follow the settlement procedures
that are applicable to securities in registered form. Notes may be credited to the securities custody accounts of Clearstream, Luxembourg and Euroclear participants on the business day following the
settlement date for value on the settlement date.
We
understand that secondary market trading between Clearstream, Luxembourg and/or Euroclear participants will occur in the ordinary way following the applicable rules and operating
procedures of Clearstream, Luxembourg and Euroclear. Secondary market trading will be settled using procedures applicable to securities in registered form.
You
should be aware that investors will only be able to make and receive deliveries, payments and other communications involving the notes through Clearstream, Luxembourg and Euroclear
on business days. Those systems may not be open for business on days when banks, brokers and other institutions are open for business in the United States or Brazil.
In
addition, because of time-zone differences, there may be problems with completing transactions involving Clearstream, Luxembourg and Euroclear on the same business day as in the
United States. Beneficial owners holding positions directly in DTC who wish to transfer their interests in the notes, or to make or receive a payment or delivery of the notes on a particular day may
find that the transactions will not be performed until the next business day in Luxembourg or Brussels, depending on whether Clearstream, Luxembourg or Euroclear is used.
Clearstream,
Luxembourg or Euroclear will credit payments to the cash accounts of participants in Clearstream, Luxembourg or Euroclear in accordance with the relevant systemic rules and
procedures, to the extent received by its depositary. Clearstream, Luxembourg or Euroclear, as the case may be, will take any other action permitted to be taken by a registered holder under the
Indenture on behalf of a Clearstream, Luxembourg or Euroclear participant only in accordance with its relevant rules and procedures.
Clearstream,
Luxembourg and Euroclear have agreed to the foregoing procedures in order to facilitate transfers of the debt securities among participants of Clearstream, Luxembourg and
Euroclear. However, they are under no obligation to perform or continue to perform those procedures, and they may discontinue those procedures at any time.
S-62
Table of Contents
TAXATION
The following discussion summarizes certain Cayman Islands, Brazilian and U.S. federal income considerations that may be
relevant to you if you invest in the notes. This summary is based on laws, regulations, rulings and decisions now in effect in the Cayman Islands, Brazil and the United States, which, in each case,
may change. Any change could apply retroactively and could affect the continued validity of this summary.
This summary does not describe all of the tax considerations that may be relevant to you or your situation, particularly if you are subject to special tax rules.
You should consult your tax advisors about the tax consequences of holding the notes, including the relevance to your particular situation of the considerations discussed below, as well as of state,
local and other tax laws.
Cayman Islands Tax Considerations
The following is a discussion of certain Cayman Islands income tax consequences of an investment in the notes. The discussion is a general
summary of present law, which is subject to prospective and retroactive change. It is not intended as tax advice, does not consider any investor's particular circumstances, and does not consider tax
consequences other than those arising under Cayman Islands law.
Payments
of interest and principal on the notes will not be subject to taxation in the Cayman Islands, and no withholding will be required on the payment of interest and principal to any
holder of the notes. In addition, gains derived from the disposition of the notes will not be subject to Cayman Islands income or corporation tax. The Cayman Islands currently have no income,
corporation or capital gains tax and no estate duty, inheritance tax or gift tax.
No
stamp duty is payable in respect of the issue of the notes. The notes themselves (if in definitive form) will be stampable if they are executed in or brought into the Cayman Islands.
An instrument of transfer in respect of a note is stampable if executed in or brought into the Cayman Islands.
Fibria
Finance has been incorporated under the laws of the Cayman Islands as an exempted company with limited liability and, as such, obtained on October 20, 2009 an undertaking
from the Governor in Cabinet of the Cayman Islands in the following form:
The Tax Concessions Law
1999 Revision
Undertaking as to Tax Concessions
In accordance with Section 6 of the Tax Concessions Law (1999 Revision), the Governor in Cabinet undertakes with Fibria Overseas
Finance Ltd. (the "Company"):
-
1.
-
That
no law which is hereafter enacted in the Islands imposing any tax to be levied on profits, income, gains or appreciations shall apply to the Company or its
operations;
-
2.
-
In
addition, that no tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax shall be
payable:
-
2.1.
-
on
or in respect of the shares, debentures or other obligations of the Company; or
-
2.2.
-
by
way of the withholding in whole or part, of any relevant payment as defined in Section 6(3) of the Tax Concessions Law (1999 Revision);
-
3.
-
These
concessions shall be for a period of twenty years from October 20, 2009.
S-63
Table of Contents
Brazilian Taxation
The following discussion is a general description of certain Brazilian tax aspects of the notes applicable to an individual, entity, trust or
organization that is not resident or domiciled in
Brazil for Brazilian tax purposes ("Non-Resident Holder") and does not purport to be a comprehensive description of all the tax aspects of the notes and does not address all of the Brazilian tax
considerations relating to the acquisition, ownership and disposition of the notes applicable to any Non-Resident Holder. Therefore, each Non-Resident Holder should consult its own tax advisor
concerning the Brazilian tax consequences in respect of the notes.
Investors
should note that, as to the discussion below, other income tax rates or treatment may be provided for in any applicable tax treaty between Brazil and the country where the
Non-Resident Holder is domiciled. Investors should also note that there is no tax treaty between Brazil and the United States. This summary does not address any tax issues that affect solely our
company, such as deductibility of expenses.
Payments on the Notes made by Fibria Finance
As a general rule, a Non-Resident Holder is taxed in Brazil only when income is derived from Brazilian sources or gains are realized on the
disposition of assets located in Brazil.
Based
on the fact that Fibria Finance is not considered for tax purposes to be domiciled in Brazil, any income (including interest and original interest discount, or OID, if any) paid by
it in respect of the notes to Non-Resident Holders should not be subject to withholding or deduction in respect of Brazilian income tax or any other taxes, duties, assessments or governmental charges
in Brazil, provided that such payments are made with funds held by Fibria Finance outside of Brazil.
Sale or other Taxable Disposition of Notes
Generally, capital gains generated outside Brazil as a result of a transaction between two non-residents of Brazil with assets located in Brazil
are subject to income tax in Brazil, according to Article 26 of Law No. 10,833, of December 29, 2003. Based on the fact that the notes are issued and registered abroad and, thus,
shall not fall within the definition of assets located in Brazil for purposes of Law No. 10,833, gains on the sale or the disposition of the notes made outside Brazil should not be subject to
taxation in Brazil. However, given the general and unclear scope of this legislation and the absence of consolidated judicial guidance in respect thereof, we cannot assure prospective investors that
such interpretation will prevail in the courts of Brazil.
In
case the notes are deemed to be assets located in Brazil, gains recognized by a Non-Resident Holder from the sale or other disposition of the notes to a non-resident in Brazil or to a
resident in Brazil may be subject to income tax in Brazil, as a general rule, at a flat rate of 15%, if the notes are sold or disposed of in 2016, at progressive rates of 15% to 22.5% if the
transaction takes place as of 2017, or at a flat rate of 25% if the Non-Resident Holder is located in a country that does not impose any income tax or which imposes it at a maximum rate lower than 20%
("Low or Nil Tax Jurisdiction") or in a country or location where the local legislation does not allow access to information related to the shareholding composition of legal entities, to their
ownership or to the identity of the effective beneficiary of the income attributed to non-residents, unless an applicable tax treaty between Brazil and the country where the Non-Resident Holder has
its domicile provides for a lower income tax rate. Pursuant to Law No. 13,259, of January 1, 2017, any gains deriving from the sale of the notes may be subject to income tax based on
progressive rates that ranges from 15% up to 22.5% (or 25% if the Non-Brazilian Resident is located in a Nil or Low Tax Jurisdiction).
S-64
Table of Contents
Favorable Tax Jurisdictions
On June 4, 2010, Brazilian tax authorities enacted Normative Instruction No. 1,037 listing (1) the countries and
jurisdictions considered as Low or Nil Tax Jurisdictions or where the local legislation does not allow access to information related to the shareholding composition of legal entities to their
ownership or to the identity of the effective beneficiary of the income attributed to non-residents and (2) the "privileged tax regimes," which definition is provided by Law No. 11,727,
of June 23, 2008. Although we believe that payments potentially made by a Brazilian source to a Non-Resident Holder that is domiciled in a country that falls in the definition of a privileged
tax regime shall not be subject to a stricter tax treatment in Brazil, we cannot assure you that subsequent legislation or interpretations by the Brazilian tax authorities regarding the effects of the
inclusion of a non-resident domiciled in a "privileged tax regime" will require that such payments are subject to the same tax treatment applicable for payments made to Non-Resident Holders domiciled
in a Low or Nil Tax Jurisdictions.
We
recommend that you consult your own tax advisors from time to time to verify any possible tax consequences arising of Normative Ruling No. 1,037 and Law No. 11,727.
Payments on the Notes Made by Fibria Celulose as Guarantor
If Fibria Celulose is ever required, in its capacity as guarantor, to make any payment of principal or interest under the notes to a
Non-Resident Holder, the Brazilian tax authorities could attempt to impose withholding income tax at the rate of 15% or 25% (depending on the nature of the payment and the location of the Non-Resident
Holder).
In
the event Fibria Celulose is required to withhold or deduct amounts for any taxes or other governmental charges imposed by Brazil, Fibria Celulose will pay such additional amounts as
are necessary to ensure that the holders of the notes receive the same amount as such holders would have received without such withholding or deduction, subject to certain exceptions. See "Description
of the NotesPayment of Additional Amounts."
Other Brazilian Tax Considerations
In addition to withholding income tax, Brazilian law imposes a Tax on Foreign Exchange Transactions (
Imposto sobre
Operações de Crédito, Câmbio e Seguro, ou relativas a Títulos e Valores Mobiliários
),
or IOF/Exchange, due on the conversion of
reais
into foreign currency and on the conversion of foreign currency into
reais
. Currently, the IOF/Exchange
rate for almost all foreign currency exchange transactions, including foreign exchange transactions in connection
with payments under the guarantee by Fibria Celulose to Non-Resident Holders, is 0.38%. The Brazilian government may increase this rate at any time up to 25%. Any such increase in rates may only apply
to future foreign exchange transactions and not retroactively.
Stamp, Transfer or Similar Taxes
Generally, there are no stamp, transfer or other similar taxes in Brazil applicable to the transfer, assignment or sale of the notes outside
Brazil, nor any inheritance, gift or succession tax applicable to the ownership, transfer or disposition of the notes, except for gift and inheritance taxes imposed in some states of Brazil on gifts
and bequests by the Non-Resident Holder to individuals or entities domiciled or residing within such Brazilian states.
The above description is not intended to constitute a complete analysis of all Brazilian tax consequences relating to the ownership of notes. Prospective
purchasers of notes should consult their own tax advisors concerning the tax consequences of their particular situations.
S-65
Table of Contents
U.S. Federal Income Taxation
The following is a description of the principal U.S. federal income tax consequences of the acquisition, ownership, retirement or other
disposition of notes by a U.S. Holder (as defined below) that acquires notes in the initial offering at the issue price (the first price at which a substantial amount of the notes is sold for money to
investors) of the notes and holds it as a capital asset (generally, property held for investment). This summary does not address all aspects of U.S. federal income taxation that may be applicable to a
particular investor's decision to acquire, own or dispose of a note. In particular, this summary does not address the U.S. federal income tax consequences that apply to prospective investors subject
to special tax rules, such as:
-
-
financial institutions;
-
-
insurance companies;
-
-
real estate investment trusts;
-
-
regulated investment companies;
-
-
grantor trusts;
-
-
tax-exempt organizations;
-
-
persons that will own notes through partnerships or other pass-through entities;
-
-
dealers or traders in securities or currencies;
-
-
certain former citizens or long-term residents of the United States;
-
-
holders that will hold a note as part of a position in a straddle or as part of a hedging, conversion or integrated transaction for U.S.
federal income tax purposes; or
-
-
holders that have a functional currency other than the U.S. dollar.
Moreover,
this description does not address the U.S. federal estate and gift tax or alternative minimum tax consequences of the acquisition, ownership, retirement or other disposition of
notes. Each
prospective purchaser should consult its tax advisor with respect to the U.S. federal, state, local and non-U.S. tax consequences of acquiring, holding and disposing of notes.
This
description is based on the Internal Revenue Code of 1986, as amended, or the "Code," existing and proposed U.S. Treasury Regulations, or the "Regulations," administrative
pronouncements and judicial decisions, each as available and in effect on the date of this prospectus supplement. All of the foregoing are subject to change, possibly with retroactive effect, or
differing interpretations which could affect the tax consequences described herein.
For
purposes of this description, a U.S. Holder is a beneficial owner of notes who, for U.S. federal income tax purposes, is:
-
-
an individual who is a citizen or resident of the United States;
-
-
a corporation (or any other entity that is treated as a corporation for U.S. federal income tax purposes) organized in or under the laws of the
United States, any State thereof or the District of Columbia;
-
-
an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
-
-
a trust (1) that has a valid election in effect to be treated as a U.S. person for U.S. federal income tax purposes or (2)(a) the
administration over which a U.S. court can exercise primary supervision and (b) all of the substantial decisions of which one or more U.S. persons have the authority to control.
S-66
Table of Contents
If
a partnership (or any other entity treated as a partnership for U.S. federal income tax purposes) holds notes, the tax treatment of the partnership and a partner in such partnership
generally will depend on the status of the partner and the activities of the partnership. Such partner or partnership should consult its own tax advisor as to its consequences.
The
notes are being issued by Fibria Finance, an entity that is disregarded as separate from Fibria Celulose for U.S. federal income tax purposes. Consequently, Fibria Celulose will be
treated as the issuer and obligor of the notes for U.S. federal income tax purposes.
Interest
Interest paid to a U.S. Holder on a note, including any additional amounts with respect thereto as described under "Description of the
NotesPayment of Additional Amounts," will be includible in such holder's gross income as ordinary interest income in accordance with such holder's usual method of tax accounting. In
addition, interest on the notes will be treated as foreign source income for U.S. federal income tax purposes. Subject to certain conditions and limitations, Brazilian or other foreign taxes, if any,
withheld on interest payments may be treated as foreign taxes eligible for credit against such holder's U.S. federal income tax liability. The limitation on foreign taxes eligible for the U.S. foreign
tax credit is calculated separately with respect to specific "baskets" of income. Interest on the notes generally will constitute "passive category income," or, in the case of certain U.S. Holders,
"general category income." As an alternative to the tax credit, a U.S. Holder may elect to deduct such taxes (the election would then apply to all foreign income taxes such U.S. Holder paid in that
taxable year). The rules governing the foreign tax credit are complex. U.S. Holders are urged to consult their tax advisors regarding the availability of the foreign tax credit under their particular
circumstances.
Sale, Exchange, Retirement or Other Disposition
Upon the sale, exchange, retirement or other disposition of a note, a U.S. Holder will recognize taxable gain or loss equal to the difference,
if any, between the amount realized on the sale, exchange, retirement or other disposition, other than accrued but unpaid interest which will be taxable as interest to the extent not previously
included in income, and such U.S. Holder's adjusted tax basis in the note. A U.S. Holder's adjusted tax basis in a note generally will equal the cost of the note to such holder. Any such gain or loss
will generally be capital gain or loss. For a non-corporate U.S. Holder, the maximum marginal U.S. federal income tax rate applicable to the gain will be lower than the maximum marginal U.S. federal
income tax rate applicable to ordinary income (other than certain dividends) if such U.S. Holder's holding period for the notes exceeds one year (i.e., such gain is long-term capital gain). Any
gain or loss realized on the sale, exchange, retirement or other disposition
of a note generally will be treated as U.S. source gain or loss, as the case may be. Consequently, a U.S. Holder may not be able to claim a credit for any Brazilian or other foreign tax, if any,
imposed upon a disposition of a note unless such credit can be applied (subject to applicable limitations) against tax due on other income treated as derived from foreign sources. The deductibility of
capital losses is subject to limitations.
Substitution of the Issuer
Fibria Finance may, subject to certain conditions, be replaced and substituted by Fibria Celulose or any wholly owned subsidiary of Fibria
Celulose as principal debtor (the "Substituted Issuer") in respect of the notes (see "Description of the Debt SecuritiesSubstitution of Issuer of the Debt Securities" of the accompanying
prospectus), which may result in certain adverse tax consequences to holders. If the Substituted Issuer is organized or incorporated in a jurisdiction other than the Cayman Islands, the Substituted
Issuer and Fibria Celulose will have an obligation to indemnify and hold harmless each holder and beneficial owner of the notes (a) against all taxes or duties which arise by reason of a law or
regulation in effect or contemplated on the date such substitution becomes effective, which are incurred or levied against such holder or beneficial owner as a result of any substitution described
S-67
Table of Contents
under
"Description of the Debt SecuritiesSubstitution of Issuer of the Debt Securities" in the accompanying prospectus and which would not have been so incurred or levied had such
substitution not been made, and (b) against all taxes or duties which are imposed on such holder or beneficial owner of the notes by any political subdivision or taxing authority of any country
in which such holder or beneficial owner of the notes resides or is subject to any such tax or duty and which would not have been so imposed had the substitution not been made, in each case subject to
certain exceptions. Holders are urged to consult their tax advisors regarding any potential adverse tax consequences that may result from a substitution of Fibria Finance.
U.S. Backup Withholding Tax and Information Reporting
Backup withholding tax and information reporting requirements apply to certain payments of principal of, and interest on, an obligation and to
proceeds of the sale or redemption of
an obligation, to certain U.S. Holders. Information reporting generally will apply to payments of principal of, and interest on, notes, and to proceeds from the sale or redemption of, notes within the
United States, or by a U.S. payor or U.S. middleman, to a U.S. Holder (other than an exempt recipient and certain other persons). The payor will be required to backup withhold on payments made within
the United States, or by a U.S. payor or U.S. middleman, on a note to a U.S. Holder, other than an exempt recipient that has certified exempt status, if the holder fails to furnish its correct
taxpayer identification number or otherwise fails to comply with, or establish an exemption from, the backup withholding requirements. The backup withholding tax rate is currently 28%.
Backup
withholding is not an additional tax. A U.S. Holder generally will be entitled to credit any amounts withheld under the backup withholding rules against such holder's U.S. federal
income tax liability and the U.S. Holder may be entitled to a refund, provided the required information is furnished to the IRS in a timely manner.
Foreign Asset Reporting
Owners of "specified foreign financial assets" with an aggregate value in excess of U.S.$50,000 (and in some circumstances, a higher threshold),
may be required to file an information report with respect to such assets with their U.S. federal income tax returns. "Specified foreign financial assets" generally include any financial accounts
maintained by foreign financial institutions as well as any of the following, but only if they are not held in accounts maintained by financial institutions: (1) stocks and securities issued by
non-U.S. persons, (2) financial instruments and contracts held for investment that have non-U.S. issuers or counterparties and (3) interests in foreign entities. U.S. Holders are urged
to consult their tax advisors regarding their information reporting obligations, if any, with respect to their ownership and disposition of the notes.
Medicare Tax
A U.S. Holder that is an individual or estate, or a trust that does not fall into a special class of trusts that is exempt from such tax, is
subject to a 3.8% tax on the lesser of (1) such U.S. Holder's "net investment income" (or undistributed "net investment income" in the case of estates and trusts) for the relevant taxable year
and (2) the excess of such U.S. Holder's modified adjusted gross income for the taxable year over a certain threshold (which in the case of individuals will be between U.S.$125,000 and
U.S.$250,000, depending on the individual's circumstances). A U.S. Holder's net investment income will generally include its gross interest income and its net gains from the disposition of the notes,
unless such interest or net gains are derived in the ordinary course of the conduct of a trade or business (other than a trade or business that consists of certain passive or trading activities). If
you are a U.S. Holder that is an individual, estate or trust, you are urged to consult your
tax advisor regarding the applicability of this tax to your income and gains in respect of your investment in the notes.
The above description is not intended to constitute a complete analysis of all tax consequences relating to the ownership and disposition of the notes.
Prospective purchasers of notes should consult their tax advisors concerning the tax consequences of their particular situations.
S-68
Table of Contents
CERTAIN EMPLOYEE BENEFIT PLAN INVESTOR CONSIDERATIONS
Subject to the considerations set forth below, the notes may be purchased and held by an employee benefit plan subject to Title I of the U.S.
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), an individual retirement account or other plan subject to Section 4975 of the U.S. Internal Revenue Code of 1986, as
amended (the "Code"), or an entity whose underlying assets include assets of any such plan. A fiduciary of an employee benefit plan subject to ERISA must determine that the purchase and holding of a
note is consistent with its fiduciary duties under ERISA. The fiduciary of an ERISA plan, as well as any other prospective investor subject to Section 4975 of the Code or any similar law, must
also determine that its purchase and holding of the notes does not result in a non-exempt prohibited transaction as defined in Section 406 of ERISA or Section 4975 of the Code or a
violation of any similar law. Each purchaser and transferee of a note who is subject to ERISA and/or Section 4975 of the Code or a similar law will be deemed to have represented by its
acquisition and holding of the note that its acquisition and holding of the notes does not constitute or give rise to a nonexempt prohibited transaction under ERISA or Section 4975 of the Code,
or result in a violation of any similar law.
S-69
Table of Contents
UNDERWRITING
Subject to the terms and conditions of the underwriting agreement, the underwriters named below have severally but not jointly agreed to
purchase from us the following respective principal amounts of notes listed opposite their name below at the public offering price less the underwriting discount set forth on the cover page of this
prospectus supplement:
|
|
|
|
|
Underwriters
|
|
Principal Amount of Notes
|
|
BNP Paribas Securities Corp.
|
|
U.S.$
|
138,560,000
|
|
Citigroup Global Markets Inc.
|
|
|
138,560,000
|
|
HSBC Securities (USA) Inc.
|
|
|
138,560,000
|
|
J.P. Morgan Securities LLC
|
|
|
138,560,000
|
|
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
|
|
|
138,560,000
|
|
Mizuho Securities USA Inc.
|
|
|
1,800,000
|
|
MUFG Securities Americas Inc.
|
|
|
1,800,000
|
|
Natixis Securities Americas LLC
|
|
|
1,800,000
|
|
Scotia Capital (USA) Inc.
|
|
|
1,800,000
|
|
|
|
|
|
|
Total
|
|
U.S.$
|
700,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
underwriters may offer and sell the notes through their affiliates. The underwriting agreement provides that the obligations of the several underwriters to purchase the notes offered
hereby are subject to certain conditions precedent and that the underwriters will purchase all of the notes offered by this prospectus supplement if any of these notes are purchased. The underwriting
agreement also provides that if an underwriter defaults, the purchase commitments of non-defaulting underwriters may also be increased or this offering may be terminated.
We
have agreed to indemnify the underwriters against some specified types of liabilities, including liabilities under the Securities Act, and to contribute to payments the underwriters
may be required to make in respect of any of these liabilities.
During
the period of 60 days following the date of this prospectus supplement, the issuer and Fibria Celulose will not, without the prior written consent of BNP Paribas Securities
Corp., Citigroup Global Markets Inc., HSBC Securities (USA) Inc., J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated (who are referred
to herein as the Joint Book-Running Managers), sell, offer, contract or grant any option to sell, pledge, transfer or otherwise dispose of any similar U.S. dollar-denominated debt securities of the
issuer or Fibria Celulose in the international capital markets (other than as contemplated by this prospectus supplement).
The
underwriters are offering the notes, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel, including the
validity of the notes, and other conditions contained in the underwriting agreement, such as the receipt by the underwriters of officer's certificates and legal opinions. The underwriters reserve the
right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.
The
notes are offered for sale in the United States and other jurisdictions where it is legal to make these offers. The distribution of this prospectus supplement and the accompanying
prospectus, and the offering of the notes in certain jurisdictions may be restricted by law. Persons into whose possession this prospectus supplement and the accompanying prospectus come and investors
in the notes should inform themselves about and observe any of these restrictions. This prospectus supplement and the accompanying prospectus do not constitute, and may not be used in connection with,
an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorized, or in
S-70
Table of Contents
which
the person making such offer or solicitation is not qualified to do so, or to any person to whom it is unlawful to make such offer or solicitation.
Purchases
to cover short positions and stabilizing purchases, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a
decline in the market price of the notes. They may also cause the price of the notes to be higher than the price that would otherwise exist in the open market in the absence of these transactions. The
underwriters may conduct these transactions in the over-the-counter market or otherwise. If the underwriters commence any of these transactions, they may discontinue them at any time.
The
notes are a new issue of securities with no established trading market. Application will be made to list the notes on the New York Stock Exchange in accordance with the rules and
regulations of the New York Stock Exchange, subject to the satisfaction of its minimum listing standards. The underwriters may make a market in the notes after completion of the offering, but will not
be obligated to do so and may discontinue any market-making activities at any time without notice. No assurance can be given as to the liquidity of the trading market for the notes or that an active
public market for the notes will develop. If an active public trading market for the notes does not develop, the market price and liquidity of the notes may be adversely affected.
The
underwriters are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory,
investment management, principal investment, hedging, financing and brokerage activities. The underwriters and their affiliates have in the past performed commercial banking, investment banking and
advisory services for us from time to time for which they have received customary fees and reimbursement of expenses and may, from time to time, engage in transactions with and perform services for us
in the ordinary course of their business for which they may receive customary fees and reimbursement of expenses. In the ordinary course of their various business activities, the underwriters and
their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (which may include bank loans
and/or credit default swaps) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and
securities activities may involve our securities and instruments. In addition, affiliates of some of the underwriters are lenders, and in some cases agents or managers for the lenders, under our
credit facility.
Conflict of Interest
Some of the underwriters and their affiliates have engaged in, and may in the future engage in, investment banking and other commercial dealings
in the ordinary course of business with us or our affiliates. They have received, or may in the future receive, customary fees and commissions for these transactions.
In
addition, in the ordinary course of their business activities, the underwriters and their affiliates may make or hold a broad array of investments and actively trade debt and equity
securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities activities
may involve securities and/or instruments of ours or our affiliates. If any of the underwriters or their affiliates has a lending relationship with us, certain of those underwriters or those
affiliates routinely hedge, and certain other of those underwriters or their affiliates may hedge, their credit exposure to us consistent with their customary risk management policies. Typically,
these underwriters and their affiliates would hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in our
securities, including potentially the notes offered hereby. Any such credit default swaps or short positions could adversely affect future trading prices of the notes offered hereby. Any such short
positions could adversely affect future trading prices of the notes
S-71
Table of Contents
offered
hereby. The underwriters and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial
instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.
Selling Restrictions
Notice to Prospective Investors in Canada
The notes may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in
National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103
Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the notes must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus
requirements of applicable securities laws.
Securities
legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus supplement (including any
amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of
the purchaser's province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser's province or territory for particulars of these rights or
consult with a legal advisor.
Pursuant
to section 3A.3 of National Instrument 33-105 Underwriting Conflicts ("NI 33-105"), the underwriters are not required to comply with the disclosure
requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.
Notice to Prospective Investors in the European Economic Area
In relation to each Member State of the European Economic Area (each, a "Member State"), there shall be no offer of notes to the public in that
Member State prior to the publication of a prospectus in relation to the notes which has been approved by the competent authority in that Member State or, where appropriate, approved in another Member
State and notified to the competent authority in that Member State, all in accordance with the Prospectus Directive (as defined below), except that, with effect from and including the Relevant
Implementation Date, an offer of notes may be made to the public in that Member State at any time:
-
a)
-
to
any legal entity which is a qualified investor as defined in the Prospectus Directive;
-
b)
-
to
fewer than 150 natural or legal persons (other than qualified investors, as defined in the Prospectus Directive) subject to obtaining the prior consent of the
Joint Book-Running Managers for any such offer; or
-
c)
-
in
any other circumstances which do not require the publication by the issuers or any guarantor of a prospectus pursuant to Article 3(2) of the Prospectus
Directive.
For
the purposes of this provision, (a) the expression an "offer of notes to the public" in relation to any of the notes in any Member State means the communication in any form
and by any means of sufficient information on the terms of the offer and the notes to be offered so as to enable an investor to decide to purchase or subscribe for the notes, as the same may be varied
in that Member State by any measure implementing the Prospectus Directive in that Member State, (b) the expression "Prospectus Directive" means Directive 2003/71/EC (as amended) and includes
any relevant implementing measure in each Member State.
S-72
Table of Contents
Notice to Prospective Investors in the United Kingdom
This prospectus supplement and any other material in relation to the notes described herein is only being distributed to, and is only directed
at, persons in the United Kingdom that are qualified investors within the meaning of Article 2(1)(e) of the Prospective Directive ("qualified investors") that also (i) have professional
experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended, or the Order,
(ii) who fall within Article 49(2)(a) to (d) of the Order or (iii) to whom it may otherwise lawfully be communicated (all such persons together being referred to as
"relevant persons"). The notes are only available to, and any invitation, offer or agreement to purchase or otherwise acquire such notes will be engaged in only with, relevant persons. This prospectus
supplement and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other person in the United Kingdom. Any
person in the United Kingdom that is not a relevant person should not act or rely on this prospectus supplement or any of its contents.
Notice to Prospective Investors in France
Neither this prospectus supplement nor any other offering material relating to the notes described in this prospectus supplement has been
submitted to the clearance procedures of the
Autorité des Marchés Financiers
or of the competent authority of another
member state of the European Economic Area and notified to the
Autorité des Marchés Financiers.
The notes have not been
offered or sold and will not be offered or sold, directly or indirectly, to the public in France. Neither this prospectus supplement nor any other offering material relating to the notes has been or
will be:
-
-
released, issued, distributed or caused to be released, issued or distributed to the public in France; or
-
-
used in connection with any offer for subscription or sale of the notes to the public in France.
Such
offers, sales and distributions will be made in France only:
-
-
to qualified investors (
investisseurs qualifiés
) and/or to a restricted circle
of investors (
cercle restreint d'investisseurs
), in each case investing for their own account, all as defined in, and in accordance with,
articles L.411-2, D.411-1, D.411-2, D.734-1, D.744-1, D.754-1 and D.764-1 of the French
Code monétaire et financier
;
-
-
to investment services providers authorized to engage in portfolio management on behalf of third parties; or
-
-
in a transaction that, in accordance with article L.411-2-II-1°-or-2°-or 3° of the French
Code monétaire et
financier
and article 211-2 of the General Regulations (
Règlement
Général
) of the
Autorité des Marchés Financiers
, does not constitute
a public offer (
appel public à l'épargne
).
The
notes may be resold directly or indirectly, only in compliance with articles L.411-1, L.411-2, L.412-1 and L.621-8 through L.621-8-3 of the French
Code
monétaire et financier
.
Notice to Prospective Investors in Hong Kong
The notes may not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not constitute an
offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), or (ii) to "professional investors" within the meaning of the Securities and Futures Ordinance
(Cap. 571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a "prospectus" within the meaning of the Companies
Ordinance (Cap. 32, Laws of Hong Kong) and no advertisement, invitation or document relating to the notes may be issued or may be in the possession of any person for the
S-73
Table of Contents
purpose
of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to
do so under the laws of Hong Kong) other than with respect to notes which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning
of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.
Notice to Prospective Investors in Japan
The notes offered in this prospectus supplement have not been registered under the Securities and Exchange Law of Japan. The notes have not been
offered or sold and will not be offered or sold, directly or indirectly, in Japan or to or for the account of any resident of Japan, except (i) pursuant to an exemption from the registration
requirements of the Securities and Exchange Law and (ii) in compliance with any other applicable requirements of Japanese law.
Notice to Prospective Investors in Singapore
This prospectus supplement has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus
supplement and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the notes may not be circulated or distributed, nor may the notes be
offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under
Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the "SFA"), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to
Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other
applicable provision of the SFA, in each case subject to compliance with conditions set forth in the SFA.
Where
the notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is:
-
-
a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold
investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or
-
-
a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an
individual who is an accredited investor,
shares,
debentures and units of shares and debentures of that corporation or the beneficiaries' rights and interest (howsoever described) in that trust shall not be transferred within six months after
that corporation or that trust has acquired the notes pursuant to an offer made under Section 275 of the SFA except
-
-
to an institutional investor (for corporations, under Section 274 of the SFA) or to a relevant person defined in Section 275(2)
of the SFA, or to any person pursuant to an offer that is made on terms that such shares, debentures and units of shares and debentures of that corporation or such rights and interest in that trust
are acquired at a consideration of not less than S$200,000 (or its equivalent in a foreign currency) for each transaction, whether such amount is to be paid for in cash or by exchange of securities or
other assets, and further for corporations, in accordance with the conditions specified in Section 275 of the SFA;
-
-
where no consideration is or will be given for the transfer; or
-
-
where the transfer is by operation of law.
S-74
Table of Contents
Notice to Prospective Investors in Switzerland
The notes may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (the "SIX") or on any other stock exchange
or regulated trading facility in Switzerland. This prospectus supplement has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the
Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing
rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the notes or the offering may be publicly
distributed or otherwise made publicly available in Switzerland.
Neither
this prospectus supplement nor any other offering or marketing material relating to the offering, the issuer or the notes have been or will be filed with or approved by any Swiss
regulatory authority. In particular, this prospectus supplement will not be filed with, and the offer of notes will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA (the
"FINMA"), and the offer of notes has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes (the "CISA"). The investor protection afforded to acquirers of
interests in collective investment schemes under the CISA does not extend to acquirers of notes.
Notice to Prospective Investors in the Dubai International Financial Centre
This prospectus supplement relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority
(the "DFSA"). This prospectus supplement is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any
other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus supplement nor taken steps to verify
the information set forth herein and has no responsibility for this prospectus supplement. The notes to which this prospectus supplement relates may be illiquid and/or subject to restrictions on their
resale. Prospective purchasers of the notes offered should conduct their own due diligence on the notes. If you do not understand the contents of this prospectus supplement you should consult an
authorized financial advisor.
Notice to Prospective Investors in Chile
The offer of the notes will begin on January 11, 2017 and is subject to General Rule No. 336 of the Chilean Securities Commission
(
Superintendencia de Valores y Seguros de Chile, SVS
). The notes being offered are not registered in the Securities Registry
(
Registro de Valores
) or the Foreign Securities Registry (
Registro de Valores Extranjeros
) of the SVS
and therefore, the notes are not subject to the supervision of the SVS. As unregistered securities, we are not required to disclose public information about the notes in Chile. The notes may not be
publicly offered in Chile unless they are registered in the corresponding securities registry.
La oferta de los valores comienza el 11 de enero del 2017 y está acogida a la NCG 336 de fecha 27 de junio de 2012 de la Superintendencia de
Valores y Seguros de Chile (la SVS). La oferta versa sobre valores noinscritos en el Registro de Valores o en el Registro de Valores Extranjeros que lleva la SVS, por lo que los valores no
están sujetos a la fiscalización de dicho organismo. Por tratarse de valores no inscritos, no existe obligación por parte del emisor de entregar en Chile
información pública al respecto de los valores. Estos valores no pueden ser objeto de oferta pública menos que sean inscritos en el registro de valores
correspondiente.
Notice to Prospective Investors in Peru
The notes and the information contained in this prospectus supplement are not being publicly marketed or offered in Peru and will not be
distributed or caused to be distributed to the general
S-75
Table of Contents
public
in Peru. Peruvian securities laws and regulations on public offerings will not be applicable to the offering of the notes and therefore, the disclosure obligations set forth therein will not be
applicable to the issuer or the sellers of the notes before or after their acquisition by prospective investors. The notes and the information contained in this prospectus supplement have not been and
will not be reviewed, confirmed, approved or in any way submitted to the Peruvian National Supervisory Commission of Companies and Securities (
Comisión Nacional
Supervisora de Empresas y Valores
) nor have they been registered under the Securities Market Law (
Ley del Mercado de Valores
) or
any other Peruvian regulations. Accordingly, the notes cannot be offered or sold within Peruvian territory except to the extent any such offering or sale qualifies as a private offering under Peruvian
regulations and complies with the provisions on private offerings set forth therein. The notes have been registered with the Superintendency of Banking, Insurance and Private Pension Funds
(
Superintendencia de Bancos, Seguros y Administradoras Privadas de Fondos de Pensiones
) so that they could qualify as eligible instruments and be
acquired by Peruvian Private Pension Funds Administrators.
Notice to Prospective Investors in the Netherlands
For selling restrictions in respect of the Netherlands, see "Notice to Prospective Investors in the European Economic Area" above and in
addition:
-
(a)
-
Specific
Dutch selling restriction for exempt offers: Each underwriter has represented and agreed that it will not make an offer of the Notes which are the subject
of the offering contemplated by this listing prospectus to the public in the Netherlands in reliance on Article 3(2) of the Prospectus Directive unless:
-
(i)
-
such
offer is made exclusively to legal entities which are qualified investors (as defined in the Prospectus Directive and which includes authorized discretionary
asset managers acting for the account of retail investors under a discretionary investment management contract) in the Netherlands;
-
(ii)
-
standard
exemption logo and wording are disclosed as required by article 5:20(5) of the Dutch Financial Markets Supervision Act (Wet op het financieel
toezicht, the "NLFMSA"); or
-
(iii)
-
such
offer is otherwise made in circumstances in which article 5:20(5) of the NLFMSA is not applicable, provided that no such offer of the Notes shall
require any Issuer or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus
Directive.
For
the purposes of this provision, the expressions (i) an "offer of the Notes to the public" in relation to any Notes in the Netherlands; and (ii) "Prospectus Directive," have the
meaning given to them above in the paragraph headed "Notice to Investors in the European Economic Area."
-
(b)
-
Regulatory
capacity to offer the Notes in the Netherlands: Each underwriter which did and does not have the requisite Dutch regulatory capacity to make offers or
sales of financial instruments in the Netherlands has represented and agreed with the Issuers that it has not offered or sold and will not offer or sell any of the Notes of the relevant Issuer in the
Netherlands, other than through one or more investment firms acting as principals and having the Dutch regulatory capacity to make such offers or sales.
Notice to Prospective Investors in Brazil
The notes have not been, and will not be, registered with the Brazilian Securities Commission (
Comissão
de Valores Mobiliários
). Any public offering or distribution of the notes in Brazil, as defined under Brazilian laws and regulations, requires prior registration
under Law No. 6,385, of December 7,
S-76
Table of Contents
1976,
as amended, and Instruction No. 400, issued by the CVM on December 29, 2003, as amended. Documents relating to an offering of the notes by this prospectus supplement, as well as
information contained in those documents, may not be distributed to the public in Brazil, nor be used in connection with any offer for subscription or sale of the notes to the public in Brazil. The
notes may not be offered or sold in Brazil, except in circumstances that do not constitute a public offering or distribution under Brazilian laws and regulations.
Notice to Prospective Investors in Colombia
The notes will not be authorized by the Colombian Superintendency of Finance (
Superintendencia Financiera de
Colombia
) and will not be registered under the Colombian National Registry of Securities and Issuers (
Registro Nacional de Valores y
Emisores
), and, accordingly, the notes will not be offered or sold to persons in Colombia except in circumstances which do not result in a public offering under Colombian law.
Notice to Prospective Investors in the Cayman Islands
No invitation, whether directly or indirectly, may be made to the public in the Cayman Islands to subscribe for the notes issued by Fibria
Finance unless Fibria Finance is listed on the Cayman Islands Stock Exchange.
S-77
Table of Contents
EXPENSES
We estimate our expenses in connection with this offering, other than the underwriting discount, will be as set forth in the following table.
|
|
|
|
|
|
|
Amount
|
|
|
|
(in U.S.$)
|
|
Expense
|
|
|
|
|
SEC registration fee
|
|
U.S.$
|
79,906
|
|
Print and engraving expenses
|
|
|
55,000
|
|
Legal fees and expenses
|
|
|
363,418
|
|
Audit fees and expenses
|
|
|
198,178
|
|
"Road show" expenses and miscellaneous costs
|
|
|
150,000
|
|
|
|
|
|
|
Total
|
|
U.S.$
|
846,502
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
amounts in the above table are estimated and accordingly are subject to change. Some of these expenses were incurred in
reais
and were
converted to U.S. dollars based on the exchange rate of R$3.2154 to U.S.$1.00, which is the selling exchange rate on January 11, 2017 as reported by the Brazilian Central Bank.
S-78
Table of Contents
LEGAL MATTERS
The validity of the notes and the guarantee will be passed upon for Fibria Celulose and Fibria Finance by White & Case LLP, U.S.
counsel to Fibria Celulose and Fibria Finance, and for the underwriters by Skadden, Arps, Slate, Meagher & Flom LLP, U.S. counsel to the underwriters.
Certain
matters of Brazilian law relating to the notes and the guarantee will be passed upon for Fibria Celulose by Trench, Rossi & Watanabe Advogados, Brazilian counsel to Fibria
Celulose and Fibria Finance, and for the underwriters by Souza, Cescon, Barrieu & Flesch Advogados, Brazilian counsel to the underwriters.
Certain
matters of Cayman Islands law will be passed upon for Fibria Finance by Maples and Calder, Cayman Islands counsel to Fibria Celulose and Fibria Finance.
S-79
Table of Contents
SERVICE OF PROCESS AND ENFORCEMENT OF JUDGMENTS
Cayman Islands
Fibria Finance is an exempted company incorporated with limited liability under the laws of the Cayman Islands. Fibria Finance is incorporated
in the Cayman Islands because of certain benefits associated with being a Cayman Islands company, such as political and economic stability, an effective judicial system, a favorable tax system, the
absence of exchange control or currency restrictions and the availability of professional and support services. However, the Cayman Islands has a less developed body of securities laws as compared to
the United States and provides protections for investors to a significantly lesser extent. All of Fibria Finance's assets are located outside the United States and all of Fibria Finance's directors
and such persons' assets are located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon Fibria Finance, or such
persons, or to enforce against them, judgments obtained in U.S. courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state
thereof.
In
the terms and conditions of the notes, Fibria Finance has (1) agreed that the courts of the State of New York and the federal courts of the United States, in each case sitting
in the Borough of Manhattan, The City of New York, will have jurisdiction to hear and determine any suit, action or proceeding, and to settle any disputes, which may arise out of or in connection with
the notes and, for such purposes, will irrevocably submit to the non-exclusive jurisdiction of such courts and (2) named an agent for service of process in the Borough of Manhattan, The City of
New York. See "Description of the Notes."
There
is uncertainty as to whether the courts of the Cayman Islands would (1) recognize or enforce judgments of the courts of the United States or any state thereof obtained
against Fibria Finance or (2) be competent to hear original actions brought in each respective jurisdiction, against the Fibria Finance or such persons predicated upon the securities laws of
the United States or any state thereof. A final and conclusive judgment in federal or state courts of the United States (assuming such courts have jurisdiction over the defendant according to Cayman
Islands conflict of law rules and such final and conclusive judgment was neither obtained in a manner that was contrary to natural justice or public policy of the Cayman Islands) under which a
liquidated sum of money is payable, other than a sum payable in respect of taxes, fines, penalties or similar charges (or in certain circumstances for
in
personam
non-monetary relief), may be subject to enforcement proceedings (subject to such enforcement not being contrary to natural justice or public policy of the Cayman
Islands) by way of an action commenced on the judgment debt in the courts of the Cayman Islands.
Brazil
Fibria Celulose is incorporated under the laws of Brazil. All of our directors and officers reside outside the United States. Substantially all
of our assets are located in Brazil. As a result, it may be difficult for investors to effect service of process within the United States upon Fibria Celulose, or such persons, or to enforce against
them, judgments obtained in U.S. courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof.
We
have been advised by Trench, Rossi & Watanabe Advogados, our Brazilian counsel, that a judgment of a United States court in connection with civil liabilities predicated upon
the federal securities laws of the United States may be enforced in Brazil, subject to certain requirements described below. Our Brazilian counsel has advised that a judgment against us, our directors
and officers or certain advisors named herein obtained in the United States would be enforceable in Brazil
S-80
Table of Contents
upon
confirmation of that judgment by the
Superior Tribunal de Justiça
(Superior Court of Justice, or STJ). That confirmation will only
occur if the U.S. judgment:
-
-
fulfills all formalities required for its enforceability under the laws of the United States;
-
-
is issued by a court of competent jurisdiction after proper service of process on the parties, which services must comply with Brazilian law if
made in Brazil, or after sufficient evidence of the parties' absence has been given, as established pursuant to applicable law;
-
-
is not subject to appeal;
-
-
is for payment of a determined sum of money;
-
-
is authenticated by a Brazilian consulate in the United States or observes the procedures set forth in the Hague Apostille Convention and, in
either case, is accompanied by a sworn translation into Portuguese; and
-
-
does not violate Brazilian public policy, good morals or national sovereignty (as set forth in Brazilian law).
We
have also been advised by our Brazilian counsel that original actions may be brought in connection with this prospectus predicated solely on the federal securities laws of the United
States in Brazilian courts and that, subject to applicable law, Brazilian courts may enforce liabilities in such actions against us or the directors and officers and certain advisors named herein
(provided that provisions of the federal securities laws of the United States do not contravene Brazilian public policy, good morals or national sovereignty).
In
addition, we have been further advised that a plaintiff, whether Brazilian or non-Brazilian, who resides outside Brazil during the course of litigation in Brazil must provide a bond
to guarantee the payment of the court expenses and the defendant's legal fees, if the plaintiff does not own real property in Brazil that could secure the payment. This bond of guarantee must have a
value sufficient to satisfy the payment of court fees and defendant attorney's fees, as determined by the Brazilian judge.
The
confirmation process may be time consuming and may also give rise to difficulties in enforcing the foreign judgment in Brazil. Accordingly, we cannot assure you that confirmation of
any judgment would be obtained or that the confirmation process would be conducted in a timely manner.
S-81
Table of Contents
EXPERTS
The consolidated financial statements and management's assessment of the effectiveness of internal control over financial reporting (which is
included in Management's Report on Internal Control over Financial Reporting) incorporated in this prospectus supplement by reference to the Annual Report on Form 20-F for the year ended
December 31, 2015 have been so incorporated in reliance on the report of PricewaterhouseCoopers Auditores Independentes, an independent registered public accounting firm, given on the authority
of said firm as experts in auditing and accounting.
S-82
Table of Contents
INDEX TO FINANCIAL STATEMENTS
F-1
Table of Contents
Fibria Celulose S.A.
Unaudited condensed consolidated interim financial information
at September 30, 2016
F-2
Table of Contents
Fibria Celulose S.A.
Unaudited condensed consolidated interim balance sheet at
In thousands of Reais
|
|
|
|
|
|
|
|
Assets
|
|
September 30,
2016
|
|
December 31,
2015
|
|
Current
|
|
|
|
|
|
|
|
Cash and cash equivalents (Note 7)
|
|
|
1,133,852
|
|
|
1,077,651
|
|
Marketable securities (Note 8)
|
|
|
2,371,858
|
|
|
1,411,864
|
|
Derivative financial instruments (Note 9)
|
|
|
199,836
|
|
|
26,795
|
|
Trade accounts receivable, net (Note 10)
|
|
|
474,778
|
|
|
742,352
|
|
Inventory (Note 11)
|
|
|
1,787,650
|
|
|
1,571,146
|
|
Recoverable taxes (Note 12)
|
|
|
224,069
|
|
|
462,487
|
|
Other assets
|
|
|
190,703
|
|
|
168,283
|
|
|
|
|
|
|
|
|
|
|
|
|
6,382,746
|
|
|
5,460,578
|
|
|
|
|
|
|
|
|
|
Non-current
|
|
|
|
|
|
|
|
Marketable securities (Note 8)
|
|
|
70,661
|
|
|
68,142
|
|
Derivative financial instruments (Note 9)
|
|
|
315,248
|
|
|
273,694
|
|
Related parties receivables (Note 14)
|
|
|
9,739
|
|
|
11,714
|
|
Recoverable taxes (Note 12)
|
|
|
1,610,412
|
|
|
1,511,971
|
|
Advances to suppliers
|
|
|
640,747
|
|
|
630,562
|
|
Judicial deposits
|
|
|
192,156
|
|
|
195,344
|
|
Deferred taxes (Note 13)
|
|
|
1,122,895
|
|
|
2,399,213
|
|
Assets held for sale (Note 1(b))
|
|
|
598,257
|
|
|
598,257
|
|
Other assets
|
|
|
108,218
|
|
|
92,714
|
|
Investments (Note 15)
|
|
|
117,170
|
|
|
137,771
|
|
Biological assets (Note 16)
|
|
|
4,323,741
|
|
|
4,114,998
|
|
Property, plant and equipment (Note 17)
|
|
|
11,990,534
|
|
|
9,433,386
|
|
Intangible assets (Note 18)
|
|
|
4,584,105
|
|
|
4,505,634
|
|
|
|
|
|
|
|
|
|
|
|
|
25,683,883
|
|
|
23,973,400
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
32,066,629
|
|
|
29,433,978
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-3
Table of Contents
Fibria Celulose S.A.
Unaudited condensed consolidated interim balance sheet at
In thousands of Reais (continued)
|
|
|
|
|
|
|
|
Liabilities and shareholders' equity
|
|
September 30,
2016
|
|
December 31,
2015
|
|
Current
|
|
|
|
|
|
|
|
Loans and financing (Note 19)
|
|
|
1,509,772
|
|
|
1,072,877
|
|
Derivative financial instruments (Note 9)
|
|
|
250,750
|
|
|
302,787
|
|
Trade payables (Note 20)
|
|
|
1,342,709
|
|
|
668,017
|
|
Payroll, profit sharing and related charges
|
|
|
155,964
|
|
|
170,656
|
|
Taxes payable
|
|
|
137,944
|
|
|
564,439
|
|
Dividends payable
|
|
|
4,126
|
|
|
86,288
|
|
Other payables
|
|
|
113,058
|
|
|
90,235
|
|
|
|
|
|
|
|
|
|
|
|
|
3,514,323
|
|
|
2,955,299
|
|
|
|
|
|
|
|
|
|
Non-current
|
|
|
|
|
|
|
|
Loans and financing (Note 19)
|
|
|
12,682,567
|
|
|
11,670,955
|
|
Derivative financial instruments (Note 9)
|
|
|
268,410
|
|
|
825,663
|
|
Deferred taxes (Note 13)
|
|
|
371,522
|
|
|
270,996
|
|
Provision for legal proceeds (Note 21)
|
|
|
185,753
|
|
|
165,325
|
|
Liabilities related to the assets held for sale (Note 1(b))
|
|
|
477,000
|
|
|
477,000
|
|
Other payables
|
|
|
237,574
|
|
|
253,420
|
|
|
|
|
|
|
|
|
|
|
|
|
14,222,826
|
|
|
13,663,359
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
17,737,149
|
|
|
16,618,658
|
|
|
|
|
|
|
|
|
|
Shareholders' equity
|
|
|
|
|
|
|
|
Share capital
|
|
|
9,729,006
|
|
|
9,729,006
|
|
Share capital reserve
|
|
|
10,186
|
|
|
15,474
|
|
Treasury shares
|
|
|
(10,378
|
)
|
|
(10,378
|
)
|
Statutory reserves
|
|
|
1,625,977
|
|
|
1,639,901
|
|
Other reserves
|
|
|
1,159,634
|
|
|
1,378,365
|
|
Retained earnings
|
|
|
1,747,103
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity attributable to shareholders of the Company
|
|
|
14,261,528
|
|
|
12,752,368
|
|
|
|
|
|
|
|
|
|
Equity attributable to non-controlling interests
|
|
|
67,952
|
|
|
62,952
|
|
|
|
|
|
|
|
|
|
Total shareholders' equity
|
|
|
14,329,480
|
|
|
12,815,320
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders' equity
|
|
|
32,066,629
|
|
|
29,433,978
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial information.
F-4
Table of Contents
Fibria Celulose S.A.
Unaudited condensed consolidated interim statement of profit or loss
In thousands of Reais, except for the earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
|
|
July 1 to
September 30,
(three months)
|
|
September 30,
(nine months)
|
|
July 1 to
September 30,
(three months)
|
|
September 30,
(nine months)
|
|
Revenues (Note 22)
|
|
|
2,299,846
|
|
|
7,081,010
|
|
|
2,789,667
|
|
|
7,096,052
|
|
Cost of sales (Note 24)
|
|
|
(1,849,485
|
)
|
|
(5,016,556
|
)
|
|
(1,533,244
|
)
|
|
(4,246,565
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
450,361
|
|
|
2,064,454
|
|
|
1,256,423
|
|
|
2,849,487
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling expenses (Note 24)
|
|
|
(114,549
|
)
|
|
(345,528
|
)
|
|
(110,590
|
)
|
|
(312,558
|
)
|
General and administrative (Note 24)
|
|
|
(68,285
|
)
|
|
(201,507
|
)
|
|
(65,805
|
)
|
|
(194,807
|
)
|
Equity in results of joint-venture
|
|
|
31
|
|
|
(758
|
)
|
|
(6
|
)
|
|
744
|
|
Other operating income and expense, net (Note 24)
|
|
|
(27,574
|
)
|
|
(175,854
|
)
|
|
(43,935
|
)
|
|
(83,070
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(210,377
|
)
|
|
(723,647
|
)
|
|
(220,336
|
)
|
|
(589,691
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before financial income and expenses
|
|
|
239,984
|
|
|
1,340,807
|
|
|
1,036,087
|
|
|
2,259,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial income (Note 23)
|
|
|
88,573
|
|
|
189,557
|
|
|
51,191
|
|
|
132,182
|
|
Financial expenses (Note 23)
|
|
|
(211,157
|
)
|
|
(534,503
|
)
|
|
(150,827
|
)
|
|
(397,946
|
)
|
Result of derivative financial instruments, net (Note 23)
|
|
|
(31,492
|
)
|
|
683,334
|
|
|
(570,507
|
)
|
|
(889,479
|
)
|
Foreign exchange loss and indexation charges, net (Note 23)
|
|
|
(49,271
|
)
|
|
1,475,123
|
|
|
(1,687,242
|
)
|
|
(2,627,044
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(203,347
|
)
|
|
1,813,511
|
|
|
(2,357,385
|
)
|
|
(3,782,287
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
36,637
|
|
|
3,154,318
|
|
|
(1,321,298
|
)
|
|
(1,522,491
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current (Note 13)
|
|
|
(13,765
|
)
|
|
(36,076
|
)
|
|
(68,501
|
)
|
|
(147,102
|
)
|
Deferred (Note 13)
|
|
|
8,794
|
|
|
(1,363,108
|
)
|
|
788,373
|
|
|
1,116,594
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) for the period
|
|
|
31,666
|
|
|
1,755,134
|
|
|
(601,426
|
)
|
|
(552,999
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders of the Company
|
|
|
28,637
|
|
|
1,747,103
|
|
|
(605,674
|
)
|
|
(563,286
|
)
|
Non-controlling interest
|
|
|
3,029
|
|
|
8,031
|
|
|
4,248
|
|
|
10,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) for the period
|
|
|
31,666
|
|
|
1,755,134
|
|
|
(601,426
|
)
|
|
(552,999
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings(loss) per share (in Reais) (Note 25(a))
|
|
|
0.05
|
|
|
3.16
|
|
|
(1.09
|
)
|
|
(1.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share (in Reais) (Note 25(b))
|
|
|
0.05
|
|
|
3.15
|
|
|
(1.09
|
)
|
|
(1.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial information.
F-5
Table of Contents
Fibria Celulose S.A.
Unaudited condensed consolidated interim statement of comprehensive income
In thousands of Reais
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
|
|
July 1 to
September 30,
(three months)
|
|
September 30,
(nine months)
|
|
July 1 to
September 30,
(three months)
|
|
September 30,
(nine months)
|
|
Net income (loss) for the period
|
|
|
31,666
|
|
|
1,755,134
|
|
|
(601,426
|
)
|
|
(552,999
|
)
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that may be subsequently reclassified to profit or loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange effect on available-for-sale financial assetsEnsyn
|
|
|
1,166
|
|
|
(21,096
|
)
|
|
22,194
|
|
|
33,577
|
|
Tax effect thereon
|
|
|
(397
|
)
|
|
7,172
|
|
|
(7,546
|
)
|
|
(11,416
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other comprehensive income (loss) for the period, net of taxes
|
|
|
769
|
|
|
(13,924
|
)
|
|
14,648
|
|
|
22,161
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income (loss) for the period, net of taxes
|
|
|
32,435
|
|
|
1,741,210
|
|
|
(586,778
|
)
|
|
(530,838
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders of the Company
|
|
|
29,406
|
|
|
1,733,179
|
|
|
(591,026
|
)
|
|
(541,125
|
)
|
Non-controlling interest
|
|
|
3,029
|
|
|
8,031
|
|
|
4,248
|
|
|
10,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,435
|
|
|
1,741,210
|
|
|
(586,778
|
)
|
|
(530,838
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial information.
F-6
Table of Contents
Fibria Celulose S.A.
Unaudited condensed consolidated interim statement of changes in shareholders' equity
In thousands of Reais
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
|
|
|
|
|
|
Other reserves
|
|
Statutory reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained
earnings
(accumulated
losses)
|
|
|
|
|
|
|
|
|
|
Capital
|
|
Share
issuance
costs
|
|
Capital
reserve
|
|
Treasury
shares
|
|
Other
comprehensive
income
|
|
Legal
|
|
Investments
|
|
Additional
dividends
proposed
|
|
Total
|
|
Non-
controlling
interest
|
|
Total
|
|
As at December 31, 2014
|
|
|
9,740,777
|
|
|
(11,771
|
)
|
|
3,920
|
|
|
(10,346
|
)
|
|
1,613,312
|
|
|
311,579
|
|
|
2,916,566
|
|
|
|
|
|
|
|
|
14,564,037
|
|
|
51,668
|
|
|
14,615,705
|
|
Net income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(563,286
|
)
|
|
(563,286
|
)
|
|
10,287
|
|
|
(552,999
|
)
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,161
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,161
|
|
|
|
|
|
22,161
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,161
|
|
|
|
|
|
|
|
|
|
|
|
(563,286
|
)
|
|
(541,125
|
)
|
|
10,287
|
|
|
(530,838
|
)
|
Transactions with shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase of shares
|
|
|
|
|
|
|
|
|
|
|
|
(32
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(32
|
)
|
|
|
|
|
(32
|
)
|
Dividends distributed
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(110,854
|
)
|
|
|
|
|
|
|
|
(110,854
|
)
|
|
|
|
|
(110,854
|
)
|
Stock option program
|
|
|
|
|
|
|
|
|
7,909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,909
|
|
|
|
|
|
7,909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at September 30, 2015
|
|
|
9,740,777
|
|
|
(11,771
|
)
|
|
11,829
|
|
|
(10,378
|
)
|
|
1,635,473
|
|
|
311,579
|
|
|
2,805,712
|
|
|
|
|
|
(563,286
|
)
|
|
13,919,935
|
|
|
61,955
|
|
|
13,981,890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at December 31, 2015
|
|
|
9,740,777
|
|
|
(11,771
|
)
|
|
15,474
|
|
|
(10,378
|
)
|
|
1,639,901
|
|
|
328,689
|
|
|
830,945
|
|
|
218,731
|
|
|
|
|
|
12,752,368
|
|
|
62,952
|
|
|
12,815,320
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,747,103
|
|
|
1,747,103
|
|
|
8,031
|
|
|
1,755,134
|
|
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13,924
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13,924
|
)
|
|
|
|
|
(13,924
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13,924
|
)
|
|
|
|
|
|
|
|
|
|
|
1,747,103
|
|
|
1,733,179
|
|
|
8,031
|
|
|
1,741,210
|
|
Transactions with shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends distributed
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(218,731
|
)
|
|
|
|
|
(218,731
|
)
|
|
|
|
|
(218,731
|
)
|
Stock option program
|
|
|
|
|
|
|
|
|
(5,288
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,288
|
)
|
|
|
|
|
(5,288
|
)
|
Additional dividends declarednon-controlling interestPortocel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,031
|
)
|
|
(3,031
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at September 30, 2016
|
|
|
9,740,777
|
|
|
(11,771
|
)
|
|
10,186
|
|
|
(10,378
|
)
|
|
1,625,977
|
|
|
328,689
|
|
|
830,945
|
|
|
|
|
|
1,747,103
|
|
|
14,261,528
|
|
|
67,952
|
|
|
14,329,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these unaudited condensed consolidated interim financial information.
F-7
Table of Contents
Fibria Celulose S.A.
Unaudited condensed consolidated interim statement of cash flows
In thousands of Reais
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
Income (loss) before income taxes
|
|
|
3,154,318
|
|
|
(1,522,491
|
)
|
|
|
|
|
|
|
|
|
Adjusted by
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
|
1,359,388
|
|
|
1,361,642
|
|
Depletion of timber resources from forestry partnership programs
|
|
|
43,462
|
|
|
48,714
|
|
Foreign exchange (gains) losses, net
|
|
|
(1,475,123
|
)
|
|
2,627,044
|
|
Change in fair value of derivative financial instruments
|
|
|
(683,334
|
)
|
|
889,479
|
|
Equity in results of joint-venture
|
|
|
758
|
|
|
(744
|
)
|
Loss on disposal of property, plant and equipment and biological assets, net
|
|
|
22,127
|
|
|
15,665
|
|
Interest and gain/losses from marketable securities
|
|
|
(118,494
|
)
|
|
(64,406
|
)
|
Interest expense
|
|
|
426,776
|
|
|
329,689
|
|
Change in fair value of biological assets
|
|
|
108,014
|
|
|
(29,831
|
)
|
Impairment of recoverable taxesICMS, net
|
|
|
74,701
|
|
|
61,084
|
|
Stock option program
|
|
|
(5,288
|
)
|
|
7,909
|
|
Tax credits
|
|
|
(8,962
|
)
|
|
|
|
Amortization of transaction costs and other
|
|
|
14,883
|
|
|
4,126
|
|
Decrease (increase) in assets
|
|
|
|
|
|
|
|
Trade accounts receivable
|
|
|
168,033
|
|
|
209,153
|
|
Inventory
|
|
|
(141,419
|
)
|
|
(220,193
|
)
|
Recoverable taxes
|
|
|
85,574
|
|
|
(260,544
|
)
|
Other assets/advances to suppliers
|
|
|
(68,721
|
)
|
|
(49,458
|
)
|
|
|
|
|
|
|
|
|
Increase (decrease) in liabilities
|
|
|
|
|
|
|
|
Trade payables
|
|
|
705,831
|
|
|
(43,305
|
)
|
Taxes payable
|
|
|
(366,602
|
)
|
|
8,551
|
|
Payroll, profit sharing and related charges
|
|
|
(14,693
|
)
|
|
12,739
|
|
Other payables
|
|
|
25,670
|
|
|
34,449
|
|
|
|
|
|
|
|
|
|
Cash provided by operating activities
|
|
|
3,306,899
|
|
|
3,419,272
|
|
|
|
|
|
|
|
|
|
Interest received
|
|
|
109,669
|
|
|
59,064
|
|
Interest paid
|
|
|
(359,539
|
)
|
|
(264,469
|
)
|
Income taxes paid
|
|
|
(90,804
|
)
|
|
(50,941
|
)
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
2,966,225
|
|
|
3,162,926
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
Acquisition of property, plant and equipment, intangible assets and forests
|
|
|
(4,380,310
|
)
|
|
(1,253,489
|
)
|
Advances for acquisition of timber from forestry partnership program
|
|
|
(53,724
|
)
|
|
(22,299
|
)
|
Subsidiary incorporationFibria Innovations
|
|
|
|
|
|
(11,630
|
)
|
Marketable securities, net
|
|
|
(953,688
|
)
|
|
(602,294
|
)
|
Capital increase on joint-venture
|
|
|
(3,267
|
)
|
|
|
|
Proceeds from sale of property, plant and equipment
|
|
|
8,798
|
|
|
32,084
|
|
Derivative transactions settled (Note 9(c))
|
|
|
(140,553
|
)
|
|
(305,890
|
)
|
Others
|
|
|
|
|
|
(8
|
)
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(5,522,744
|
)
|
|
(2,163,526
|
)
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
Borrowings
|
|
|
5,225,097
|
|
|
1,965,416
|
|
Repayments of principal
|
|
|
(2,175,817
|
)
|
|
(1,095,233
|
)
|
Dividends paid
|
|
|
(303,926
|
)
|
|
(149,350
|
)
|
Others
|
|
|
(3,660
|
)
|
|
(1,190
|
)
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
2,741,694
|
|
|
719,643
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
(128,974
|
)
|
|
417,016
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
56,201
|
|
|
2,136,059
|
|
Cash and cash equivalents at beginning of period
|
|
|
1,077,651
|
|
|
461,067
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
|
1,133,852
|
|
|
2,597,126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial information.
F-8
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016
In thousands of Reais, unless otherwise indicated
1 Operations and current developments
-
(a)
-
General information
Fibria
Celulose S.A. is incorporated under the laws of the Federal Republic of Brazil, as a publicly-held company. Fibria Celulose S.A. and its subsidiaries are referred to
in this condensed consolidated interim financial information as the "Company", "Fibria", or "we". We have the legal status of a share corporation, operating under Brazilian corporate law. Our
headquarter and principal executive officers are located in São Paulo, SP, Brazil.
We
are listed on the stock exchange of S
ã
o Paulo (BM&FBOVESPA) and the New York Stock Exchange (NYSE) and we are subject to
the reporting requirements of the Brazilian
Comissão de Valores Mobiliários
(CVM) and the United States Securities and
Exchange Commission (SEC).
Our
activities are focused on the growth of renewable and sustainable forests and the manufacture and sale of bleached eucalyptus kraft pulp. Forests in formation are located in the
States of São Paulo, Mato Grosso do Sul, Minas Gerais, Rio de Janeiro, Espirito Santo, Bahia and Rio Grande do Sul.
We
operate in a single operating segment, which is the producing and selling of short fiber pulp, with our pulp production facilities located in the cities of Aracruz (State of
Espírito Santo), Três Lagoas (State of Mato Grosso do Sul), Jacareí (State of São Paulo) and Eunãpolis (State of Bahia)
(Veracel Celulose S.A. ("Veracel"), a jointly-controlled entity).
The
pulp produced for export is delivered to customers by sea vessels on the basis of long-term contracts with the owners of these vessels, through the ports of Santos, located in the
State of São Paulo (operated under a concession from Federal Government until 2017) and Barra do Riacho, located in the State of Espírito Santo (operated by our
subsidiary PortocelTerminal Especializado Barra do Riacho S.A.).
On
December 9, 2015, we participated in the public auction n° 03/2015, promoted by
"Agência Nacional de Transportes
AquaviciriosANTAQ",
a regulatory agency, for the leasing of the public areas and infrastructures for handling and storage of paper, pulp and general cargo, for
25 years (renewable for 25 years). The Company was awarded the contract based on its proposal for the Macuco Terminal (STSo7), located in the port of Santos, State of São
Paulo, in the amount of R$ 115,047, which the approval of the public auction and the adjudication were published in the Federal Official Gazette on March 2, 2016. On September 29,
2016, we signed the instrument of investiture of the terminal.
With
the approval of the result and based on the standard IFRIC 12Service Concession Arrangements, the subsidiary Fibria Terminal de Celulose de Santos
SPE S.A., recently established by the Company for the administration of Macuco Terminal, recognized on March 2016, the amount of R$ 115,047 related to the grant concession rights into
the group of "Intangible assets", which will be amortized over the concession period.
The
main investments according to the contract include:
-
(i)
-
a
new storage facility, handling and transshipment of cargo equipment, with static capacity of 75,000 tons at least, ensuring the movement of 1,800,000 tons of pulp
bales per year; and,
-
(ii)
-
the
implementation of new railway lines for access to port facilities.
F-9
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
1 Operations and current developments (Continued)
The
startup of the terminal is expected for the second semester of 2017.
In
May 2016, we started the acquisition of hardwood pulp produced by Klabin S.A. ("Klabin"), at its plant located in the city of Ortigueira, in the state of Paraná,
as supply agreement signed between the parties and subject of disclosure to the market on May 4, 2015.
The
agreement term is six years from the beginning of the plant operations (which may be extended upon agreement between the parties), being four years at a minimum volume of 900,000
tons of short fiber pulp (except if otherwise agreed between the parties) and two years of a gradual reduction of volume (phase out), equivalents to, respectively, 75% and 50% of the volume delivered
in the fourth year of the agreement. The purchase price of the volume from Klabin will be based on the average net price charged by the Company and the volume acquired might be sold for countries
outside South America.
-
(b)
-
Non-current assets held for sale
On December 28, 2012, the Company and CMPC Celulose Riograndense Ltda. ("CMPC") signed the definitive Purchase and Sale Agreement
for the sale of all of the Losango project assets, comprising approximately 100 thousand hectares of land owned by Fibria and approximately 39 thousand hectares of planted eucalyptus and
leased land, all located in the State of Rio Grande do Sul, in the amount of R$615 million.
The
amount of R$ 477 million was received in advance the amount of R$ 477 million, recognized under "Liabilities related to the assets held for sale". Another
installment, amounting to R$ 140 million, was deposited in an escrow account and will be released to us once additional government approvals are obtained. In case of the approvals is not
obtained after the period of 96 months, will be returned to CMPC the amount paid to us, plus interest and the escrow deposits made by CMPC will revert.
Since
the signing of agreement with CMPC, we have taken action to obtain the approvals needed, such as the fulfillment of all conditions precedent, the partial renewal of the area
operating license and filing the documentation required by the government agencies. Management's best estimate is that approval will be granted.
We
have concluded that these assets should remain classified as "assets held for sale" as non-current assets as at September 30, 2016. However, the completion of the sale is not
under our sole control and depends on various government approvals, which have been slower than expected.
The
Losango assets did not generate any significant impact in the nine-month period ended September 30, 2016 and 2015, since that at this moment, the result of the transaction has
not been recognized.
-
(c)
-
Expansion plan of the Três Lagoas Unit
On
May 14, 2015, the Board of Directors approved the Horizonte 2 Project for the construction of the second Três Lagoas pulp production line.
F-10
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
1 Operations and current developments (Continued)
The
construction of Horizonte 2 Project has already started and consists of a new bleached eucalyptus pulp production line with a capacity of 1.95 million tons per year and an
estimated investment of US$2.3 billion. The startup of the line is projected for the fourth quarter of 2017 and the physical execution is approximately 60% concluded.
The
Project is being financed from the Company's operating cash flows and financing agreements negotiated with financial institutions.
2 Presentation of condensed consolidated interim financial information and summary of significant accounting policies
-
2.1
-
Condensed consolidated interim financial informationbasis of preparation
The
condensed consolidated interim financial information have been prepared under the historical cost convention, as modified by available-for-sale financial assets, other assets and
financial liabilities (including derivative instruments) measured at fair value.
-
(a)
-
Accounting policies adopted
The
condensed consolidated interim financial information have been prepared and is being presented in accordance with IAS 34 as issued by the International Accounting Standards
Board (IASB) and disclose all (and only) the applicable significant information related to the financial statements, which is consistent with the information utilized by management in the performance
of its duties.
The
condensed consolidated interim financial information should be read in conjunction with the audited financial statements for the year ended December 31, 2015, considering that
its purpose is to provide an update on the activities, events and significant circumstances in relation to those presented in the annual financial statements.
The
current accounting practices, which include the measurement principles for the recognition and valuation of the assets and liabilities, the calculation methods used in the
preparation of this condensed consolidated interim financial information and the estimates used, are the same as those used in the preparation of the most recent annual financial statements, except
for the item 2.2.1 below and items related to the adoption of the new standards, amendments and interpretations issued by IASB, as detailed in Note 3 below.
-
(b)
-
Approval of the condensed consolidated interim financial information
The
condensed unaudited consolidated interim financial information were approved by the Board of Directors on October 25, 2016.
-
2.2
-
Critical accounting estimates and assumptions
Estimates
and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable
under the circumstances. Accounting estimates will, by definition, seldom match the actual results. In the nine-month period ended September 30, 2016, except for the item 2.2.1 below,
there were no significant
F-11
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
2 Presentation of condensed consolidated interim financial information and summary of significant accounting policies (Continued)
changes
in the critical estimates and assumptions which are likely to result in significant adjustments to the carrying amounts of assets and liabilities during the current period, compared to those
disclosed in Note 3 to our most recent annual financial statements.
-
2.2.1
-
Changing on critical accounting estimates and assumptions
-
(a)
-
Biological assets
The
Company reviewed the assumptions used in the calculating of the fair value of biological assets and concluded as appropriate changing, from 2016, the assumption called "actual
planted area", so that the immature forests (up to two years from the date of planting) are maintained at historical cost, as a result of the Management's understanding that during this period, the
historical cost of biological assets approximates of their fair value. The purpose of this change is reflect the experience acquired in the measurement process of biological assets and the alignment
of the calculation methodology to the Company's forest management, which considers continuous forest inventories with the purpose of estimate the volume of timber stock or future production
projections, represented by the average annual growth ("IMA"), from the third year of planting.
The
assumption regarding the "net average sale price" of biological assets (measured in R$/m3) is now supported only in market prices research, in order to maximize the usage of external
and independent data to measure the fair value of the forests.
If
the aforementioned changes would not have been made, the fair value adjustment of biological assets would have generated a lower expense of R$ 30,471 in relation to the amount
recognized in the nine-month period ended September 30, 2016.
The
other assumptions used by the Company to calculate the fair value of biological assets have not changed. See details about the biological assets in Note 16.
F-12
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
3 New standards, amendments and interpretations issued by IASB
The standards below have been issued and are effectives for future periods, as from January 1, 2018. We have not early adopted these standards.
|
|
|
|
|
|
|
Standard
|
|
Effective date
|
|
Main points introduced by the standard
|
|
Impacts of the adoption
|
IFRS 9Financial Instruments
|
|
January 1,2018
|
|
The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change which is due to an entity's own credit risk is recorded in Other comprehensive income
rather than the Statement of profit or loss.
|
|
The Company is currently assessing the impacts of the adoption.
|
IFRS 15Revenue recognition
|
|
January 1, 2018
|
|
This accounting standard establishes the accounting principles to determine and measure revenue and when the revenue should be recognized.
|
|
The Company is currently assessing the impacts of the adoption.
|
IFRS 16Leases
|
|
January 1, 2019
|
|
This accounting standard replaces the previous leases standard, IAS 17 Leases, and related interpretations and sets out the principles for the recognition, measurement, presentation and disclosure of leases for both
parties to a contract, i.e., the customers ('lessees') and the suppliers ('lessor'). Lessees are required to recognize a lease liability reflecting future lease payments and a 'right-of-use asset' for virtually all lease contracts, except for
certain short- term leases and leases of low-value assets. For lessors, the accounting stays almost the same and continues to classify its leases as operating leases or finance leases, and to account for those two types of leases
differently.
|
|
The Company is currently assessing the impacts of the adoption.
|
There
are no other IFRSs or IFRIC interpretations that are not yet effective that the Company expects to have a material impact on the Company's financial position and results of
operations.
F-13
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
4 Risk management
On July 28, 2016, the Board of Directors approved the revision of the finance policy, with effective date as from August 2016, which main changes are related to the following risk
factors:
The Company shall evaluate on an annual basis the optimal percentage between fixed-rate debts and debts with floating rates. This review will be
made by the Treasury department and Governance, Risks and Compliance ("GRC") department, who will report annually the results to the Finance Committee.
The
Finance and Investor Relations Director is responsible for evaluating the hedging strategy of interest rate and inflation, considering the results of evaluation of the optimal
percentage and market factors.
The
rest of the policies disclosed in the annual financial statements (Note 4) as at December 31, 2015 has no significant changes.
The
Company's financial liabilities which present liquidity risk are presented below by maturity (Note 4.1), exchange risk exposure (Note 4.2), sensitivity analysis
(Note 5) and fair value estimates (Note 6), which were considered relevant by Fibria's management to be accompanied quarterly.
-
4.1
-
Liquidity risk
The
table below presents the financial liabilities into relevant maturity groupings based on the remaining period from the balance sheet date to the contractual maturity date. The
amounts disclosed
F-14
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
4 Risk management (Continued)
in
the table are the contractual undiscounted cash flows and as such they differ from the amounts presented in the consolidated balance sheet.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than
one year
|
|
Between
one and
two years
|
|
Between
two and
five years
|
|
Over five
years
|
|
At September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and financing
|
|
|
2,454,930
|
|
|
3,563,903
|
|
|
9,986,441
|
|
|
4,821,846
|
|
Derivative financial instruments
|
|
|
235,041
|
|
|
206,924
|
|
|
161,225
|
|
|
|
|
Trade and other payables
|
|
|
1,455,767
|
|
|
50,210
|
|
|
37,328
|
|
|
25,912
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,145,738
|
|
|
3,821,037
|
|
|
10,184,994
|
|
|
4,847,758
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and financing
|
|
|
1,358,138
|
|
|
4,451,707
|
|
|
7,326,394
|
|
|
2,817,802
|
|
Derivative financial instruments
|
|
|
319,954
|
|
|
560,572
|
|
|
902,136
|
|
|
|
|
Trade and other payables
|
|
|
758,252
|
|
|
68,327
|
|
|
44,902
|
|
|
39,556
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,436,344
|
|
|
5,080,606
|
|
|
8,273,432
|
|
|
2,857,358
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
4.2
-
Foreign exchange risk
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
December 31,
2015
|
|
Assets in foreign currency
|
|
|
|
|
|
|
|
Cash and cash equivalents (Note 7)
|
|
|
890,165
|
|
|
1,068,180
|
|
Trade accounts receivable (Note 10)
|
|
|
392,690
|
|
|
674,224
|
|
|
|
|
|
|
|
|
|
|
|
|
1,282,855
|
|
|
1,742,404
|
|
|
|
|
|
|
|
|
|
Liabilities in foreign currency
|
|
|
|
|
|
|
|
Loans and financing (Note 19)
|
|
|
(9,300,200
|
)
|
|
(10,215,115
|
)
|
Trade payables
|
|
|
(232,010
|
)
|
|
(76,304
|
)
|
Derivative financial instruments (Note 9(a))
|
|
|
(231,335
|
)
|
|
(1,081,533
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(9,763,545
|
)
|
|
(11,372,952
|
)
|
|
|
|
|
|
|
|
|
Liability exposure
|
|
|
(8,480,690
|
)
|
|
(9,630,548
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5 Sensitivity analysis
The probable scenario is the closing exchange rate at the date of these condensed consolidated interim financial information
(R$ × USD = 3.2462). As the amounts have already been recognized in the condensed consolidated interim financial information, there are no additional effects in the
Statement of profit or loss in this scenario. In the "Possible" and "Remote" scenarios, the U.S. Dollar
F-15
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
5 Sensitivity analysis (Continued)
is
deemed to appreciate/depreciate by 25% and 50%, before tax, when compared to the "Probable" scenario:
|
|
|
|
|
|
|
|
|
|
Impact of appreciation/depreciation of
the Real against the U.S. Dollar
on the fair valueabsolute amounts
|
|
|
|
Possible (25%)
|
|
Remote (50%)
|
|
Derivative financial instruments
|
|
|
768,171
|
|
|
1,574,280
|
|
Loans and financing
|
|
|
2,183,685
|
|
|
4,367,370
|
|
Cash and cash equivalents
|
|
|
207,121
|
|
|
414,241
|
|
We adopted as the probable scenario the fair value considering the market yield as at September 30, 2016. As the amounts have already
been recognized in the condensed consolidated interim financial information, there are no additional effects in the Statement of profit or loss in this scenario. In the "Possible" and "Remote"
scenarios, the interest rates are deemed to increase/decrease by 25% and 50%, respectively, before tax, when compared to the "Probable" scenario:
|
|
|
|
|
|
|
|
|
|
Impact of increase/decrease of
the interest rate on the fair
valueabsolute amounts
|
|
|
|
Possible (25%)
|
|
Remote (50%)
|
|
Loans and financing
|
|
|
|
|
|
|
|
LIBOR
|
|
|
1,303
|
|
|
2,507
|
|
Currency basket
|
|
|
1,735
|
|
|
3,466
|
|
TJLP
|
|
|
1,622
|
|
|
3,221
|
|
Interbank Deposit Certificate (CDI)
|
|
|
5,103
|
|
|
10,067
|
|
Derivative financial instruments
|
|
|
|
|
|
|
|
LIBOR
|
|
|
9,897
|
|
|
18,140
|
|
TJLP
|
|
|
2,286
|
|
|
2,913
|
|
Interbank Deposit Certificate (CDI)
|
|
|
53,596
|
|
|
101,659
|
|
Marketable securities(a)
|
|
|
|
|
|
|
|
Interbank Deposit Certificate (CDI)
|
|
|
2,512
|
|
|
4,848
|
|
-
(a)
-
Only
marketable securities indexed to post-fixed rate were considered in the sensitivity analysis above.
F-16
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
5 Sensitivity analysis (Continued)
To calculate the "Probable" scenario, we used the US-CPI index at September 30, 2016. The "Probable" scenario was stressed considering an
additional increase/decrease of 25% and 50% in the US-CPI for the definition of the scenarios "Possible" and "Remote", respectively.
|
|
|
|
|
|
|
|
|
|
Impact of appreciation of the
US-CPI at the fair value
absolute amounts
|
|
|
|
Possible (25%)
|
|
Remote (50%)
|
|
Embedded derivative in forestry partnership and standing timber supply agreements
|
|
|
109,137
|
|
|
224,254
|
|
6 Fair value estimates
In the nine-month period ended September 30, 2016, there were no changes in the criteria of classification of the assets and liabilities in the levels of the fair value hierarchy
when compared to the criteria used in the classification of those instruments disclosed in Note 6 to our most recent annual financial statements as at December 31, 2015. There were no
transfers between levels 1, 2 and 3 during the periods presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2016
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Recurring fair value measurements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At fair value through profit and loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments (Note 9)
|
|
|
|
|
|
515,084
|
|
|
|
|
|
515,084
|
|
Warrant to acquire Ensyn's shares (Note 15)
|
|
|
|
|
|
|
|
|
9,933
|
|
|
9,933
|
|
Marketable securities (Note 8)
|
|
|
58,821
|
|
|
2,306,479
|
|
|
|
|
|
2,365,300
|
|
Available for sale financial assets
|
|
|
|
|
|
|
|
|
103,977
|
|
|
103,977
|
|
Other investmentsfair value methodEnsyn (Note 15)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Biological asset (Note 16)
|
|
|
|
|
|
|
|
|
4,323,741
|
|
|
4,323,741
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
58,821
|
|
|
2,821,563
|
|
|
4,437,651
|
|
|
7,318,035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At fair value through profit and loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments (Note 9)
|
|
|
|
|
|
(519,160
|
)
|
|
|
|
|
(519,160
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
|
|
(519,160
|
)
|
|
|
|
|
(519,160
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-17
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
6 Fair value estimates (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Recurring fair value measurements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At fair value through profit and loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments (Note 9)
|
|
|
|
|
|
300,489
|
|
|
|
|
|
300,489
|
|
Warrant to acquire Ensyn's shares (Note 15)
|
|
|
|
|
|
|
|
|
11,949
|
|
|
11,949
|
|
Marketable securities (Note 8)
|
|
|
40,364
|
|
|
1,365,478
|
|
|
|
|
|
1,405,842
|
|
Available for sale financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other investmentsfair value methodEnsyn (Note 15)
|
|
|
|
|
|
|
|
|
125,071
|
|
|
125,071
|
|
Biological asset (Note 16)
|
|
|
|
|
|
|
|
|
4,114,998
|
|
|
4,114,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
40,364
|
|
|
1,665,967
|
|
|
4,252,018
|
|
|
5,958,349
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At fair value through profit and loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments (Note 9)
|
|
|
|
|
|
(1,128,450
|
)
|
|
|
|
|
(1,128,450
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
|
|
(1,128,450
|
)
|
|
|
|
|
(1,128,450
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
6.1
-
Fair value of loans and financing
The
fair value of loans and financing, which are measured at amortized cost in the balance sheet, is estimated as follows: (a) bonds, for which fair value is based on the observed
quoted price in the market (based on an average of closing prices provided by Bloomberg), and (b) for the other financial liabilities that do not have a secondary market, or for which the
secondary market is not active, fair value is estimated by discounting the future contractual cash flows by current market interest rates, also
F-18
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
6 Fair value estimates (Continued)
considering
the Company's credit risk. The fair value of loans and financing are classified as Level 2 on the fair value hierarchy. The following table presents the fair value of loans and
financing:
|
|
|
|
|
|
|
|
|
|
|
|
Yield used to discount(*)
|
|
September 30,
2016
|
|
December 31,
2015
|
|
Quoted in the secondary market
|
|
|
|
|
|
|
|
|
|
In foreign currency
|
|
|
|
|
|
|
|
|
|
BondsVOTO IV
|
|
|
|
|
340,259
|
|
|
387,939
|
|
BondsFibria Overseas
|
|
|
|
|
2,052,410
|
|
|
2,237,193
|
|
Estimated based on discounted cash flow
|
|
|
|
|
|
|
|
|
|
In foreign currency
|
|
|
|
|
|
|
|
|
|
Export credits (Pre-payments)
|
|
LIBOR USD
|
|
|
5,088,307
|
|
|
6,831,364
|
|
Finnvera
|
|
LIBOR USD
|
|
|
847,418
|
|
|
|
|
Export credits (ACC/ACE)
|
|
DDI
|
|
|
454,517
|
|
|
46,445
|
|
In local currency
|
|
|
|
|
|
|
|
|
|
BNDESTJLP
|
|
Brazilian interbank rate (DI 1)
|
|
|
797,293
|
|
|
809,793
|
|
BNDESFixed rate
|
|
Brazilian interbank rate (DI 1)
|
|
|
111,379
|
|
|
107,797
|
|
BNDESSelic
|
|
Brazilian interbank rate (DI 1)
|
|
|
22,436
|
|
|
11,110
|
|
Currency basket
|
|
Brazilian interbank rate (DI1)
|
|
|
498,557
|
|
|
549,246
|
|
CRA
|
|
Brazilian interbank rate (DI 1)
|
|
|
2,633,647
|
|
|
658,573
|
|
FINEP
|
|
Brazilian interbank rate (DI 1)
|
|
|
1,803
|
|
|
2,063
|
|
FINAME
|
|
Brazilian interbank rate (DI 1)
|
|
|
2,735
|
|
|
4,951
|
|
NCE in Reais
|
|
Brazilian interbank rate (DI 1)
|
|
|
653,137
|
|
|
694,859
|
|
FCO
|
|
Brazilian interbank rate (DI 1)
|
|
|
13,832
|
|
|
21,303
|
|
FDCO
|
|
Brazilian interbank rate (DI 1)
|
|
|
355,043
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,872,773
|
|
|
12,362,636
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(*)
-
Used
to calculate the present value of the loans.
-
6.2
-
Fair value measurement of derivative financial instruments (including embedded derivative)
The
Company estimates the fair value of its derivative financial instruments and acknowledges that it may differ from the amounts payable/receivable in the event of early settlement of
the instrument. This difference results from factors such as liquidity, spreads or the intention of early settlement from the counterparty, among others. The amounts estimated by management are also
compared with the Mark-to-Market (MtM) provided as reference by the banks (counterparties) and with the estimates performed by an independent financial advisor.
A
summary of the methodologies used for purposes of determining fair value by type of instrument is presented below.
-
-
Swap contractsthe present value of both the asset and liability legs are estimated through the discount of forecasted cash flows
using the observed market interest rate for the currency in which the swap is denominated, considering both of Fibria's and counterpart credit risk. The
F-19
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
6 Fair value estimates (Continued)
contract
fair value is the difference between the asset and liability. The only exception is the TJLP × US$ swap, where the cash flow of the asset leg
(TJLP × fixed) are projected using a stable yield, as current TJLP value, during the duration of the swap contract, obtained from Banco Nacional de Desenvolvimento
Econômico e Social ("BNDES").
-
-
Options (Zero Cost Collar)the fair value was calculated based on the Garman-Kohlhagen model, considering both of Fibria's and
counterpart credit risk. Volatility information and interest rates are observable and obtained from BM&FBOVESPA exchange information to calculate the fair values.
-
-
Swap US-CPIthe cash flow of the liability position is projected using the yield of the US-CPI index, obtained through the implicit
rates in the American titles indexed to the inflation rate (TIPS), issued by the Bloomberg. The cash flow of the asset position is projected using the fixed rate established in the embedded derivative
instrument. The fair value of the embedded derivative instrument is the present value of the difference between both positions.
The
yield curves used to calculate the fair value in September 30, 2016 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate curves
|
|
|
|
|
|
Brazil
|
|
United States
|
|
Dollar coupon
|
|
Vertex
|
|
Rate (p.a.)%
|
|
Vertex
|
|
Rate (p.a.)%
|
|
Vertex
|
|
Rate (p.a.)%
|
|
1M
|
|
|
14.03
|
|
1M
|
|
|
0.55
|
|
1M
|
|
|
(6.17
|
)
|
6M
|
|
|
13.33
|
|
6M
|
|
|
0.91
|
|
6M
|
|
|
0.54
|
|
1Y
|
|
|
12.48
|
|
1Y
|
|
|
0.94
|
|
1Y
|
|
|
1.39
|
|
2Y
|
|
|
11.73
|
|
2Y
|
|
|
1.01
|
|
2Y
|
|
|
2.09
|
|
3Y
|
|
|
11.58
|
|
3Y
|
|
|
1.07
|
|
3Y
|
|
|
2.49
|
|
5Y
|
|
|
11.60
|
|
5Y
|
|
|
1.18
|
|
5Y
|
|
|
3.37
|
|
10Y
|
|
|
11.78
|
|
10Y
|
|
|
1.47
|
|
10Y
|
|
|
3.93
|
|
7 Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
Average yield p.a.%
|
|
September30,
2016
|
|
December 31,
2015
|
|
Cash and banks
|
|
|
|
|
|
101,788
|
|
|
196,274
|
|
Fixed-term deposits
|
|
|
|
|
|
|
|
|
|
|
Local currency
|
|
|
101.69 of CDI
|
|
|
203,583
|
|
|
3,985
|
|
Foreign currency(i)
|
|
|
0.47
|
|
|
828,481
|
|
|
877,392
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,133,852
|
|
|
1,077,651
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(i)
-
Mainly
Time Deposit maturing within 90 days.
F-20
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
8 Marketable securities
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
yield p.a.%
|
|
September 30,
2016
|
|
December 31,
2015
|
|
In local currency
|
|
|
|
|
|
|
|
|
|
|
Brazilian Federal provision fund
|
|
|
77 of CDI
|
|
|
9
|
|
|
250
|
|
Brazilian Federal Government securities
|
|
|
|
|
|
|
|
|
|
|
At fair value through profit and loss
|
|
|
79.80 of CDI
|
|
|
58,821
|
|
|
40,364
|
|
Held to maturity(i)
|
|
|
6 and 79.80 of CDI
|
|
|
77,210
|
|
|
73,914
|
|
Private securities (repurchase agreements)
|
|
|
100.43of CDI
|
|
|
2,306,479
|
|
|
1,365,478
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable securities
|
|
|
|
|
|
2,442,519
|
|
|
1,480,006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
2,371,858
|
|
|
1,411,864
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Current
|
|
|
|
|
|
70,661
|
|
|
68,142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(i)
-
The
yield of 79.80% of CDI refers to the investment fundPulp and the yield of 6% p.a. refers to the agrarian debt bonds.
The
increase of R$ 962,513 in the nine-month period ended September 30, 2016 refers, mainly, to the funds raised in the period, as detailed in Note 19.
F-21
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
9 Derivative financial instruments (including embedded derivative)
-
(a)
-
Derivative financial instruments by type
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reference value
(notional)in U.S Dollars
|
|
Fair value
|
|
Type of derivative
|
|
September 30,
2016
|
|
December 31,
2015
|
|
September 30,
2016
|
|
December 31,
2015
|
|
Instruments contracted of economic hedge strategy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operational hedge
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow hedges of exports
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zero cost collar
|
|
|
1,475,000
|
|
|
310,000
|
|
|
249,134
|
|
|
(8,627
|
)
|
Hedges of debts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedges of interest rates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Swap LIBOR × Fixed (USD)
|
|
|
604,670
|
|
|
622,907
|
|
|
(17,133
|
)
|
|
(8,902
|
)
|
Hedges of foreign currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Swap DI × US$ (USD)
|
|
|
318,828
|
|
|
358,607
|
|
|
(293,686
|
)
|
|
(648,052
|
)
|
Swap TJLP × US$ (USD)
|
|
|
49,284
|
|
|
98,287
|
|
|
(80,431
|
)
|
|
(230,433
|
)
|
Swap Pre × US$ (USD)
|
|
|
89,144
|
|
|
112,107
|
|
|
(89,219
|
)
|
|
(185,519
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(231,335
|
)
|
|
(1,081,533
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Embedded derivative in forestry partnership and standing timber supply agreements(*)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Swap of US-CPI
|
|
|
824,293
|
|
|
857,710
|
|
|
227,259
|
|
|
253,572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,076
|
)
|
|
(827,961
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Classified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In current assets
|
|
|
|
|
|
|
|
|
199,836
|
|
|
26,795
|
|
In non-current assets
|
|
|
|
|
|
|
|
|
315,248
|
|
|
273,694
|
|
In current liabilities
|
|
|
|
|
|
|
|
|
(250,750
|
)
|
|
(302,787
|
)
|
In non-current liabilities
|
|
|
|
|
|
|
|
|
(268,410
|
)
|
|
(825,663
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,076
|
)
|
|
(827,961
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(*)
-
The
embedded derivative is a swap of the US-CPI variations during the term of the Forestry Partnership and Standing Timber Supply Agreements.
F-22
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
9 Derivative financial instruments (including embedded derivative) (Continued)
-
(b)
-
Derivative financial instruments of economic hedge strategy by type and broken down by nature of the exposure
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reference value (notional)
in currency of origin
|
|
Fair value
|
|
Type of derivative and protected risk
|
|
Currency
|
|
September 30,
2016
|
|
December 31,
2015
|
|
September 30,
2016
|
|
December 31,
2015
|
|
Swap contractsHedge of debts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIBOR to fixed
|
|
US$
|
|
|
|
604,670
|
|
|
622,907
|
|
|
1,911,706
|
|
|
2,308,517
|
|
Real CDI to USD
|
|
R$
|
|
|
|
622,134
|
|
|
698,559
|
|
|
1,006,536
|
|
|
1,058,346
|
|
Real TJLP to USD
|
|
R$
|
|
|
|
80,519
|
|
|
159,938
|
|
|
79,875
|
|
|
153,963
|
|
Real Pre to USD
|
|
R$
|
|
|
|
191,666
|
|
|
236,072
|
|
|
164,467
|
|
|
182,240
|
|
Liability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIBOR to fixed
|
|
US$
|
|
|
|
604,670
|
|
|
622,907
|
|
|
(1,928,839
|
)
|
|
(2,317,419
|
)
|
Real CDI to USD
|
|
US$
|
|
|
|
318,828
|
|
|
358,607
|
|
|
(1,300,222
|
)
|
|
(1,706,398
|
)
|
Real TJLP to USD
|
|
US$
|
|
|
|
49,284
|
|
|
98,287
|
|
|
(160,306
|
)
|
|
(384,396
|
)
|
Real Pre to USD
|
|
US$
|
|
|
|
89,144
|
|
|
112,107
|
|
|
(253,686
|
)
|
|
(367,759
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total of swap contracts
|
|
|
|
|
|
|
|
|
|
|
|
(480,469
|
)
|
|
(1,072,906
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OptionsCash flow hedge
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zero cost collar
|
|
US$
|
|
|
|
1,475,000
|
|
|
310,000
|
|
|
249,134
|
|
|
(8,627
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(231,335
|
)
|
|
(1,081,533
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(c)
-
Derivative financial instruments by type of economic hedge strategy contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value
|
|
Value (paid) or received
|
|
Type of derivative
|
|
September 30,
2016
|
|
December 31,
2015
|
|
September 30,
2016
|
|
December 31,
2015
|
|
Operational hedge
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow hedge of exports
|
|
|
249,134
|
|
|
(8,627
|
)
|
|
10,804
|
|
|
(125,107
|
)
|
Hedge of debts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedge of interest rates
|
|
|
(17,133
|
)
|
|
(8,902
|
)
|
|
(14,205
|
)
|
|
(15,333
|
)
|
Hedge of foreign currency
|
|
|
(463,336
|
)
|
|
(1,064,004
|
)
|
|
(137,152
|
)
|
|
(279,191
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(231,335
|
)
|
|
(1,081,533
|
)
|
|
(140,553
|
)
|
|
(419,631
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-23
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
9 Derivative financial instruments (including embedded derivative) (Continued)
-
(d)
-
Fair value and counterparty by maturity date of economic hedge strategy contracts
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
December 31,
2015
|
|
2016
|
|
|
7,575
|
|
|
(281,423
|
)
|
2017
|
|
|
(34,417
|
)
|
|
(396,982
|
)
|
2018
|
|
|
(121,735
|
)
|
|
(280,340
|
)
|
2019
|
|
|
(51,623
|
)
|
|
(76,408
|
)
|
2020
|
|
|
(31,135
|
)
|
|
(46,380
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(231,335
|
)
|
|
(1,081,533
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
value does not necessarily represent the cash required to immediately settle each contract, as such disbursement will only be made on the date of maturity of each transaction, when
the final settlement amount will be determined.
The
outstanding contracts at September 30, 2016 are not subject to margin calls or anticipated liquidation clauses resulting from mark-to-market variations. All operations are
over-the-counter and registered at CETIP (a clearing house).
10 Trade accounts receivable
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
December 31,
2015
|
|
Domestic customers
|
|
|
88,921
|
|
|
75,281
|
|
Export customers
|
|
|
392,690
|
|
|
674,224
|
|
|
|
|
|
|
|
|
|
|
|
|
481,611
|
|
|
749,505
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts
|
|
|
(6,833
|
)
|
|
(7,153
|
)
|
|
|
|
|
|
|
|
|
|
|
|
474,778
|
|
|
742,352
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
the nine-month period ended September 30, 2016, we made some credit assignment without recourse for certain customers' receivables, in the amount of R$ 1,794,735 (R$ 1,788,970
at December 31, 2015), that were derecognized from accounts receivable in the balance sheet. The amounts regarding to these credit assignment were received by us.
F-24
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
11 Inventory
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
December 31,
2015
|
|
Finished goods at plants/warehouses
|
|
|
|
|
|
|
|
Brazil
|
|
|
266,235
|
|
|
155,286
|
|
Abroad
|
|
|
870,902
|
|
|
731,498
|
|
Work in progress
|
|
|
20,578
|
|
|
12,935
|
|
Raw materials
|
|
|
462,198
|
|
|
520,445
|
|
Supplies
|
|
|
164,949
|
|
|
150,838
|
|
Imports in transit
|
|
|
2,788
|
|
|
144
|
|
|
|
|
|
|
|
|
|
|
|
|
1,787,650
|
|
|
1,571,146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Recoverable taxes
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
December 31,
2015
|
|
Withholding tax and prepaid Income Tax (IRPJ) and Social Contribution (CSLL)
|
|
|
1,022,289
|
|
|
762,743
|
|
Value-added Tax on Sales and Services (ICMS) on purchases of property, plant and equipment
|
|
|
24,964
|
|
|
26,235
|
|
Value-added Tax on Sales and Services (ICMS and IPI) on purchases of raw materials and supplies
|
|
|
1,035,677
|
|
|
978,399
|
|
Federal tax credits
|
|
|
|
|
|
356,058
|
|
Credit related to Reintegra Program
|
|
|
85,744
|
|
|
91,145
|
|
Social Integration Program (PIS) and Social Contribution on Revenue (COFINS) Recoverable
|
|
|
706,672
|
|
|
727,210
|
|
Provision for the impairment of ICMS credits
|
|
|
(1,040,865
|
)
|
|
(967,332
|
)
|
|
|
|
|
|
|
|
|
|
|
|
1,834,481
|
|
|
1,974,458
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
224,069
|
|
|
462,487
|
|
|
|
|
|
|
|
|
|
Non-current
|
|
|
1,610,412
|
|
|
1,511,971
|
|
|
|
|
|
|
|
|
|
During
the nine-month period ended September 30, 2016, there were no relevant changes to our expectations regarding the recoverability of the tax credits presented in this note
and the Note 14 to the most recent annual financial statements.
13 Income taxes
The Company and the subsidiaries located in Brazil are taxed based on their taxable income. The subsidiaries located outside of Brazil use methods established by the respective local
jurisdictions. Income taxes have been calculated and recorded considering the applicable statutory tax rates enacted at the balance sheet date.
F-25
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
13 Income taxes (Continued)
The
Company still believes in the previsions of the International Double Taxation Treaties signed by Brazil. However, as the decision regarding its applicability is still pending on the
Supreme Court (
Supremo Tribunal FederalSTF
), nowadays the Company taxes the foreign profits according to the Law 12,973/14.
The
Law 12,973/14 revoked the article 74 of Provisional Measure 2,158/01. The law determines that the adjustment in the value of the investment, in the direct or indirect
controlled company, domiciled abroad, equivalent to its profits before tax, except for the foreign exchange, must be computed in the taxation basis of the corporate income tax and social contribution
over profits of the controller company domiciled in Brazil, at the end of the fiscal year. The repatriation of these profits in subsequent years will not be subject to taxation in Brazil. The Company
has provisions regarding the Corporate Income Tax of the subsidiaries on an accrual basis.
-
(a)
-
Deferred taxes
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
December 31,
2015
|
|
Tax loss carryforwards(i)
|
|
|
421,686
|
|
|
54,888
|
|
Provision for legal proceeds
|
|
|
133,693
|
|
|
119,924
|
|
Sundry provisions (impairment, operational and other)
|
|
|
537,457
|
|
|
637,176
|
|
Results of derivative contractspayable on a cash basis for tax purposes
|
|
|
1,386
|
|
|
281,507
|
|
Exchange losses (net)payable on a cash basis for tax purposes
|
|
|
1,425,504
|
|
|
2,396,243
|
|
Tax amortization of the assets acquired in the business combinationAracruz
|
|
|
97,872
|
|
|
99,196
|
|
Actuarial gains on medical assistance plan (SEPACO)
|
|
|
3,743
|
|
|
3,743
|
|
Income tax and social contribution from foreign-domiciled subsidiaries under IFRS
|
|
|
(609,881
|
)
|
|
(338,315
|
)
|
Tax accelerated depreciation
|
|
|
(14,111
|
)
|
|
(7,324
|
)
|
Reforestation costs already deducted for tax purposes
|
|
|
(449,425
|
)
|
|
(387,568
|
)
|
Fair values of biological assets
|
|
|
(121,733
|
)
|
|
(174,450
|
)
|
Tax benefit of goodwillgoodwill not amortized for accounting purposes
|
|
|
(603,846
|
)
|
|
(536,752
|
)
|
Transaction costs and capitalized financing costs
|
|
|
(63,438
|
)
|
|
(5,347
|
)
|
Other provisions
|
|
|
(7,534
|
)
|
|
(14,704
|
)
|
|
|
|
|
|
|
|
|
Total deferred taxes asset, net
|
|
|
751,373
|
|
|
2,128,217
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred taxesasset (net by entity)
|
|
|
1,122,895
|
|
|
2,399,213
|
|
Deferred taxesliability (net by entity)
|
|
|
371,522
|
|
|
270,996
|
|
-
(i)
-
The
balance as at September 30, 2016 is presented net of R$ 304,227 (R$ 346,291 as at December 31, 2015) related to the provision for impairment for
foreign tax losses.
F-26
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
13 Income taxes (Continued)
Changes
in the net balance of deferred income tax are as follows:
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
December 31,
2015
|
|
At the beginning of the period
|
|
|
2,128,217
|
|
|
924,308
|
|
Tax loss carryforwards
|
|
|
366,798
|
|
|
(137,759
|
)
|
Temporary differences from provisions
|
|
|
(85,950
|
)
|
|
198,028
|
|
Provision for tax on investments in foreign-domiciled subsidiaries
|
|
|
(271,566
|
)
|
|
(312,338
|
)
|
Derivative financial instruments taxed on a cash basis
|
|
|
(280,121
|
)
|
|
139,569
|
|
Amortization of goodwill
|
|
|
(68,418
|
)
|
|
(92,598
|
)
|
Reforestation costs
|
|
|
(68,644
|
)
|
|
(36,605
|
)
|
Exchange losses (net) taxed on a cash basis
|
|
|
(970,739
|
)
|
|
1,483,024
|
|
Fair value of biological assets
|
|
|
52,717
|
|
|
(21,430
|
)
|
Actuarial losses on medical assistance plan (SEPACO)(*)
|
|
|
|
|
|
(2,866
|
)
|
Transaction costs and capitalized financing costs
|
|
|
(58,091
|
)
|
|
(5,347
|
)
|
Other
|
|
|
7,170
|
|
|
(7,769
|
)
|
|
|
|
|
|
|
|
|
At the end of the period
|
|
|
751,373
|
|
|
2,128,217
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(*)
-
Deferred
taxes related to the other comprehensive income.
-
(b)
-
Reconciliation of taxes on income
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
Income (loss) before tax
|
|
|
3,154,318
|
|
|
(1,522,491
|
)
|
Income tax and social contribution benefit (expense) at statutory nominal rate34%
|
|
|
(1,072,468
|
)
|
|
517,647
|
|
|
|
|
|
|
|
|
|
Reconciliation to effective expense:
|
|
|
|
|
|
|
|
Equity in results of joint-venture
|
|
|
(258
|
)
|
|
253
|
|
Credit from Reintegra Program
|
|
|
1,372
|
|
|
18,604
|
|
Benefits to directors
|
|
|
(10,538
|
)
|
|
(6,292
|
)
|
Foreign exchange effects on foreign subsidiaries(i)
|
|
|
(294,983
|
)
|
|
452,174
|
|
Other, mainly non-deductible provisions
|
|
|
(22,309
|
)
|
|
(12,894
|
)
|
|
|
|
|
|
|
|
|
Income tax and social contribution benefit (expense) for the period
|
|
|
(1,399,184
|
)
|
|
969,492
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective rate%
|
|
|
44.4
|
|
|
63.7
|
|
-
(i)
-
Relates
to net foreign exchange gains recognized by our foreign subsidiaries that use the Real as the functional currency. As the Real is not used for tax purposes
in the foreign country this net foreign exchange gain is not recognized for tax purposes in the foreign country nor will it ever be subject to tax in Brazil.
F-27
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
14 Significant transactions and balances with related parties
-
(a)
-
Related parties
The
Company is governed by a Shareholders Agreement entered into between Votorantim S.A., which holds 29.42% of our shares, and BNDES
Participações S.A. ("BNDESPAR"), which holds 29.08% of our shares (together the "Controlling Shareholders"). The Company's commercial and financial transactions
with its subsidiaries, Votorantim Group's entities and other related parties are carried out at normal market prices and conditions, based on usual terms and rates applicable to third parties.
In
the nine-month period ended September 30, 2016, there were no significant changes in the terms of the contracts, agreements and transactions, and there were no new contracts,
agreements or transactions with distinct nature between the Company and its related parties when compared to the transactions disclosed in Note 16 to the most recent financial statements as at
December 31, 2015.
F-28
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
14 Significant transactions and balances with related parties (Continued)
(i) Balances recognized in assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
Balances receivable (payable)
|
|
|
|
Nature
|
|
September 30,
2016
|
|
December 31,
2015
|
|
Transactions with controlling shareholders
|
|
|
|
|
|
|
|
|
|
Votorantim S.A.
|
|
Rendering of services
|
|
|
(418
|
)
|
|
(9
|
)
|
Votorantim S.A.
|
|
Land leases
|
|
|
|
|
|
(851
|
)
|
BNDES
|
|
Financing
|
|
|
(1,573,654
|
)
|
|
(1,851,408
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,574,072
|
)
|
|
(1,852,268
|
)
|
|
|
|
|
|
|
|
|
|
|
Transactions with Votorantim Group' entities
|
|
|
|
|
|
|
|
|
|
Votorantim S.A.
|
|
Financing
|
|
|
9,739
|
|
|
11,714
|
|
VotenerVotorantim Comercializadora e Energia
|
|
Energy supplier
|
|
|
1,171
|
|
|
6,937
|
|
Banco Votorantim S.A.
|
|
Investments
|
|
|
187,273
|
|
|
32,806
|
|
Banco Votorantim S.A.
|
|
Financial instruments
|
|
|
2,751
|
|
|
(1,066
|
)
|
Votorantim Cimentos S.A.
|
|
Energy supplier
|
|
|
|
|
|
517
|
|
Votorantim Cimentos S.A.
|
|
Input supplier
|
|
|
(51
|
)
|
|
(50
|
)
|
Polimix Concreto Ltda.
|
|
Input supplier
|
|
|
|
|
|
(143
|
)
|
Votorantim Siderurgia
|
|
Standing wood supplier
|
|
|
(2,176
|
)
|
|
(4,164
|
)
|
Sitrel Siderurgia Três Lagoas
|
|
Land leases
|
|
|
(10
|
)
|
|
|
|
Pedreira Pedra Negra
|
|
Input supplier
|
|
|
|
|
|
(21
|
)
|
Votorantim Metais Ltda.
|
|
Chemical products supplier
|
|
|
(491
|
)
|
|
(277
|
)
|
Companhia Brasileira de AlumínioCBA
|
|
Land leases
|
|
|
(699
|
)
|
|
(695
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
197,507
|
|
|
45,558
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
|
|
|
(1,376,565
|
)
|
|
(1,806,710
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Presented in the following lines
|
|
|
|
|
|
|
|
|
|
In assets
|
|
|
|
|
|
|
|
|
|
Marketable securities (Note 8)
|
|
|
|
|
187,273
|
|
|
32,806
|
|
Derivative financial instruments (Note 9)
|
|
|
|
|
2,751
|
|
|
|
|
Related partiesnon-current
|
|
|
|
|
9,739
|
|
|
11,714
|
|
Other assetscurrent
|
|
|
|
|
1,171
|
|
|
7,454
|
|
In liabilities
|
|
|
|
|
|
|
|
|
|
Loans and financing (Note 19)
|
|
|
|
|
(1,573,654
|
)
|
|
(1,851,408
|
)
|
Derivative financial instruments (Note 9)
|
|
|
|
|
|
|
|
(1,066
|
)
|
Suppliers
|
|
|
|
|
(3,845
|
)
|
|
(6,210
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,376,565
|
)
|
|
(1,806,710
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-29
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
14 Significant transactions and balances with related parties (Continued)
-
(ii)
-
Amounts transacted in the period
|
|
|
|
|
|
|
|
|
|
|
|
Nature
|
|
September 30,
2016
|
|
September 30,
2015
|
|
Transactions with controlling shareholders
|
|
|
|
|
|
|
|
|
|
Votorantim S.A.
|
|
Rendering of services
|
|
|
(8,357
|
)
|
|
(7,592
|
)
|
BNDES
|
|
Financing
|
|
|
15,575
|
|
|
(352,205
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,218
|
|
|
(359,797
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transactions with Votorantim Group's entities
|
|
|
|
|
|
|
|
|
|
Votorantim S.A.
|
|
Financing
|
|
|
(1,975
|
)
|
|
3,950
|
|
VotenerVotorantim Comercializadora de Energia
|
|
Energy supplier
|
|
|
(13,588
|
)
|
|
67,125
|
|
Banco Votorantim S.A.
|
|
Investments
|
|
|
3,908
|
|
|
1,758
|
|
Banco Votorantim S.A.
|
|
Financial instruments
|
|
|
2,703
|
|
|
(1,016
|
)
|
Banco Votorantim S.A.
|
|
Rendering of services
|
|
|
(1,500
|
)
|
|
|
|
Votorantim CTVM Ltda.
|
|
Rendering of services
|
|
|
(119
|
)
|
|
|
|
Votorantim Cimentos S.A.
|
|
Energy supplier
|
|
|
7,892
|
|
|
4,907
|
|
Votorantim Cimentos S.A.
|
|
Input supplier
|
|
|
(224
|
)
|
|
(79
|
)
|
Votorantim Cimentos S.A.
|
|
Selling of wood
|
|
|
|
|
|
126
|
|
Votorantim Siderurgia S.A.
|
|
Standing wood supplier
|
|
|
(9,734
|
)
|
|
3,361
|
|
Sitrel Siderurgia Três Lagoas
|
|
Energy supplier
|
|
|
5,332
|
|
|
|
|
Sitrel Siderurgia Três Lagoas
|
|
Land leases
|
|
|
(10
|
)
|
|
|
|
Pedreira Pedra Negra
|
|
Input supplier
|
|
|
(78
|
)
|
|
(219
|
)
|
Votorantim Metais Ltda.
|
|
Chemical products supplier
|
|
|
(7,566
|
)
|
|
(3,155
|
)
|
Votorantim Metais Ltda.
|
|
Land leases
|
|
|
|
|
|
(2,318
|
)
|
Companhia Brasileira de AlumínioCBA
|
|
Land leases
|
|
|
(399
|
)
|
|
(2,541
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15,358
|
)
|
|
71,899
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(b)
-
Key management compensation
The
remuneration expenses of the Fibria's officers and directors, including all benefits, are summarized as follows:
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
Benefits to officers and directors(i)
|
|
|
12,091
|
|
|
37,347
|
|
Benefit programPhantom Stock Options and Stock Options plans
|
|
|
(8,974
|
)
|
|
12,950
|
|
|
|
|
|
|
|
|
|
|
|
|
3,117
|
|
|
50,297
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(i)
-
Benefits
to officers and directors include fixed compensation, social charges, profit sharing program and the variable compensation program.
F-30
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
14 Significant transactions and balances with related parties (Continued)
The
amount of R$ 3,117 recognized as provision or reversal of provision in the nine-month period ended September 30, 2016, was impacted by the change in the Company's stock price,
which is considered for the valuation of the variable compensation program and benefit program (Phantom Stock Options and Stock Options plans) existing.
Benefits
to key management do not include the compensation for the Statutory Audit Committee, Finance, Compensation and Sustainability Committees' members of R$ 954 for the nine-month
period ended September 30, 2016 (R$ 713 for the nine-month period ended September 30, 2015).
The
Company does not have any other post-employment plans and does not offer any other benefits, such as additional paid leave for time of service.
The
balances to be paid to the Company's officers and directors are recorded as follows:
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
December 31,
2015
|
|
Current liability
|
|
|
|
|
|
|
|
Payroll, profit sharing and related charges
|
|
|
13,444
|
|
|
37,563
|
|
Non-current liability
|
|
|
|
|
|
|
|
Other payables
|
|
|
2,100
|
|
|
9,401
|
|
Shareholders' equity
|
|
|
|
|
|
|
|
Capital reserve
|
|
|
4,637
|
|
|
9,329
|
|
|
|
|
|
|
|
|
|
|
|
|
20,181
|
|
|
56,293
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15 Investments
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
December 31,
2015
|
|
Investment in joint-ventureequity method
|
|
|
3,260
|
|
|
751
|
|
Other investmentsat fair value(i)
|
|
|
113,910
|
|
|
137,020
|
|
|
|
|
|
|
|
|
|
|
|
|
117,170
|
|
|
137,771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(i)
-
Fair
value change in our interest in Ensyn was not significant in the nine-month period ended September 30, 2016. The decrease in the balance refers to the
foreign currency effect on the investment.
None
of the subsidiaries and jointly-operated entities has publicly traded shares.
The
provisions and contingent liabilities related to the entities of the Company are described in Note 21.
Additionally,
the Company does not have any significant restriction or commitments with regards to its joint-venture.
F-31
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
16 Biological assets
|
|
|
|
|
|
|
|
|
|
September 30, 2016
|
|
December 31, 2015
|
|
At the beginning of the period
|
|
|
4,114,998
|
|
|
3,707,845
|
|
Additions
|
|
|
1,115,127
|
|
|
1,344,355
|
|
Harvests in the year (depletion)
|
|
|
(796,600
|
)
|
|
(1,102,725
|
)
|
Change in fair valuestep up
|
|
|
(108,014
|
)
|
|
184,583
|
|
Disposals / provision for disposals
|
|
|
(1,770
|
)
|
|
(19,063
|
)
|
Transfer(i)
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
At the end of the period
|
|
|
4,323,741
|
|
|
4,114,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(i)
-
Includes
transfers between biological assets and property, plant and equipment.
17 Property, plant and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
|
|
Buildings
|
|
Machinery,
equipment
and facilities
|
|
Property, plant
and equipment
in progress(i)
|
|
Other(ii)
|
|
Total
|
|
At December 31, 2014
|
|
|
1,200,512
|
|
|
1,358,716
|
|
|
6,457,787
|
|
|
217,627
|
|
|
18,091
|
|
|
9,252,733
|
|
Additions
|
|
|
453,775
|
|
|
335
|
|
|
3,640
|
|
|
553,291
|
|
|
1,903
|
|
|
1,012,944
|
|
Disposals
|
|
|
(17,367
|
)
|
|
(6,056
|
)
|
|
(16,005
|
)
|
|
|
|
|
(887
|
)
|
|
(40,315
|
)
|
Depreciation
|
|
|
|
|
|
(112,005
|
)
|
|
(653,595
|
)
|
|
|
|
|
(14,368
|
)
|
|
(779,968
|
)
|
Acquisition of assetsFibria Innovations
|
|
|
|
|
|
|
|
|
4,212
|
|
|
|
|
|
|
|
|
4,212
|
|
Transfers and others(iii)
|
|
|
|
|
|
50,294
|
|
|
184,508
|
|
|
(303,900
|
)
|
|
52,878
|
|
|
(16,220
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2015
|
|
|
1,636,920
|
|
|
1,291,284
|
|
|
5,980,547
|
|
|
467,018
|
|
|
57,617
|
|
|
9,433,386
|
|
Additions
|
|
|
|
|
|
575
|
|
|
6,704
|
|
|
3,140,594
|
|
|
1,176
|
|
|
3,149,049
|
|
Disposals
|
|
|
(413
|
)
|
|
(4,964
|
)
|
|
(17,916
|
)
|
|
|
|
|
(423
|
)
|
|
(23,716
|
)
|
Depreciation
|
|
|
|
|
|
(88,567
|
)
|
|
(489,999
|
)
|
|
|
|
|
(13,151
|
)
|
|
(591,717
|
)
|
Transfers and others(iii)
|
|
|
6,147
|
|
|
82,844
|
|
|
194,041
|
|
|
(336,165
|
)
|
|
76,665
|
|
|
23,532
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2016
|
|
|
1,642,654
|
|
|
1,281,172
|
|
|
5,673,377
|
|
|
3,271,447
|
|
|
121,884
|
|
|
11,990,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(i)
-
Includes
the amount of R$ 3,066,300 regarding the Horizonte 2 Project.
-
(ii)
-
Includes
vehicles, furniture, IT equipment and others.
-
(iii)
-
Includes
transfers between property, plant and equipment, intangible assets and inventory.
F-32
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
18 Intangible assets
|
|
|
|
|
|
|
|
|
|
September 30, 2016
|
|
December 31, 2015
|
|
At the beginning of the period
|
|
|
4,505,634
|
|
|
4,552,103
|
|
Additions
|
|
|
116,134
|
|
|
8
|
|
Amortization
|
|
|
(50,704
|
)
|
|
(76,021
|
)
|
Disposals
|
|
|
(98
|
)
|
|
(67
|
)
|
Transfers and others(*)
|
|
|
13,139
|
|
|
29,611
|
|
|
|
|
|
|
|
|
|
At the end of the period
|
|
|
4,584,105
|
|
|
4,505,634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Composed by
|
|
|
|
|
|
|
|
GoodwillAracruz
|
|
|
4,230,450
|
|
|
4,230,450
|
|
Systems development and deployment
|
|
|
32,156
|
|
|
28,677
|
|
Concession rightMacuco Terminal (Note 1(a))
|
|
|
115,047
|
|
|
|
|
Acquired from business combination
|
|
|
|
|
|
|
|
Databases
|
|
|
102,600
|
|
|
136,800
|
|
Relationships with suppliers-chemical products
|
|
|
85,078
|
|
|
92,812
|
|
Other
|
|
|
18,774
|
|
|
16,895
|
|
|
|
|
|
|
|
|
|
|
|
|
4,584,105
|
|
|
4,505,634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(*)
-
Includes
transfers between property, plant and equipment and intangible assets.
F-33
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
19 Loans and financing
-
(a)
-
Breakdown of the balance by type of loan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
Non-current
|
|
Total
|
|
|
|
|
|
Average
annual
interest
rate%
|
|
Type/purpose
|
|
Interest
rate
|
|
September 30,
2016
|
|
December 31,
2015
|
|
September 30,
2016
|
|
December 31,
2015
|
|
September 30,
2016
|
|
December 31,
2015
|
|
In foreign currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BNDEScurrency basket
|
|
UMBNDES
|
|
|
6.5
|
|
|
72,141
|
|
|
78,632
|
|
|
493,370
|
|
|
652,610
|
|
|
565,511
|
|
|
731,242
|
|
BondsUS$
|
|
Fixed
|
|
|
5.6
|
|
|
44,764
|
|
|
15,801
|
|
|
2,235,918
|
|
|
2,686,105
|
|
|
2,280,682
|
|
|
2,701,906
|
|
Finnvera
|
|
LIBOR
|
|
|
2.5
|
|
|
4,389
|
|
|
|
|
|
831,497
|
|
|
|
|
|
835,886
|
|
|
|
|
Export credits (prepayment)
|
|
LIBOR
|
|
|
2.5
|
|
|
313,583
|
|
|
595,795
|
|
|
4,849,769
|
|
|
6,141,049
|
|
|
5,163,352
|
|
|
6,736,844
|
|
Export credits (ACC/ACE)
|
|
Fixed
|
|
|
1.6
|
|
|
454,769
|
|
|
45,123
|
|
|
|
|
|
|
|
|
454,769
|
|
|
45,123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
889,646
|
|
|
735,351
|
|
|
8,410,554
|
|
|
9,479,764
|
|
|
9,300,200
|
|
|
10,215,115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In Reais
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BNDES
|
|
TJLP
|
|
|
6.5
|
|
|
170,651
|
|
|
186,937
|
|
|
679,324
|
|
|
776,421
|
|
|
849,975
|
|
|
963,358
|
|
BNDES
|
|
Fixed
|
|
|
5.75
|
|
|
33,069
|
|
|
29,745
|
|
|
89,213
|
|
|
100,460
|
|
|
122,282
|
|
|
130,205
|
|
BNDES
|
|
Selic
|
|
|
6.9
|
|
|
753
|
|
|
18
|
|
|
35,133
|
|
|
26,585
|
|
|
35,886
|
|
|
26,603
|
|
FINAME
|
|
TJLP/Fixed
|
|
|
3.1
|
|
|
2,226
|
|
|
3,236
|
|
|
668
|
|
|
2,226
|
|
|
2,894
|
|
|
5,462
|
|
CRA
|
|
CDI
|
|
|
11.46
|
|
|
96,941
|
|
|
16,687
|
|
|
2,676,798
|
|
|
659,275
|
|
|
2,773,739
|
|
|
675,962
|
|
NCE
|
|
CDI
|
|
|
12.39
|
|
|
304,498
|
|
|
88,855
|
|
|
365,596
|
|
|
613,177
|
|
|
670,094
|
|
|
702,032
|
|
FCO, FDCO and FINEP
|
|
Fixed
|
|
|
8.0
|
|
|
11,988
|
|
|
12,048
|
|
|
425,281
|
|
|
13,047
|
|
|
437,269
|
|
|
25,095
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
620,126
|
|
|
337,526
|
|
|
4,272,013
|
|
|
2,191,191
|
|
|
4,892,139
|
|
|
2,528,717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,509,772
|
|
|
1,072,877
|
|
|
12,682,567
|
|
|
11,670,955
|
|
|
14,192,339
|
|
|
12,743,832
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
|
|
|
|
|
|
257,301
|
|
|
94,172
|
|
|
76,586
|
|
|
109,658
|
|
|
333,887
|
|
|
203,830
|
|
Short-term borrowing
|
|
|
|
|
|
|
|
454,468
|
|
|
44,905
|
|
|
|
|
|
|
|
|
454,468
|
|
|
44,905
|
|
Long-term borrowing
|
|
|
|
|
|
|
|
798,003
|
|
|
933,800
|
|
|
12,605,981
|
|
|
11,561,297
|
|
|
13,403,984
|
|
|
12,495,097
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,509,772
|
|
|
1,072,877
|
|
|
12,682,567
|
|
|
11,670,955
|
|
|
14,192,339
|
|
|
12,743,832
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
average rates were calculated based on the forward yield curve of benchmark rates to which the loans are indexed, weighted through the maturity date for each installment, including
the issuing/contracting costs, when applicable.
F-34
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
19 Loans and financing (Continued)
-
(b)
-
Breakdown by maturity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
2025
|
|
2026
|
|
2027
|
|
Total
|
|
In foreign currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BNDEScurrency basket
|
|
|
22,635
|
|
|
66,478
|
|
|
53,987
|
|
|
148,392
|
|
|
156,660
|
|
|
38,509
|
|
|
6,709
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
493,370
|
|
BondsUS$
|
|
|
|
|
|
|
|
|
|
|
|
310,543
|
|
|
|
|
|
|
|
|
|
|
|
1,925,375
|
|
|
|
|
|
|
|
|
|
|
|
2,235,918
|
|
Finnvera
|
|
|
|
|
|
103,937
|
|
|
103,937
|
|
|
103,937
|
|
|
103,937
|
|
|
103,937
|
|
|
103,937
|
|
|
103,937
|
|
|
103,938
|
|
|
|
|
|
|
|
|
831,497
|
|
Export credits (prepayment)
|
|
|
154,703
|
|
|
1,153,532
|
|
|
2,450,621
|
|
|
360,859
|
|
|
730,054
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,849,769
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
177,338
|
|
|
1,323,947
|
|
|
2,608,545
|
|
|
923,731
|
|
|
990,651
|
|
|
142,446
|
|
|
110,646
|
|
|
2,029,312
|
|
|
103,938
|
|
|
|
|
|
|
|
|
8,410,554
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In Reais
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BNDESTJLP
|
|
|
44,351
|
|
|
121,486
|
|
|
91,517
|
|
|
157,551
|
|
|
168,857
|
|
|
56,428
|
|
|
26,666
|
|
|
12,468
|
|
|
|
|
|
|
|
|
|
|
|
679,324
|
|
BNDESFixed rate
|
|
|
8,533
|
|
|
33,197
|
|
|
27,093
|
|
|
15,200
|
|
|
4,791
|
|
|
399
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
89,213
|
|
BNDESSelic
|
|
|
355
|
|
|
1,419
|
|
|
1,419
|
|
|
1,419
|
|
|
554
|
|
|
1,409
|
|
|
14,900
|
|
|
13,658
|
|
|
|
|
|
|
|
|
|
|
|
35,133
|
|
FINAME
|
|
|
501
|
|
|
167
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
668
|
|
CRA
|
|
|
|
|
|
|
|
|
|
|
|
1,187,050
|
|
|
661,292
|
|
|
|
|
|
828,456
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,676,798
|
|
NCE
|
|
|
21,252
|
|
|
257,894
|
|
|
43,225
|
|
|
43,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
365,596
|
|
FCO, FDCO and FINEP
|
|
|
2,974
|
|
|
659
|
|
|
47,448
|
|
|
46,775
|
|
|
46,775
|
|
|
46,775
|
|
|
46,775
|
|
|
46,775
|
|
|
46,775
|
|
|
46,775
|
|
|
46,775
|
|
|
425,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77,966
|
|
|
414,822
|
|
|
210,702
|
|
|
1,451,220
|
|
|
882,269
|
|
|
105,011
|
|
|
916,797
|
|
|
72,901
|
|
|
46,775
|
|
|
46,775
|
|
|
46,775
|
|
|
4,272,013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
255,304
|
|
|
1,738,769
|
|
|
2,819,247
|
|
|
2,374,951
|
|
|
1,872,920
|
|
|
247,457
|
|
|
1,027,443
|
|
|
2,102,213
|
|
|
150,713
|
|
|
46,775
|
|
|
46,775
|
|
|
12,682,567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-35
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
19 Loans and financing (Continued)
-
(c)
-
Breakdown by currency
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
December 31,
2015
|
|
Real
|
|
|
4,856,253
|
|
|
2,502,114
|
|
U.S. Dollar
|
|
|
8,734,689
|
|
|
9,483,873
|
|
Selic
|
|
|
35,886
|
|
|
26,603
|
|
Currency basket
|
|
|
565,511
|
|
|
731,242
|
|
|
|
|
|
|
|
|
|
|
|
|
14,192,339
|
|
|
12,743,832
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(d)
-
Roll forward
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
December 31,
2015
|
|
At the beginning of period
|
|
|
12,743,832
|
|
|
8,326,519
|
|
Borrowings
|
|
|
5,330,223
|
|
|
3,118,475
|
|
Interest expense
|
|
|
497,106
|
|
|
479,287
|
|
Foreign exchange losses (gains)
|
|
|
(1,750,028
|
)
|
|
3,037,653
|
|
Repaymentsprincipal amount
|
|
|
(2,175,817
|
)
|
|
(1,800,670
|
)
|
Interest paid
|
|
|
(359,539
|
)
|
|
(405,546
|
)
|
Additional transaction costs
|
|
|
(105,126
|
)
|
|
(30,486
|
)
|
Other(*)
|
|
|
11,688
|
|
|
18,600
|
|
|
|
|
|
|
|
|
|
At the end of the period
|
|
|
14,192,339
|
|
|
12,743,832
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(*)
-
It
includes amortization of transactions costs.
-
(e)
-
Relevant operations settled in the period
During the nine-month period ended September 30, 2016, the Company paid some export contracts (ACC) in the amount of
US$ 404 million (equivalent then to R$ 1,387,578), which interest rate were between 1.24% and 1.99% p.a.
-
(f)
-
Relevant operations contracted in the period
During the nine-month period ended September 30, 2016, the Company, through its subsidiary Fibria-MS, entered into export contracts (ACC
and ACE) in the amount of US$ 140 million (equivalent then to R$ 462,252), which matures through October 2016 with a fixed interest rate between 1.55% and 1.60% p.a.
F-36
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
19 Loans and financing (Continued)
During the nine-month period ended September 30, 2016, the Company concluded three public distributions with restrict efforts of
Agribusiness Credit Receivable Certificates issued by Eco Securitizadora de Direitos Creditórios do Agronegócio S.A. In the first distribution, the total amount
released was R$ 1,350 million, in two tranches, being the first tranche in the amount of R$ 880 million, with maturity for the principal in 2020, payments of interest semi-annually and
an interest rate of 97% of CDI and the second tranche in the amount of R$ 470 million, with maturity for the principal in 2023, payments of interest annually and an interest rate of IPCA plus
5.9844% p.a. The funds were received by the Company on June 23, 2016. In the second distribution, the total amount released was R$ 374 million, with maturity for the principal in 2023,
payments of interest annually and an interest rate of IPCA plus 5.9844% p.a. The funds were received by the Company on August 15, 2016. In the third distribution, the total amount released was
R$ 326 million, with maturity for the principal in 2020, payments of interest semi-annually and an interest rate of 97% of CDI. The funds were received by the Company on August 31, 2016.
The events of default of the contract are reflected in the item (g) below.
In May 2016, the Company, through its subsidiary Fibria-MS, entered into a loan agreement for the financing of imported equipment for the second
pulp production line in Três Lagoas (Horizonte 2 Project). The total amount raised was U.S. Dollar equivalent to € 383,873 thousand with the
financial institutions BNP Paribas, Finnish Export Credit, HSBC Bank and Nordea, totally guaranteed by Finnvera (Export Credit Agency). During the nine-month period ended September 30, 2016,
the amount of US$ 275 million (equivalents then R$ 919,628) was released in three tranches of US$ 194 million, US$ 67 million and
US$ 14 million, maturing in December 2025 and interest rates at semi-annual LIBOR plus 1.03% p.a. for the first tranche and semi-annual LIBOR plus 1.08% p.a. for the second and third
tranches. The remaining balance not released of U.S. Dollar equivalent to € 140,120 thousand, will be released according to the payments for the suppliers of the
project. The events of default of the contract are reflected in the item (g) below.
In September 2016, the Company, through its subsidiary Fibria-MS, raised R$ 423,621 from the total of R$ 831,478 contracted with Banco do
Brasil, with an interest rate of 8.0% p.a., monthly payments of principal and interest as from June 2019 and final maturity in December 2027. The remaining balance of R$ 407,857 might be released
until the end of 2016.
-
(g)
-
Covenants
Some
of the financing agreements of the Company contain covenants establishing maximum indebtedness and leverage levels, as well as minimum coverage of outstanding amounts.
The
Company's debt financial covenants are measured based on consolidated information translated into U.S. Dollars. The covenants specify that indebtedness ratio (Net debt to Adjusted
EBITDA, as defined (Note 4.2.2 to the most recent financial statements for the year ended December 31, 2015)) cannot exceed 4.5 times.
F-37
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
19 Loans and financing (Continued)
The
Company is in full compliance with the covenants established in the financial contracts at September 30, 2016.
The
loan and financing agreements with debt financial covenants also present the following events of default:
-
-
Non-payment, within the stipulated period, of the principal or interest.
-
-
Inaccuracy of any declaration, guarantee or certification provided.
-
-
Cross-default and cross-judgment default, subject to an agreed.
-
-
Subject to certain periods for resolution, breach of any obligation under the contract.
-
-
Certain events of bankruptcy or insolvency of the Company, its main subsidiaries or Veracel.
-
-
Expropriation, confiscation or any other action affecting a significant portion of the Company's assets;
-
-
Addiction, invalidity, ineffectiveness or unenforceability of the contract;
-
-
Extinction or termination the contract for any reason or person;
-
-
Split of the Company without the prior consent of the creditor;
-
-
Any direct or indirect controlling which does not integrate the Votorantim Group, to perform any act aimed annul, revise, cancel or repudiate
by judicial or extrajudicial means the contract;
-
-
Compliance with certain environmental and social conditions on the Horizon Project 2, for Finnvera's contract.
20 Trade payables
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
December 31,
2015
|
|
Local currency
|
|
|
|
|
|
|
|
Related parties
|
|
|
4,885
|
|
|
5,738
|
|
Third parties(i)
|
|
|
1,105,814
|
|
|
585,975
|
|
Foreign currency
|
|
|
|
|
|
|
|
Third parties
|
|
|
232,010
|
|
|
76,304
|
|
|
|
|
|
|
|
|
|
|
|
|
1,342,709
|
|
|
668,017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(i)
-
As
mentioned in Note 1 (a), we have a long-term supply agreement of hardwood pulp with Klabin in different conditions in terms of volume, exclusivity,
guarantees and payment terms up to 360 days, whose prices were practiced in market conditions, as established in the agreement.
As
at September 30, 2016, the amount of R$ 489,127 (zero as at December 31, 2015) refers to pulp purchases of the contract abovementioned.
F-38
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
21 Provision for contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September30, 2016
|
|
December 31, 2015
|
|
|
|
Judicial
deposits
|
|
Provision
|
|
Net
|
|
Judicial
deposits
|
|
Provision
|
|
Net
|
|
Nature of claims
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax
|
|
|
105,327
|
|
|
111,359
|
|
|
6,032
|
|
|
96,997
|
|
|
106,571
|
|
|
9,574
|
|
Labor
|
|
|
70,746
|
|
|
229,159
|
|
|
158,413
|
|
|
64,429
|
|
|
201,561
|
|
|
137,132
|
|
Civil
|
|
|
21,021
|
|
|
42,329
|
|
|
21,308
|
|
|
18,918
|
|
|
37,537
|
|
|
18,619
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
197,094
|
|
|
382,847
|
|
|
185,753
|
|
|
180,344
|
|
|
345,669
|
|
|
165,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
change in the provision for contingencies is as follows:
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
December 31,
2015
|
|
At the beginning of the period
|
|
|
345,669
|
|
|
302,144
|
|
Settlement
|
|
|
(1,751
|
)
|
|
(16,334
|
)
|
Reversal
|
|
|
(12,767
|
)
|
|
(38,196
|
)
|
New litigation
|
|
|
14,503
|
|
|
37,089
|
|
Accrual of financial charges
|
|
|
37,193
|
|
|
60,966
|
|
|
|
|
|
|
|
|
|
At the end of the period
|
|
|
382,847
|
|
|
345,669
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(i)
-
Significant changes in the period
On January 19, 2016, the Tax Federal Administrative Court (CARFConselho Administrativo de Recursos Fiscais) rejected as per
the casting vote of CARF's President, the appeal filed by the Company in the administrative process regarding the tax assessment received on the swap of industrial and forestry assets with
International Paper, as mentioned in Note 24(b)(iv) of our most recent annual financial statements as at December 31, 2015. The Company was notified of the decision on May 25,
2016 and due to the impossibility of new resources and the consequent closure of the case at the administrative level, decided to continue the discussion with the Judiciary and the presentation of
challenge is pending by the Union. The Company presented judicial guarantee, which was accepted and maintains its position to not constitute provisions for contingencies, based on the Company's and
its external legal advisors' opinion that the probability of loss on this case is possible. The updated amount as at September 30, 2016 was R$ 1,646,813.
On February 25, 2016, the Company was notified of the decision that rejected the appeal filed by the tax authorities, in view of the
favorable decision to the Company in the first administrative level. Since that there were no new appeal by the tax authorities, on March 6, 2016, the tax assessment was extinguished.
F-39
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
21 Provision for contingencies (Continued)
On October 21, 2015, the Company was notified of the CARF's decision that judged favorably the appeal presented. Since that there were no
new appeal by the tax authorities, on January 21, 2016, the tax assessment was extinguished.
On February 3, 2016, CARF judged favorably the appeal presented by the Company and rejected the appeal filled by the tax authorities. On
March 21, 2016, the tax authorities filled petitions regarding the administrative proceedings informing they do not have interest in pursuing the discussion in the Superior Chamber of Tax
Appeals, which leads the tax assessment to be extinguished.
22 Revenue
-
(a)
-
Reconciliation
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
Gross amount
|
|
|
9,067,147
|
|
|
9,018,281
|
|
Sales taxes
|
|
|
(173,295
|
)
|
|
(143,054
|
)
|
Discounts and returns(*)
|
|
|
(1,812,842
|
)
|
|
(1,779,175
|
)
|
|
|
|
|
|
|
|
|
Net revenues
|
|
|
7,081,010
|
|
|
7,096,052
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(*)
-
Related
mainly to trade discounts.
-
(b)
-
Information about markets
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
Revenue
|
|
|
|
|
|
|
|
Domestic market
|
|
|
703,044
|
|
|
564,612
|
|
Export market
|
|
|
6,312,661
|
|
|
6,461,801
|
|
Services
|
|
|
65,305
|
|
|
69,639
|
|
|
|
|
|
|
|
|
|
|
|
|
7,081,010
|
|
|
7,096,052
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-40
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
23 Financial results
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
Financial expenses
|
|
|
|
|
|
|
|
Interest on loans and financing(i)
|
|
|
(426,776
|
)
|
|
(329,689
|
)
|
Loans commissions
|
|
|
(16,329
|
)
|
|
(7,344
|
)
|
Others
|
|
|
(91,398
|
)
|
|
(60,913
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(534,503
|
)
|
|
(397,946
|
)
|
|
|
|
|
|
|
|
|
Financial income
|
|
|
|
|
|
|
|
Financial investment earnings
|
|
|
126,127
|
|
|
65,756
|
|
Others(ii)
|
|
|
63,430
|
|
|
66,426
|
|
|
|
|
|
|
|
|
|
|
|
|
189,557
|
|
|
132,182
|
|
|
|
|
|
|
|
|
|
Gains (losses) on derivative financial instruments
|
|
|
|
|
|
|
|
Gains
|
|
|
1,063,671
|
|
|
480,198
|
|
Losses
|
|
|
(380,337
|
)
|
|
(1,369,677
|
)
|
|
|
|
|
|
|
|
|
|
|
|
683,334
|
|
|
(889,479
|
)
|
|
|
|
|
|
|
|
|
Foreign exchange losses and monetary adjustment, net
|
|
|
|
|
|
|
|
Loans and financing
|
|
|
1,750,028
|
|
|
(3,254,485
|
)
|
Other assets and liabilities(iii)
|
|
|
(274,905
|
)
|
|
627,441
|
|
|
|
|
|
|
|
|
|
|
|
|
1,475,123
|
|
|
(2,627,044
|
)
|
|
|
|
|
|
|
|
|
Net
|
|
|
1,813,511
|
|
|
(3,782,287
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(i)
-
Does
not include the amount of R$ 70,330 as at September 30, 2016 (R$ 2,438 as at September 30, 2015), related to capitalized financing costs.
-
(ii)
-
Includes
interest accrual of the tax credits.
-
(iii)
-
Includes
the effect of exchange foreign on cash and cash equivalents, trade accounts receivable, trade payable and others.
F-41
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
24 Expenses by nature
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
Cost of sales
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
|
(1,385,378
|
)
|
|
(1,390,903
|
)
|
Freight
|
|
|
(656,553
|
)
|
|
(656,709
|
)
|
Labor expenses
|
|
|
(406,822
|
)
|
|
(358,997
|
)
|
Variable costs (raw materials, miscellaneous materials and inventories for resale)
|
|
|
(2,567,803
|
)
|
|
(1,839,956
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(5,016,556
|
)
|
|
(4,246,565
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling expenses
|
|
|
|
|
|
|
|
Labor expenses
|
|
|
(24,492
|
)
|
|
(21,526
|
)
|
Selling expenses(i)
|
|
|
(293,224
|
)
|
|
(266,897
|
)
|
Operational leasing
|
|
|
(1,609
|
)
|
|
(1,340
|
)
|
Depreciation and amortization charges
|
|
|
(7,418
|
)
|
|
(7,398
|
)
|
Other expenses
|
|
|
(18,785
|
)
|
|
(15,397
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(345,528
|
)
|
|
(312,558
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
|
|
|
|
|
Labor expenses
|
|
|
(77,922
|
)
|
|
(73,849
|
)
|
Third-party services
|
|
|
(77,019
|
)
|
|
(77,786
|
)
|
Depreciation and amortization
|
|
|
(10,054
|
)
|
|
(12,055
|
)
|
Taxes and contributions
|
|
|
(4,805
|
)
|
|
(4,837
|
)
|
Operating leases and insurance
|
|
|
(8,309
|
)
|
|
(6,552
|
)
|
Other expenses
|
|
|
(23,398
|
)
|
|
(19,728
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(201,507
|
)
|
|
(194,807
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating (expenses) income
|
|
|
|
|
|
|
|
Programs of variable compensation(ii)
|
|
|
(42,215
|
)
|
|
(95,531
|
)
|
Loss on disposal of property, plant and equipment
|
|
|
(22,127
|
)
|
|
(15,665
|
)
|
Tax credits
|
|
|
12,282
|
|
|
2,195
|
|
Provision of contingencies
|
|
|
(14,129
|
)
|
|
(7,928
|
)
|
Changes in fair value of biological assets
|
|
|
(108,014
|
)
|
|
29,831
|
|
Others
|
|
|
(1,651
|
)
|
|
4,028
|
|
|
|
|
|
|
|
|
|
|
|
|
(175,854
|
)
|
|
(83,070
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(i)
-
Includes
handling expenses, storage and transportation expenses and sales commissions and others.
-
(ii)
-
Includes
the provisions/reversals of the variable compensation program and benefit programs (Phantom Stock Options and Stock Options plans), which consider the
Company's stock price in its valuation.
F-42
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
25 Earnings per share
-
(a)
-
Basic
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
Numerator
|
|
|
|
|
|
|
|
Net income (loss) attributable to the shareholders of the Company
|
|
|
1,747,103
|
|
|
(563,286
|
)
|
Denominator
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding
|
|
|
553,590,604
|
|
|
553,591,281
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per sharein Reais
|
|
|
3.16
|
|
|
(1.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
weighted average number of shares in the presented periods is represented by a total number of shares of 553,934,646 issued and outstanding for the nine-month period ended
September 30, 2016 and 2015, without considering treasury shares, for total of 344,042 shares in the nine-month period ended September 30, 2016 and 2015. In the nine-month period ended
September 30, 2016 and 2015 there were no changes in the number of shares of Company.
-
(b)
-
Diluted
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
September 30,
2015
|
|
Numerator
|
|
|
|
|
|
|
|
Net income (loss) attributable to the shareholders of the Company
|
|
|
1,747,103
|
|
|
(563,286
|
)
|
Denominator
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding
|
|
|
553,590,604
|
|
|
553,591,281
|
|
Dilution effect Stock options
|
|
|
894,976
|
|
|
687,840
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding adjusted according to dilution effect
|
|
|
554,485,580
|
|
|
554,279,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share (in Reais)
|
|
|
3.15
|
|
|
(1.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26 Explanatory notes not presented
We presented explanatory notes to the annual financial statements detailing the financial instruments by category (Note 7), credit quality of financial assets (Note 8),
financial and operational lease
agreements (Note 21), advances to suppliers (Note 22), the tax amnesty and refinancing program (Note 25), asset retirement obligations (Note 26), long term commitments
(Note 27), benefits to employees (Note 29), compensation program based on shares (Note 30), insurance (Note 34), non-current assets held for sale (Note 36) and
impairment testing (Note 37), that we omitted in the September 30, 2016 condensed consolidated interim financial information because the assumptions, operations and policies have not
seen any relevant changes compared to the position presented in the financial statements as at December 31, 2015.
F-43
Table of Contents
Fibria Celulose S.A.
Notes to the unaudited condensed consolidated interim
financial information at September 30, 2016 (Continued)
In thousands of Reais, unless otherwise indicated
27 Subsequent event
On October 7, 2016, the Company approved the public distributions of Agribusiness Credit Receivable Certificates (CRA) to be issued by Eco Securitizadora de Direitos
Creditórios do Agronegócio S.A., until the amount of R$ 1,700,000, in two tranches, being the first tranche with maturity for the principal in 2022 and an interest
rate of 99% of CDI and the second tranche with maturity for the principal in 2023 and an interest rate indexed to NTN-B 24. The Agribusiness Credit Receivable Certificates will be backed in Export
Credit Notes ("NCEs") to be issued by the Company.
* * *
F-44
Table of Contents
PROSPECTUS
FIBRIA CELULOSE S.A.
Debt Securities and Guarantees
Fibria Overseas Finance Ltd.
Guaranteed Debt Securities
Fibria
Celulose S.A. may offer debt securities from time to time, and Fibria Overseas Finance Ltd. may offer debt securities guaranteed by Fibria Celulose S.A. from
time to time, in each case, in amounts, at prices and on terms to be determined at or prior to the time of the offering. This prospectus describes the general manner in which these securities may be
offered using this prospectus. We will provide specific terms and offering prices of these securities in supplements to this prospectus. You should read this prospectus and any accompanying prospectus
supplement carefully before you invest.
We
may offer the securities through underwriting syndicates managed or co-managed by one or more underwriters or dealers, through agents or directly to investors, on a continuous or
delayed basis or through any combination of these methods. The prospectus supplement for each offering of securities will describe in detail the plan of distribution for that offering. For general
information about the distribution of securities offered, you should refer to the section entitled "Plan of Distribution" in the applicable prospectus supplement. The net proceeds we expect to receive
from such sale will also be set forth in a prospectus supplement.
Investing in our securities involves risks. You should carefully review the "Risk Factors" section set forth in our most recent annual report on
Form 20-F, which is incorporated by reference herein, as well as in other reports we file from time to time and that we specify are incorporated by reference herein or in the applicable
prospectus supplement.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The
date of this prospectus is May 1, 2014.
TABLE OF CONTENTS
We are responsible for the information contained in this prospectus, any accompanying prospectus supplement and the documents incorporated by reference herein and
therein. You should rely only on the information contained or incorporated by reference in this prospectus and the applicable prospectus supplement. We have not authorized anyone to provide you with
different information. This prospectus may only be used where it is legal to sell these securities. You should not assume that the information in this prospectus or the applicable prospectus
supplement is accurate as of any date other than the date on the front of those documents. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not
permitted.
i
Table of Contents
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement we filed with the Securities and Exchange Commission, or the SEC, using the "shelf"
registration process. Under the shelf registration process, using this prospectus, together with a prospectus supplement, we may sell from time to time the debt securities described in this prospectus
in one or more offerings. This prospectus provides you only with a general description of the debt securities that may be offered. Each time we sell securities pursuant to this prospectus, we will
provide a prospectus supplement that will contain specific information about the terms of the securities being offered. The applicable prospectus supplement may include a discussion of any risk
factors or other special considerations applicable to those securities or to us. The applicable prospectus supplement may also add to, update or change information contained in this prospectus and,
accordingly, to the extent inconsistent, the information in this prospectus is superseded by the information in the applicable prospectus supplement. We may also add, update or change other
information contained in the prospectus by incorporating by reference information we file with the SEC. You should read this prospectus, any related prospectus supplements and the related exhibits
filed with the SEC, together with the additional information described under "Where You Can Find More Information" and "Incorporation of Certain Documents by Reference" before making an investment in
our securities.
This
prospectus contains summaries of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information. All
of the summaries are qualified in their entirety by reference to the actual documents. Copies of the documents referred to herein have been filed, or will be filed or incorporated by reference as
exhibits to the registration statement of which this prospectus is a part, and you may obtain copies of those documents as described below under "Where You Can Find More Information."
Neither the delivery of this prospectus nor any sale made under it implies that there has been no change in our affairs or that the information in this prospectus
is correct as of any date after the date of this prospectus. You should not assume that the information in this prospectus, including any information incorporated in this prospectus by reference, any
accompanying prospectus supplement or any free writing prospectus prepared by us, is accurate as of any date other than the date on the front of those documents. Our business, financial condition,
results of operations and prospects may have changed since that date.
You
should rely only on the information contained in or incorporated by reference in this prospectus or a prospectus supplement. We have not authorized anyone to provide you with
different information. We are not making an offer to sell securities in any jurisdiction where the offer or sale of such securities is not permitted.
In
this prospectus, unless otherwise indicated, references to:
-
-
"Fibria Celulose" refers to Fibria Celulose S.A.;
-
-
"Fibria," "our company," "we," "our," "ours," "us" or similar terms refer to Fibria Celulose together with its
consolidated subsidiaries and jointly controlled companies;
-
-
"Fibria Finance" refers to Fibria Overseas Finance Ltd.;
-
-
"Brazil" refers to the Federative Republic of Brazil;
-
-
references to the "
real
,"
"
reais
" or "R$" are to the Brazilian
real
, the official currency of Brazil;
and
-
-
references to "U.S. dollars," "dollars" or "U.S.$" are to United States dollars.
1
Table of Contents
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form F-3 under the U.S. Securities Act of 1933, as amended, or the
Securities Act, relating to the securities offered by this prospectus. This prospectus, which is part of the registration statement, does not contain all of the information set forth in the
registration statement and the exhibits and schedules to the registration statement. For further information pertaining to us, we refer you to the registration statement and the exhibits and schedules
filed as part of the registration statement. Statements contained or incorporated by reference in this prospectus regarding the contents of any contract or other document are not necessarily complete,
and, where the contract or other document is an exhibit to the registration statement or incorporated or deemed to be incorporated by reference, each of these statements is qualified in all respects
by the provisions of the actual contract or other document. If a document has been filed as an exhibit to the registration statement, we refer you to the copy of the document that has been filed. We
file reports, including annual reports on Form 20-F, and other information with the SEC pursuant to the rules and regulations of the SEC that apply to foreign private issuers.
The
registration statement, including exhibits and schedules thereto, and any other materials we may file with the SEC, including our annual and other reports filed and/or furnished to
the SEC under the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act, may be inspected without charge, at the following location of the SEC:
Public
Reference Room
100 F Street, N.E.
Room 1580
Washington, D.C. 20549
In
addition, the SEC maintains an Internet web site at http://www.sec.gov, from which you can electronically access the registration statement and its exhibits.
2
Table of Contents
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" information into this prospectus. This means that we can disclose important information
to you by referring you to another document filed separately with the SEC. The information incorporated by reference is considered to be a part of this prospectus, except for any information
superseded by information that is included directly in this prospectus or incorporated by reference subsequent to the date of this prospectus.
We
incorporate by reference into this prospectus the following documents listed below, which we have already filed with or furnished to the
SEC:
-
-
our annual report on Form 20-F for the fiscal year ended December 31, 2013, which we filed with the SEC on
February 28, 2014 (File No. 001-15018), which we refer to as our 2013 Annual Report;
-
-
any future annual reports on Form 20-F that we file with the SEC after the date of this prospectus and prior to the
termination of the offering of the securities offered by this prospectus;
-
-
our current report on Form 6-K furnished to the SEC on April 24, 2014 (File No. 001-15018),
containing our unaudited consolidated interim financial statements as of March 31, 2014 and for the three-month periods ended March 31, 2014 and 2013, which we refer to as our First
Quarter Form 6-K;
-
-
our current report on Form 6-K furnished to the SEC on May 1, 2014 (File No. 001-15018), containing a
statement regarding the computation of our ratio of earnings to fixed charges; and
-
-
any future reports on Form 6-K that we submit to the SEC after the date of this prospectus that are identified in
such reports as being incorporated by reference in this prospectus.
You
may request a copy of any and all of the information that has been incorporated by reference into this prospectus and that has not been delivered with this prospectus, at no cost, by
writing or telephoning us at Alameda Santos, 13576th floor, 01419-908, São Paulo, SP, Brazil, telephone +55 11 2138-4565.
3
Table of Contents
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements related to our plans, expectations regarding future events, business strategies and
prospects that are subject to risks and uncertainties. Some of the matters discussed concerning our business operations and financial performance include forward-looking statements within the meaning
of the Securities Act and the Exchange Act.
We
have based these forward-looking statements largely on our current expectations and estimates about future events and financial trends, which affect or may affect our businesses and
results of
operations. Although we believe that these forward-looking statements are based upon reasonable assumptions, these statements are subject to several risks and uncertainties and are made in light of
information currently available to us. It is possible that our future performance may differ materially from our current assessments due to a number of factors, including the
following:
-
-
our direction and future operation;
-
-
the implementation of our principal operating strategies, including our potential participation in acquisition or joint
venture transactions or other investment opportunities;
-
-
general economic, political and business conditions, both in Brazil and in our principal export markets;
-
-
industry trends and the general level of demand for, and change in the market prices of, our products;
-
-
existing and future governmental regulation, including tax, labor, pension and environmental laws and regulations and
import tariffs in Brazil and in other markets in which we operate or to which we export our products;
-
-
the competitive nature of the industry in which we operate;
-
-
our level of capitalization, including the levels of our indebtedness and overall leverage;
-
-
the cost and availability of financing;
-
-
compliance with the covenants contained in the instruments governing our indebtedness;
-
-
the implementation of our financing strategy and capital expenditure plans;
-
-
interest rate fluctuations, inflation and fluctuations in currency exchange rates, including the Brazilian
real
and the U.S.
Dollar;
-
-
legal and administrative proceedings to which we are or may become a party;
-
-
the volatility of the prices of the raw materials we sell or purchase to use in our business;
-
-
other statements included or incorporated in this prospectus that are not historical; and
-
-
other risk factors discussed under "Item 3. Key InformationRisk Factors" of our most recent annual
report on Form 20-F, which annual report is incorporated by reference herein.
The
words "believe," "may," "could," "will," "should," "would," "estimate," "continue," "plan," "anticipate," "intend," "expect" and similar words are intended to identify estimates and
forward-looking statements. Estimates and forward-looking statements speak only as of the date they were made, and we undertake no obligation to update or to review any estimate and/or forward-looking
statement because of new information, future events or other factors. Estimates and forward-looking
statements involve risks and uncertainties and are not guarantees of future performance. Our future results may differ materially from those expressed in these estimates and forward-looking
statements. In light of the risks and uncertainties described above, the estimates and forward-looking statements discussed in this prospectus might not occur and our future results and our
performance may differ materially from those expressed in these forward-looking statements due to, inclusive of, but not limited to, the factors mentioned above. As a result of these risks and
uncertainties, investors should not base their decisions to invest in this offering on these estimates or forward-looking statements.
4
Table of Contents
FIBRIA CELULOSE
We are the world's largest producer of market pulp, according to the independent consulting firm Hawkins Wright and the Pulp and Paper
Products Council, or the PPPC, with an annual aggregate pulp production capacity of approximately 5.3 million tons. This represented 28% of the world demand for bleached eucalyptus kraft market
pulp, or BEKP, in 2013, according to the PPPC.
We
believe that our BEKP production costs are among the lowest in the world. During the three-month period ended March 31, 2014, our pulp cash production cost per ton, including
logistics, was 12% less than the average in Brazil, the most competitive market for BEKP, and in the year ended December 31, 2013, it was 5% less than the average in Brazil, according to
Hawkins Wright. This important competitive advantage is principally due to: (1) our economies of scale, (2) advanced forestry techniques in managing the planting, maintenance and
harvesting of our forests; (3) modern industrial plants using state-of-the-art technology; (4) the comparatively short harvest cycle of our trees; and (5) the relative low-cost of
our raw materials, including electricity and chemicals.
We
produce BEKP in three pulp mills, which are located in the States of Espírito Santo, Mato Grosso do Sul and São Paulo. In addition, we have a 50%
interest in Veracel Celulose S.A., or Veracel, a joint venture with the Swedish-Finnish company Stora Enso OYJ, which operates a pulp mill in the State of Bahia. In 2013, we produced 5,258
kilotons of pulp (including 50.0% of Veracel's pulp production) and recorded consolidated net revenues of R$6,917 million.
Our
forestry base is broad and diversified. We have certified quality, environmental, occupational health and safety and forest management systems, and all of our units have been
certified by the Forest Stewardship Council® (FSC®) and Cerflor/PEFC. As of March 31, 2014, we had total forestry land of 961.7 thousand hectares (owned, leased
or held in partnership) located in six Brazilian states, including (1) 556.8 thousand hectares planted with eucalyptus, which we expect will supply almost all of the wood we require for
our cellulose production, and (2) 346.2 thousand hectares of conservation areas with native vegetation, or preserved areas.
We
are the controlling shareholder of Portocel Terminal Especializado de Barra do Riacho S.A., or Portocel, in which we hold a 51% interest. Portocel operates a specialized
terminal of Barra do Riacho, located three kilometers from our Aracruz mill in the State of Espírito Santo, and it is a port from which we export a portion of our cellulose production.
The
export market is the principal destination for our production; our export sales volume accounted for 90.2% during the three-month period ended March 31, 2014 and 91.4% in the
year ended December 31, 2013 of our total cellulose sale volumes. During the three-month period ended March 31, 2014, 46% of our total sales volume was exported to Europe, 26% to Asia,
19% to North America and the remaining 9% was sold in Latin America (including Brazil), as compared to 42%, 22%, 26% and 10%, respectively, in the corresponding period in 2013. In 2013, Europe was the
principal region for our exports of cellulose, with 39% of our cellulose volume sold, followed by North America with 28%, Asia with 25% and Latin America (including Brazil) with 9%.
Our
strategy is to concentrate our sales in the markets for tissue paper and specialized papers, which generally present less volatility compared to the markets for printing and writing
papers. In 2013, approximately 53% of the cellulose volume we sold was used by our customers to produce tissue paper, approximately 30% to produce printing and writing paper and approximately 17% to
produce specialized papers.
Our
joint-controlling shareholders are Votorantim Industrial S.A., or VID, and BNDES Participações S.A., or BNDESPar, which are also our
largest shareholders and together hold 59.8% of our total voting capital. VID is a holding company for industrial assets of the Votorantim Group, one of the largest private conglomerates in Brazil,
and BNDESPar, an investment arm of the Brazilian
5
Table of Contents
National
Bank for Economic and Social Development (
Banco Nacional do Desenvolvimento
), invests in various segments of the Brazilian economy.
Fibria
Celulose is incorporated under the laws of Brazil under the name Fibria Celulose S.A., as a publicly-held stock corporation with unlimited duration, operating under the
Brazilian corporate law. Our headquarters and principal executive offices are located at Alameda Santos, 1357, 6th floor, 01419-908, São Paulo, SP, Brazil, and our telephone
number is +55 11 2138-4565. Our website address is www.fibria.com.br/ir. Information contained on our website is, however, not incorporated by reference in, and should not be considered as part of
this prospectus, or any accompanying prospectus supplement.
6
Table of Contents
FIBRIA FINANCE
Fibria Finance is a 100%-owned finance subsidiary of Fibria Celulose. Fibria Finance is a finance company, and its business is to issue
debt securities to fund the activities of Fibria Celulose and its subsidiaries and affiliates. Fibria Finance is an exempted company which was incorporated with limited liability under the laws of the
Cayman Islands on October 9, 2009 with unlimited duration. The registered office of Fibria Finance is at the offices of Intertrust Corporate Services (Cayman) Limited, 190 Elgin Avenue, George
Town, Grand Cayman KY1-9005, Cayman Islands and its principal executive office is located at Alameda Santos, 1357, 6th floor, 01419-908, São Paulo, SP, Brazil. Fibria Finance was
registered with Company No. 231879 by the Registrar of Companies of the Cayman Islands on October 9, 2009.
7
Table of Contents
USE OF PROCEEDS
Fibria Celulose
Unless otherwise indicated in any accompanying prospectus supplement, Fibria Celulose intends to use the net proceeds from the sale of
its debt securities for general corporate purposes, including to repay debt.
Fibria Finance
Unless otherwise indicated in any accompanying prospectus supplement, Fibria Finance intends to on-lend the net proceeds from the sale
of the debt securities to Fibria Celulose and its subsidiaries for their general corporate purposes, including to repay debt.
8
Table of Contents
LEGAL OWNERSHIP OF DEBT SECURITIES
In this prospectus and in any applicable prospectus supplement, when we refer to the "holders" of debt securities as being entitled to
specified rights or payments, we mean only the actual legal holders of the debt securities. While you will be the holder if you hold a security registered in your name, more often than not the
registered holder will actually be a broker, bank, other financial institution or, in the case of a global security, a depositary. Our obligations, as well as the obligations of the trustee, any
registrar, any depositary and any third parties employed by us or the other entities listed above, run only to persons who are registered as holders of our debt securities, except as may be
specifically provided for in a contract governing the debt securities. For example, once we make a payment to the registered holder, we have no further responsibility for the payment even if that
registered holder is legally required to transfer the payment to you as a street name customer but does not do so.
Street Name and Other Indirect Holders
Holding debt securities in accounts with banks or brokers is known as holding in "street name." If you hold our debt securities in
street name, we will recognize only the bank or broker, or the financial institution that the bank or broker uses to hold the debt securities, as a holder. These intermediary banks, brokers, other
financial institutions and depositaries transfer to you, as an indirect holder, principal, interest and other payments, if any, on the debt securities, either because they agree to do so in their
customer agreements or because they are legally required to do so. This means that if you are an indirect holder, you will need to coordinate with the institution through which you hold your interest
in a security in order to determine how the provisions involving holders described in this prospectus and any applicable prospectus supplement will actually apply to you. For example, if the debt
security in which you hold a beneficial interest in street name can be repaid at the option of the holder, you cannot redeem it yourself by following the procedures described in the prospectus
supplement relating to that debt security. Instead, you would need to cause the institution through which you hold your interest to take those actions on your behalf. Your institution may have
procedures and deadlines different from or additional to those described in this prospectus and any applicable prospectus supplement.
If
you hold our debt securities in street name or through other indirect means, you should check with the institution through which you hold your interest in our debt securities to find
out, among other things:
-
-
how it handles payments and notices with respect to the debt securities;
-
-
whether it imposes fees or charges;
-
-
how it handles voting, if applicable;
-
-
how and when you should notify it to exercise on your behalf any rights or options that may exist under the debt
securities;
-
-
whether and how you can instruct it to send you debt securities registered in your own name so you can be a direct holder;
and
-
-
how it would pursue rights under the debt securities if there were a default or other event triggering the need for
holders to act to protect their interests.
Global Securities
A global security is a special type of indirectly held security. If we issue debt securities in the form of global securities, the
ultimate beneficial owners can only be indirect holders. We do this by requiring that the global security be registered in the name of a financial institution we select and by requiring that the debt
securities included in the global security not be transferred to the name of any other
9
Table of Contents
direct
holder unless the special circumstances described below occur. The financial institution that acts as the sole direct holder of the global security is called the "depositary." Any person
wishing to own a security issued in global form must do so indirectly through an account with a broker, bank or other financial institution that in turn has an account with the depositary. The
applicable prospectus supplement will indicate whether the debt securities will be issued only as global securities.
As
an indirect holder, your rights relating to a global security will be governed by the account rules of your financial institution and of the depositary, as well as general laws
relating to securities transfers. We will not recognize you as a holder of the debt securities and instead will deal only with the depositary that holds the global security.
You
should be aware that if our debt securities are issued only in the form of global securities:
-
-
you cannot have the debt securities registered in your own name;
-
-
you cannot receive physical certificates for your interest in the debt securities;
-
-
you will be a street name holder and must look to your own bank or broker for payments on the debt securities and
protection of your legal rights relating to the debt securities;
-
-
you may not be able to sell interests in the debt securities to some insurance companies and other institutions that are
required by law to own their debt securities in the form of physical certificates;
-
-
the depositary's policies will govern payments, transfers, exchanges and other matters relating to your interest in the
global security. We, the trustee and any registrar have no responsibility for any aspect of the depositary's actions or for its records of ownership interests in the global security. We, the trustee
and any registrar also do not supervise the depositary in any way; and
-
-
the depositary will require that interests in a global security be purchased or sold within its system using same-day
funds for settlement.
In
a few special situations described below, a global security representing our debt securities will terminate and interests in it will be exchanged for physical certificates
representing the debt securities. After that exchange, the choice of whether to hold debt securities directly or in street name will be up to you. You must consult your bank or broker to find out how
to have your interests in the debt securities transferred to your name, so that you will be a direct holder.
Unless
we specify otherwise in the applicable prospectus supplement, the special situations in which a global security representing our debt securities will terminate
are:
-
-
the depositary has notified us that it is unwilling or unable to continue as depositary for such global security or the
depositary ceases to be a clearing agency registered under the Exchange Act, as amended, at a time when such depositary is required to be so registered in order to act as depositary, and, in each
case, we do not or cannot appoint a successor depositary within 90 days; or
-
-
any of the notes has become immediately due and payable in accordance with "Description of the Debt
SecuritiesEvents of Default.
The
applicable prospectus supplement may also list additional situations for terminating a global security that would apply only to the particular series of debt securities covered by
that prospectus supplement. When a global security terminates, the depositary (and not us, the trustee or any registrar) is responsible for deciding which institutions will be the initial direct
holders.
10
Table of Contents
DESCRIPTION OF THE DEBT SECURITIES
The following briefly summarizes the material provisions of the debt securities and the indentures that will
govern the debt securities, other than pricing and related terms and other terms that will be disclosed in the applicable prospectus supplement. You should read the more detailed provisions of the
applicable indenture, including the defined terms, for provisions that may be important to you. You should also read the particular terms of your series of debt securities, which will be described in
more detail in the applicable prospectus supplement. This summary is subject to, and qualified in its entirety by reference to, the provisions of such indenture, the debt securities and the prospectus
supplement relating to each series of debt securities. In this summary, references to "Fibria Celulose" mean Fibria Celulose S.A. only and do not include any of our
subsidiaries.
Indentures
Any debt securities that we issue will be governed by a document called an indenture. The indenture is a contract entered into between
the issuer, the guarantor, if applicable, and a trustee, currently Deutsche Bank Trust Company Americas. The trustee under an indenture has two main
roles:
-
-
first, the trustee can enforce your rights against us if we default on our obligations under the indenture or the debt
securities, although there are some limitations on the extent to which the trustee acts on your behalf that are described under "Events of Default"; and
-
-
second, the trustee performs administrative duties for us, such as sending payments and notices to you.
Fibria
Celulose will issue debt securities under an indenture we refer to as the Fibria Celulose indenture. Fibria Finance will issue debt securities guaranteed by Fibria Celulose under
an indenture we refer to as the Fibria Finance indenture.
Each
of the Fibria Celulose and Fibria Finance indentures and their associated documents contain the full legal text of the matters described in this section. We have agreed in each
indenture that New York law governs the indenture and the debt securities. We have filed a copy of the Fibria Celulose and Fibria Finance indentures with the SEC as exhibits to our registration
statement. We have consented in each indenture to the non-exclusive jurisdiction of any U.S. federal or New York state court sitting in the borough of Manhattan in the City of New York, New York,
United States and any appellate court from any thereof.
Types of Debt Securities
Together or separately, we may issue as many distinct series of debt securities under our indentures as are authorized by the corporate
bodies that are required under applicable law and our corporate organizational documents to authorize the issuance of debt securities. Specific issuances of debt securities will also be governed by a
supplemental indenture, an officer's
certificate or a document evidencing the authorization of any such corporate body. This section summarizes material terms of the debt securities that are common to all series of debt securities and to
each of the Fibria Celulose and Fibria Finance indentures, unless otherwise indicated in this section and in the prospectus supplement relating to a particular series of debt securities.
Because
this section is a summary, it does not describe every aspect of the debt securities. This summary is subject to and qualified in its entirety by reference to all the provisions
of the indentures, including the definition of various terms used in the indentures. For example, we describe the meanings for only the more important terms that have been given special meanings in
the indentures. Whenever we refer to defined terms of the indentures in this prospectus or in any prospectus supplement, those defined terms are incorporated by reference herein or in such prospectus
supplement.
11
Table of Contents
We
may issue the debt securities at par (or with a small discount), at a premium or as original issue discount securities, which are debt securities that are offered and sold at a
substantial discount to their stated principal amount. We may also issue the debt securities as indexed securities or securities denominated in currencies other than the U.S. dollar, currency units or
composite currencies, as described in more detail in the prospectus supplement relating to any such debt securities. We will describe the U.S. federal income tax consequences and any other special
considerations applicable to original issue discount, indexed or foreign currency debt securities in the applicable prospectus supplement.
In
addition, the material financial, legal and other terms particular to a series of debt securities will be described in the prospectus supplement relating to that series. Those terms
may vary from the terms described here. Accordingly, this summary also is subject to and qualified by reference to the description of the terms of the series of debt securities described in the
applicable prospectus supplement.
In
addition, the prospectus supplement will state whether we will list the debt securities of the series on any stock exchange or exchanges and, if so, which ones.
Form, Exchange and Transfer
The debt securities will be issued, unless otherwise indicated in the applicable prospectus supplement, in fully registered form
without interest coupons and in minimum denominations of US$2,000 and any integral multiples of US$1,000 thereof.
You
may have your debt securities broken into more debt securities of smaller authorized denominations or combined into fewer debt securities of larger authorized denominations, as long
as the total principal amount is not changed. This is called an exchange.
You
may exchange or transfer your registered debt securities at the office of the trustee. The trustee will maintain an office in New York, New York. The trustee acts as our agent for
registering debt securities in the names of holders and transferring registered debt securities. The entity performing the role of maintaining the list of registered holders is called the
"
security registrar
." It will also register transfers of the registered debt securities.
You
will not be required to pay a service charge to transfer or exchange debt securities, but you may be required to pay any tax or other governmental charge associated with the
registration of transfer or exchange. The transfer or exchange of a registered debt security will only be made if you have duly endorsed the debt security or provided the security registrar with a
written instrument of transfer satisfactory in form to the security registrar.
If
we designate additional transfer agents, they will be named in the applicable prospectus supplement. We may cancel the designation of any particular transfer agent. Fibria Celulose
may also approve a change in the office through which any transfer agent acts or choose to act as our transfer agent.
If
the debt securities are redeemable and we redeem less than all of the debt securities of a particular series, we may block the transfer or exchange of debt securities in order to
freeze the list of holders to prepare the mailing during the period beginning 15 days before the day we mail the notice of redemption and ending on the day of that mailing. We may also refuse
to register transfers or exchanges of debt securities selected for redemption. However, we will continue to permit transfers and exchanges of the unredeemed portion of any debt security being
partially redeemed.
12
Table of Contents
Payment and Paying Agents
If your debt securities are in registered form, we will pay interest to you if you are a direct holder listed in the trustee's records
at the close of business on a particular day in advance of each due date for interest, even if you no longer own the security on the interest due date. That particular day is called the
"
regular record date
" and will be stated in the applicable prospectus supplement.
We
will pay interest, principal (and premium, if any) and any other money due on global registered debt securities pursuant to the applicable procedures of the depositary or, if the debt
securities are not in global form, at our office or agency maintained for that purpose in New York, New York. We may also choose to pay interest by mailing checks. Upon application by a holder to the
specified office of the trustee or any paying agent not less than 10 business days before the due date for any payment in respect of a debt security, such payment may be made by transfer to a U.S.
dollar account maintained by the holder with a bank in New York City. We may also arrange for additional payment offices, and we may cancel or change our use of these offices, including our use of the
trustee's corporate trust office. These offices are called "
paying agents
." We may appoint paying agents outside the United States for a specific
issuance of securities. We may also choose to act as our own paying agent.
Regardless
of who acts as paying agent, all money that we pay as principal, premium or interest to a paying agent, or then held by us in trust, that remains unclaimed at the end of two
years after the amount is due to a direct holder will, subject to any unclaimed property laws, be repaid to us or (if then held in trust) discharged from trust. After that two-year period, direct
holders may look only to us for payment and not to the trustee, any other paying agent or anyone else.
Street name and other indirect holders should consult their banks or brokers for information on how they will receive payments.
Notices
We and the trustee will send notices only to direct holders, using their addresses as listed in the registrar's records. In addition,
if the debt securities of a series are listed on a securities exchange, we will provide notice to the holders in accordance with the applicable rules of such exchange.
Modification and Waiver
Each indenture provides several categories of changes that can be made to the indenture and the debt securities issued under that
indenture. Such changes may or may not require the consent of the holders, as described below.
Changes Requiring Each Holder's Approval
Each indenture provides that there are changes to the indenture that cannot be made without the approval of each holder of the
outstanding debt securities affected thereby. Those types of changes include:
-
-
reduce the rate of interest on any debt security or extend the stated maturity of any payment of interest on any debt
security;
-
-
reduce the principal amount of any debt security or extend the stated maturity of any payment of principal of (and
premium, if any, on) any debt security;
-
-
reduce the amount payable upon the redemption of any debt security or change the time at which any debt security may be
redeemed;
-
-
a change in the currency of any payment on a debt security or its place of payment;
-
-
an impairment of the holder's right to sue for payment of any amount due on a debt security;
13
Table of Contents
-
-
a waiver of specified defaults in payment of principal of (and premium, if any, on) and interest on a debt security;
-
-
in the case of the Fibria Finance indenture, amend any provisions of the payment obligations under guarantees in a manner
that would materially and adversely affect the holders;
-
-
a reduction in the percentage in principal amount of the outstanding debt securities the consent of the holders of which
is needed to modify or amend the indenture or a debt security or waive compliance with various provisions of the indenture; and
-
-
make any change in the amendment or waiver provisions which require each holder's consent.
Changes Not Requiring Approval
Each indenture provides that there are changes to the indenture that do not require any approval by holders of outstanding debt
securities under that indenture. Those types of changes include:
-
-
to cure any ambiguity, defect or inconsistency in the indenture or the debt securities;
-
-
to comply with the covenant described under the caption "Certain Covenants of Fibria
CeluloseMergers and Similar Transactions";
-
-
to evidence and provide for the acceptance of an appointment by a successor trustee;
-
-
to provide for any guarantee of the debt securities, to secure the debt securities or to confirm and evidence the release,
termination or discharge of any guarantee of or Lien securing the debt securities when such release, termination or discharge is permitted by the indenture;
-
-
to provide for or confirm the issuance of additional debt securities; or
-
-
to make any other change that does not materially, adversely affect the rights of any holder or to conform the indenture
to this "Description of the Debt Securities" or the "Description of the Notes" in the applicable prospectus supplement.
Changes Requiring Majority Approval
Each indenture provides that other changes to the indenture and the outstanding debt securities under the indenture requires the
approval by the holders of debt securities that together represent a majority of the outstanding principal amount of the particular series affected. This approval would also be required for us to
obtain a waiver of all or part of any covenants described below under "Certain Covenants of Fibria Celulose" or in the applicable prospectus supplement, for us to obtain a waiver of a
past default, or to rescind or annul a declaration of acceleration with respect to debt securities of any series before a judgment or decree for payment of the money due has been obtained by the
trustee if subject to the conditions described in "Events of DefaultRemedies Upon an Event of Default." The required approval must be given by written consent. However, we cannot obtain a
waiver of a payment default or any other aspect of an indenture or the debt securities issued under that indenture described above under
"Changes Requiring Each Holder's Approval" unless we obtain the consent of all holders of the debt securities issued under that indentures to the waiver.
Further Details Concerning Voting
Debt securities will not be considered outstanding, and therefore the holders of those debt securities will not be eligible to vote or
take other action under the applicable indenture, if we have deposited or set aside in trust for the holders money for their payment or redemption. Debt securities will also not be eligible to vote or
take other action under the applicable indenture if they have been defeased as described under "Defeasance and Discharge." Debt securities held by Fibria Celulose, Fibria Finance or their
affiliates are not considered outstanding.
14
Table of Contents
We
will generally be entitled to set any day as a record date for the purpose of determining the holders of outstanding debt securities that are entitled to vote or take other action
under the applicable indenture. In limited circumstances, the trustee, and not Fibria Celulose or Fibria Finance, will be entitled to set a record date for action by holders. If a record date is set
for a vote or other action to be taken by holders of a particular series, that vote or action may be taken only by persons who are holders of outstanding debt securities of that series on the record
date and must be taken within 180 days following the record date or another period that we or, if it sets the record date, the trustee may specify. This period may be shortened or lengthened
(but not beyond 180 days).
Street name and other indirect holders should consult their banks or brokers for information on how approval may be granted or denied if we seek to change the
indenture or the debt securities or request a waiver.
Redemption
Unless otherwise indicated in the applicable prospectus supplement, your debt security will not be entitled to the benefit of any
sinking fund; that is, we will not deposit money on a regular basis into any separate custodial account to repay your debt securities. In addition, other
than as set forth in "Optional Tax Redemption" below, unless otherwise specified in the applicable prospectus supplement, we will not be entitled to redeem your debt security before its
stated maturity.
If
the applicable prospectus supplement specifies a redemption date, it will also specify one or more redemption prices, which may be expressed as a percentage of the principal amount of
your debt security or by reference to one or more formulae used to determine the redemption price. It may also specify one or more redemption periods during which the redemption prices relating to a
redemption of debt securities during those periods will apply.
If
the applicable prospectus supplement specifies a redemption commencement date, we may redeem your debt security at our option at any time on or after that date. If we redeem your debt
security, we will do so at the specified redemption price, together with interest accrued to the redemption date. If different prices are specified for different redemption periods, the price we pay
will be the price that applies to the redemption period during which your debt security is redeemed. If less than all of the debt securities are redeemed at any time, (1) the particular debt
securities to be redeemed will be chosen by the trustee in compliance with the requirements governing redemptions of the principal securities exchange, if any, on which debt securities of the
applicable series are listed or if such securities exchange has no requirement governing redemption or the debt securities of the applicable series are not then listed on a securities exchange, on a
pro rata
basis or by lot (or, in the case of debt securities issued in global form, subject to the applicable procedures of the depositary), and
(2) the trustee will authenticate and deliver to the holder of such debt securities without service charge, a new debt security or securities of the same series and of like tenor, of any
authorized denomination as requested by such holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the debt security so surrendered. If debt
securities of any series are redeemed in part, the remaining outstanding amount of any debt security of that series must be at least equal to U.S.$2,000 and be an integral multiple of U.S.$1,000.
In
the event that we exercise an option to redeem any debt securities, we will give to the trustee and the holders written notice of the principal amount of the debt securities to be
redeemed, not less than five business days nor more than 60 business days before the applicable redemption date. We will give the notice in the manner described above under "Notices."
15
Table of Contents
Optional Tax Redemption
Unless otherwise indicated in the applicable prospectus supplement, we will have the option to redeem, in whole but not in part, any
series of debt securities if:
-
-
as a result of a change in, or amendment to, any laws or regulations:
-
-
in the case of a series of debt securities issued by Fibria Celulose under the Fibria Celulose indenture or guaranteed by
Fibria Celulose under the Fibria Finance indenture, Fibria Celulose or any successor has or will become obligated to pay additional amounts, as described below under "Payment of
Additional Amounts," with respect to that series of debt securities or the related guarantee in excess of the additional amounts that Fibria Celulose or any successor would pay if payments in respect
of that series of debt securities or the guarantee were subject to deduction or withholding for Brazilian Taxes (as defined under "Payment of Additional Amounts") at a rate of
(1) 15% generally in case of any taxes imposed by Brazil, or (2) 25% in case of taxes imposed by Brazil on amounts paid to residents of countries which do not impose any income tax or
which impose it at a maximum rate lower than 20% or where the laws of that country or location impose restrictions on the disclosure of (x) shareholding composition; (y) the ownership of
the investment; or (z) the beneficial ownership of income paid to non-resident persons, pursuant to Law No. 9,779, dated January 19, 1999; or
-
-
in the case of a series of debt securities issued by Fibria Finance under the Fibria Finance indenture, Fibria Finance or
any successor has or will become obligated to pay additional amounts with respect to that series of debt securities in respect of deduction or withholding for Cayman Islands Taxes (as defined under
"Payment of Additional Amounts");
in
any such case, as a result of such change in, or amendment to, such laws or regulations that occur on or after the date of the indenture for the applicable series of debt securities in the
jurisdiction in which Fibria Celulose or Fibria Finance or their respective successors, as applicable, are incorporated or any political subdivision or governmental authority thereof or therein having
power to tax; and
-
-
the obligation cannot be avoided by Fibria Celulose or Fibria Finance or their respective successors, as applicable, after
taking reasonable measures to avoid it. For this purpose, "reasonable" measures do not include any change in the jurisdiction of incorporation or organization or location of the principal executive
office or registered office of Fibria Celulose or Fibria Finance or their respective successors, as applicable.
If
the debt securities are redeemed, the redemption price for the debt securities (other than original issue discount debt securities) will be equal to the principal amount of the debt
securities being redeemed and any applicable premium plus accrued interest due on the date fixed for redemption. The redemption price for original issue discount debt securities will be specified in
the applicable prospectus supplement for such debt securities. Furthermore, we must give you between five business days and 60 business days' notice before redeeming the debt securities (except in the
case of debt securities that have a variable rate of interest, which may be redeemed on any interest payment date).
Open Market Purchases
Subject to any restrictions described in the applicable prospectus supplement, we or our affiliates may at any time purchase debt
securities from investors who are willing to sell from time to time, either in the open market at prevailing prices or in private transactions at negotiated prices. Debt securities that we or they
purchase may, in our discretion, be held, resold or canceled, but will only be resold in compliance with applicable requirements or exemptions under the relevant securities laws.
16
Table of Contents
Payment of Additional Amounts
Unless otherwise indicated in the applicable prospectus supplement, all payments in respect of the debt securities issued thereunder
and the related guarantee, if any, will be made without withholding or deduction for or on account of any present or future taxes, duties, assessments, or other governmental charges of whatever nature
imposed or levied by or on behalf of (i) Brazil ("
Brazilian Taxes
"), (ii) the Cayman Islands (in the case of securities issued under the
Fibria Finance indenture) ("
Cayman Islands Taxes
"), or (iii) any other jurisdiction or political subdivision thereof in which Fibria Finance (in
the case of securities issued under the Fibria Finance indenture),
Fibria Celulose or any successor thereto is organized or incorporated, as applicable, or is a resident for tax purposes having power to tax (a "
Relevant Taxing
Jurisdiction
"), unless Fibria Celulose or Fibria Finance, as applicable, is compelled by law to deduct or withhold such taxes, duties, assessments or governmental charges. In
such event, Fibria Celulose or Fibria Finance, as applicable, will pay to each holder such additional amounts as may be necessary in order that every net payment made by Fibria Celulose or Fibria
Finance, as applicable, on each debt security of that series or the related guarantee after deduction or withholding for or on account of any Brazilian Taxes or Cayman Islands Taxes, as the case may
be, will not be less than the amount then due and payable on such debt security or the related guarantee. Notwithstanding the foregoing, neither Fibria Celulose nor Fibria Finance will have to pay
additional amounts:
-
i.
-
to,
or to a third party on behalf of, a holder or beneficial owner who is liable for such taxes, duties, assessments or governmental charges in respect of
such debt security by reason of its having some present or former connection with a Relevant Taxing Jurisdiction, other than the mere holding of the debt security and the receipt of payments with
respect to the debt security or the related guarantee;
-
ii.
-
in
respect of any tax, assessment or other governmental charge that would not have been so imposed but for the presentation by a holder for payment on a
date more than 30 days after the date on which such payment became due and payable or the date on which payment thereof is made, whichever occurs later;
-
iii.
-
in
respect of any tax, duty, assessment or other governmental charge to the extent that such tax, duty, assessment or other governmental charge would not
have been imposed but for the failure of a holder or beneficial owner to comply with any certification, identification or other reporting requirements concerning the nationality, residence, identity
or connection with a Relevant Taxing Jurisdiction, if (a) such compliance is required or imposed by law as a precondition to exemption from all or a part of such tax, duty, assessment or other
governmental charge and (b) Fibria Celulose or Fibria Finance, as applicable, has given the holders at least 30 days' notice that holders will be required to comply with such
requirement;
-
iv.
-
in
respect of any estate, inheritance, gift, sales, transfer, excise or personal property or similar tax, assessment or governmental charge;
-
v.
-
where
such withholding or deduction is imposed on a payment to an individual and is required to be made pursuant to any law implementing or complying with,
or introduced in order to conform to, any European Union Directive on the taxation of savings;
-
vi.
-
in
respect of any tax, assessment or other governmental charge that would have been avoided by such holder presenting the relevant debt security (if
presentation is required) or requesting that such payment be made to another paying agent, if applicable, in a member state of the European Union;
-
vii.
-
in
respect of any tax, assessment or other governmental charge that is payable other than by deduction or withholding from payments of principal of(and
premium, if any, on) or interest on the debt security of the applicable series; or
17
Table of Contents
-
viii.
-
in
respect of any combination of the above.
Notwithstanding
anything to the contrary in the preceding paragraph, Fibria Celulose, Fibria Finance and any paying agent, the trustee, the principal paying agent or any other person
will be entitled to make any deduction or withholding without any liability, and will not be required to pay any additional amounts with respect to any such deduction or withholding, imposed on or in
respect of any note pursuant to Section 1471 through Section 1474 of the Code ("
FATCA
"), any treaty, law, regulation or other official
guidance enacted by any jurisdiction in which we are organized, or in which payments on the notes are made, or any successor jurisdiction or any political subdivision or authority therein or thereof
having power to tax (each such jurisdiction, a "
Taxing Jurisdiction
"), implementing FATCA, or any agreement between us, the trustee, the principal
paying agent or a paying agent and the United States, a Taxing Jurisdiction, or any authority of any of the foregoing implementing FATCA.
The
applicable prospectus supplement may describe additional circumstances in which we would not be required to pay additional amounts.
The
debt securities are subject in all cases to any tax, fiscal or other law or regulation or administrative or judicial interpretation. Except as specifically provided above, neither
Fibria Celulose nor Fibria Finance will be required to make a payment with respect to any tax, assessment or governmental charge imposed by any government or a political subdivision or taxing
authority thereof or therein.
Fibria
Celulose or Fibria Finance will pay any present or future stamp, court or documentary taxes or any other excise or property taxes, charges or similar levies that arise in any
jurisdiction from the execution, delivery, registration or the making of payments in respect of the debt securities and the guarantee, excluding any such taxes, charges or similar levies imposed by
any jurisdiction outside of Brazil or the Cayman Islands, as the case may be, other than those resulting from, or required to be paid in connection with, the enforcement of the debt securities and the
guarantee following the occurrence of any default or Event of Default.
No
additional amounts will be paid with respect to a payment on any debt security or the guarantee to a holder that is a fiduciary or partnership or other than the sole beneficial owner
of such payment to the extent a beneficiary or settlor with respect to such fiduciary or a member of such partnership or beneficial owner would not have been entitled to receive payment of the
additional amounts had the beneficiary, settlor, member or beneficial owner been the holder of the debt securities or the related guarantee.
Any
reference in this prospectus or the applicable prospectus supplement, the applicable indenture or the debt securities to principal of (and premium, if any, on) or interest on the
debt securities or the guarantees by Fibria Celulose, or Fibria Finance, as applicable, will be deemed to include any additional amount, unless the context requires otherwise, that may be payable in
respect of such principal (and premium, if any, on), or interest.
Certain Covenants of Fibria Celulose
Mergers and Similar Transactions
Unless otherwise specified in the applicable prospectus supplement, Fibria Celulose will covenant that Fibria Celulose will not
consolidate with or merge with or into, or convey, transfer or lease all or substantially all of its assets (determined on a consolidated basis of Fibria Celulose and its subsidiaries) to, any person
unless:
-
-
the person formed by such consolidation or into which Fibria Celulose is merged (if other than Fibria Celulose) or the
person that acquires by conveyance, transfer or lease all or substantially all of the properties or assets of Fibria Celulose, which we refer to as the "
successor
person
,"
18
Table of Contents
will
expressly assume, by a supplemental indenture to the applicable indenture, all obligations of Fibria Celulose under the applicable indenture and the debt securities or guarantee, as applicable,
issued under that indenture;
-
-
immediately after giving effect to such transaction, no Event of Default with respect to any debt security issued under
the applicable indenture will have occurred and be continuing; and
-
-
Fibria Celulose has delivered to the trustee under the applicable indenture:
-
-
a certificate signed by an executive officer of Fibria Celulose stating that such consolidation, merger, conveyance,
transfer or lease complies with this covenant and that all relevant conditions precedent provided in the applicable indenture have been complied with; and
-
-
an opinion of counsel stating that such consolidation, merger, conveyance, transfer or lease complies with this covenant
and that all relevant conditions precedent provided in the applicable indenture have been complied with.
Upon
any consolidation, merger, conveyance or transfer in accordance with these conditions, the successor person will succeed to, and be substituted for, and may exercise every right and
power of,
Fibria Celulose under the debt securities or guarantee of Fibria Celulose, as applicable, with the same effect as if the successor person had been named as the issuer or guarantor, as applicable, of
the debt securities issued under the applicable indenture.
If
the conditions described above are satisfied, Fibria Celulose will not need to obtain the consent of the holders in order to merge or consolidate or convey, transfer or lease all or
substantially all of its properties or assets to any other person. Also, Fibria Celulose will not need to satisfy these conditions if Fibria Celulose enters into other types of transactions, including
the following:
-
-
any transaction in which Fibria Celulose acquires the stock or assets of another person;
-
-
any transaction that involves a change of control of Fibria Celulose, but in which Fibria Celulose does not merge or
consolidate; and
-
-
any transaction in which Fibria Celulose sells or otherwise disposes of less than substantially all of its assets.
Limitation on Liens
Unless otherwise specified in the applicable prospectus supplement, Fibria Celulose will covenant that for so long as any debt
securities remain outstanding under the applicable indenture, Fibria Celulose will not, and will not permit any Significant Subsidiary to, create or suffer to exist any Lien upon any of its property
or assets now owned or hereafter acquired by it or on any Capital Stock of any Significant Subsidiary securing any Indebtedness of Fibria Celulose or any Significant Subsidiary, other than a Permitted
Lien, without in any such case effectively providing that the outstanding debt securities (together with, if Fibria Celulose so determines, any other Indebtedness of Fibria Celulose) are secured
equally and ratably with or prior to such secured Indebtedness for so long as such Indebtedness is so secured. For the definitions of capitalized terms used in this paragraph, see
"Certain Defined Terms."
"
Permitted Liens
" means:
-
(1)
-
any
Lien existing on the date of the applicable indenture, and any extension, renewal or replacement (and any subsequent extensions, renewals or
replacements) thereof or of any Lien referred to in clauses (2), (3), (4) or (11) below;
provided, however
, that the aggregate
principal amount of Indebtedness so secured is not increased, other than any increase reflecting premiums, fees and expenses in connection with such extension, renewal or replacement;
19
Table of Contents
-
(2)
-
any
Lien on any property or assets (including Capital Stock of any person) securing Indebtedness incurred solely for purposes of financing the acquisition,
construction or improvement of such property or assets including related transaction fees and expenses after the date of the applicable indenture;
provided
that (a) the aggregate principal amount
of Indebtedness secured by the Liens will not exceed (but may be less than) the cost
(
i.e
., purchase price) of the property or assets so acquired, constructed or improved and (b) the Lien is incurred before, or within
365 days after the completion of, such acquisition, construction or improvement and does not encumber any other property or assets of Fibria Celulose or any Significant Subsidiary;
-
(3)
-
any
Lien securing Indebtedness for the purpose of financing all or part of the cost of the acquisition, construction or development of a project;
provided
that (a) the Lien in respect of such
Indebtedness is limited to assets (including Capital Stock of the project entity), rights and/or
revenues of such project, (b) the aggregate principal amount of Indebtedness secured by the Liens will not exceed (but may be less than) the cost (i.e., purchase price) of the project,
and (c) the Lien is incurred before, or within 365 days after the completion of, that acquisition, construction or development and does not apply to any other property or assets of
Fibria Celulose or any Significant Subsidiary;
-
(4)
-
any
Lien existing on any property or assets of any person before that person's acquisition by, merger into or consolidation with Fibria Celulose or any
Subsidiary after the date of the applicable indenture;
provided
that (a) the Lien is not created in contemplation of or in connection with such
acquisition, merger or consolidation, (b) the Indebtedness secured by the Liens may not exceed the Indebtedness secured on the date of such acquisition, merger or consolidation, in each case,
taking into account any accrued interest or monetary variation, (c) the Lien will not apply to any other property or assets of Fibria Celulose or any of its Subsidiaries and (d) the Lien
will secure only the Indebtedness that it secures on the date of such acquisition, merger or consolidation;
-
(5)
-
any
Lien imposed by law that was incurred in the ordinary course of business, including carriers', warehousemen's and mechanics' liens and other similar
encumbrances arising in the ordinary course of business, in each case for sums not yet due or being contested in good faith by appropriate proceedings;
-
(6)
-
any
pledge or deposit made in connection with workers' compensation, unemployment insurance or other similar social security legislation, any deposit to
secure appeal bonds in proceedings being contested in good faith to which Fibria Celulose or any Subsidiary is a party, good faith deposits in connection with bids, tenders, contracts (other than for
the payment of Indebtedness) or leases to which Fibria Celulose or any Subsidiary is a party or deposits for the payment of rent, in each case made in the ordinary course of business;
-
(7)
-
any
Lien in favor of issuers of surety bonds or letters of credit issued pursuant to the request of and for the account of Fibria Celulose or any Subsidiary
in the ordinary course of business;
-
(8)
-
any
Lien securing taxes, assessments and other governmental charges, the payment of which are not yet due or are being contested in good faith by
appropriate proceedings and for which such reserves or other appropriate provisions, if any, have been established as required by GAAP;
-
(9)
-
minor
defects, easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business and encumbrances consisting
of zoning restrictions, licenses, restrictions on the use of property or assets or minor imperfections in title that do not materially impair the value or use of the property or assets affected
thereby, and any leases and subleases of real property that do not interfere with the ordinary conduct of the business
20
Table of Contents
For the avoidance of doubt, a Permitted Lien need not be permitted solely by reference to a single clause permitting such Lien, but may be permitted in part by
such clause and in part by one or more other clauses of the definition of Permitted Lien.
You
should consult the prospectus supplement relating to your debt securities for further information about these covenants and whether they are applicable to your debt securities.
Substitution of Issuer of the Debt Securities
Without the consent of any holder of the applicable series of debt securities, (a) Fibria Finance may be substituted by
(x) Fibria Celulose or (y) any Wholly-owned Subsidiary of Fibria Celulose and (b) Fibria Celulose may be substituted by any Wholly-owned Subsidiary of Fibria Celulose, as
principal debtor in respect of such series of debt securities (in that capacity, the "
Substituted Issuer
");
provided
that the following conditions are
satisfied:
-
(1)
-
such
documents will be executed, (a) in the case of the Fibria Finance indenture, by the Substituted Issuer, Fibria Finance, Fibria Celulose and the
trustee as may be necessary to give full effect to the substitution, including a supplemental indenture under which the Substituted Issuer assumes all of the obligations of Fibria Finance under the
indenture and the applicable
21
Table of Contents
series
of debt securities and, unless Fibria Celulose is the Substituted Issuer or Fibria Celulose's then-existing guarantee remains in full force and effect, a substitute guarantee issued by Fibria
Celulose in respect of the applicable series of debt securities or (b) in the case of the Fibria Celulose indenture, by the Substituted Issuer, Fibria Celulose and the trustee as may be
necessary to give full effect to the substitution, including a supplemental indenture under which (i) the Substituted Issuer assumes all of the obligations of Fibria Celulose under the
indenture and the applicable series of debt securities and (ii) the covenants and events of default under the indenture and the applicable series of debt will continue to apply to Fibria
Celulose in respect of the applicable series of debt securities as if no such substitution had occurred and (iii) Fibria Celulose fully, unconditionally and irrevocably guarantees to each
holder of the applicable series of debt securities the payment of all sums payable under the indenture and the applicable series of debt securities by the Substituted Issuer as such principal debtor
(collectively, the "
Substitution Documents
");
-
(2)
-
if
the Substituted Issuer is organized in a jurisdiction other than (x) the Cayman Islands (in the case of the Fibria Finance indenture), or
(y) Brazil (in the case of the Fibria Celulose indenture), the Substitution Documents will contain covenants (i) to ensure that each holder of the applicable series of debt securities
has the benefit of a covenant in terms corresponding to the obligations of Fibria Finance or Fibria Celulose, as applicable, in respect of the payment of additional amounts (but replacing references
to the Cayman Islands or Brazil, as applicable, with references to such other jurisdiction) and (ii) to indemnify each holder and beneficial owner of the applicable series of debt securities
against all taxes or duties that (a) arise by reason of a law or regulation in effect or contemplated on the effective date of the substitution that are incurred or levied against such holder
or beneficial owner of the applicable series of debt securities as a result of the substitution and that would not have been so incurred or levied had the substitution not been made, and
(b) are imposed on such holder or beneficial owner of the applicable series of debt securities by any political subdivision or taxing authority of any country in which such holder or beneficial
owner of the debt securities resides or is subject to any such tax or duty and that would not have been so imposed had the substitution not been made;
-
(3)
-
Fibria
Finance or Fibria Celulose, as applicable, will deliver, or cause the delivery, to the trustee opinions from internationally recognized counsel in
the jurisdiction of organization of the Substituted Issuer and the State of New York as to the enforceability of the Substitution Documents, as well as an officer's certificate as to compliance with
the provisions described under this section;
-
(4)
-
the
Substituted Issuer will appoint a process agent in the Borough of Manhattan in The City of New York to receive service of process on its behalf in
relation to any legal action or proceedings arising out of or in connection with the applicable series of debt securities, the applicable indenture and the Substitution Documents;
-
(5)
-
no
Event of Default under the applicable indenture has occurred or is continuing; and
-
(6)
-
the
substitution will comply with all applicable requirements under the laws of the jurisdiction of organization of the Substituted Issuer, the Cayman
Islands (in the case of the Fibria Finance indenture) and Brazil (in the case of the Fibria Celulose indenture).
Upon
the execution of the Substitution Documents, any substitute guarantees and compliance with the other conditions in the applicable indenture relating to the substitution,
(i) the Substituted Issuer will be deemed to be named in the applicable series of debt securities as the principal debtor in place of Fibria Finance or Fibria Celulose (or any previous
substitute), as applicable; (ii) in the case of the Fibria Finance indenture, Fibria Finance (or any previous substitute) will be released from all of its obligations under the applicable
series of debt securities and the indenture; and (iii) in the case of the
22
Table of Contents
Fibria
Celulose Indenture, Fibria Celulose (or any previous substitute) will be released from its obligations under the applicable series of debt securities and the applicable indenture, but Fibria
Celulose shall provide a guarantee in respect of the applicable series of debt securities and remain subject to the covenants and events of default under the applicable series of debt securities and
applicable indenture as if no substitution had occurred.
Not
later than 10 business days after the execution of the Substitution Documents, the Substituted Issuer will give notice thereof to the holders of the applicable series of debt
securities.
Defeasance and Discharge
The following discussion of full defeasance and covenant defeasance will apply to your series of debt securities.
Full Defeasance
Fibria Celulose and Fibria Finance (in the case of securities issued under the Fibria Finance indenture) will be legally released from
any payment and other obligations on the debt securities of the applicable series, except for various obligations described below (such release is referred to as "
full
defeasance
"),
provided
that Fibria Celulose or Fibria Finance, as applicable, in addition to other actions, puts in place the
following arrangements for you to be repaid:
-
-
Fibria Celulose or Fibria Finance, as applicable, must irrevocably deposit in trust for your benefit and the benefit of
all other direct holders of the debt securities of the applicable series a combination of money and non-callable U.S. government or U.S. government agency debt securities or bonds that, in the
opinion of an internationally recognized firm of independent public accountants or investment bank, will generate enough cash without consideration of any reinvestment to make interest, principal (and
premium, if any) and any other payments on the debt securities of the applicable series on their various due dates.
-
-
Fibria Celulose or Fibria Finance, as applicable, must deliver to the trustee a legal opinion of counsel, based upon a
ruling by the U.S. Internal Revenue Service or upon a change in applicable U.S. federal income tax law, confirming that under then-current U.S. federal income tax law Fibria Celulose or Fibria
Finance, as applicable, may make the above deposit without causing you to be taxed on the debt securities of the applicable series any differently than if Fibria Celulose or Fibria Finance, as
applicable, did not make the deposit and instead repaid the debt securities itself of the applicable series.
If
Fibria Celulose or Fibria Finance ever accomplished full defeasance as described above, you would have to rely solely on the trust deposit for repayment on the debt securities of the
applicable series. You could not look to Fibria Celulose or Fibria Finance for repayment in the unlikely event of any shortfall. However, even if Fibria Celulose or Fibria Finance takes these actions,
a number of our obligations relating to the debt securities of the applicable series will remain, including to register the
transfer and exchange of debt securities and to replace mutilated, destroyed, lost or stolen debt securities.
Covenant Defeasance
Fibria Celulose or Fibria Finance, as applicable, can make the same type of deposit described above and be released from all or some of
the covenants and certain Events of Default that apply to the debt securities of that particular series. This is called "
covenant defeasance
." In that
event, you would lose the protection of those covenants but would gain the protection of having money and debt securities set aside in trust to repay the debt securities of that series. In order to
achieve covenant defeasance, Fibria Celulose or Fibria Finance, as applicable, would be required to take all of the steps
23
Table of Contents
described
above under "Full Defeasance," except that the opinion of counsel would not have to refer to a change in United States Federal income tax laws or a ruling from the United States
Internal Revenue Service.
If
Fibria Celulose or Fibria Finance, as applicable, were to accomplish covenant defeasance, the following provisions of the indenture and/or the debt securities of the applicable series
would no longer apply:
-
-
certain covenants applicable to the series of debt securities described herein and in the applicable prospectus
supplement; and
-
-
the second Event of Default described below under "Events of DefaultWhat Is an Event of
Default?".
If
Fibria Celulose or Fibria Finance, as applicable, accomplishes covenant defeasance, you would still be able to look to it for repayment of the debt securities of the applicable series
if there were a
shortfall in the trust deposit. If any event of default occurs and the debt securities of the applicable series become immediately due and payable, there may be such a shortfall. Depending on the
event causing the default, you may not be able to obtain payment of the shortfall.
Ranking
The applicable prospectus supplement will indicate whether the debt securities of a particular series are subordinated to any of our
other debt obligations. If they are not subordinated, they will rank equally with all our other unsecured and unsubordinated indebtedness. Unsecured debt securities will effectively be subordinated to
our secured indebtedness.
Events of Default
Each indenture provides that you will have rights if you hold debt securities issued under that indenture and an event of default
occurs under that indenture and is not cured or waived, as described later in this subsection and as may be specified in the applicable prospectus supplement.
What Is an Event of Default?
Each indenture provides that the term "
Event of Default
" with respect to any series of
debt securities means any of the following, unless otherwise specified in the applicable prospectus supplement:
-
(1)
-
failure
to pay any interest on any of the debt securities of that series on the date when due, which failure continues for a period of 30 days; or
failure to pay any principal of (including premium, if any, on) any of the debt securities of that series on the date when due upon its Stated Maturity, upon redemption, or otherwise.
-
(2)
-
Fibria
Celulose or Fibria Finance (in the case of securities issued under the Fibria Finance indenture) fails to comply with any of its other covenants or
agreements in respect of the debt securities of that series or the applicable indenture (other than those referred to in the foregoing clause (1)) and such failure continues for a period of
60 days after Fibria Celulose or Fibria Finance, as applicable, receives a notice of default from the trustee or holders of 25% of the principal amount of the outstanding debt securities of the
affected series;
-
(3)
-
Fibria
Celulose pursuant to or within the meaning of any Bankruptcy Law: (1) commences a voluntary case or files a request or petition for a
writ of execution to initiate bankruptcy proceedings or have itself adjudicated as bankrupt; (2) applies for or consents to the entry of an order for relief against it in an involuntary case;
(3) applies for or consents to the appointment of a custodian of it or for any substantial part of its property; (4) makes a
24
Table of Contents
An
event of default for a particular series of debt securities does not necessarily constitute an event of default for any other series of debt securities issued under the applicable
indenture, although the default and acceleration of one series of debt securities may trigger a default and acceleration of another series of debt securities.
Fibria
Celulose or Fibria Finance (in the case of securities issued under the Fibria Finance indenture) will furnish to the trustee within 120 days after the end of our fiscal
year every year a written statement of certain of its officers or directors, as the case may be, that will either certify that, to their knowledge, it is in compliance with the applicable indenture
and the debt securities of each series issued thereunder or specify any default.
Remedies upon an Event of Default
Except as provided in the next sentence, if an event of default has occurred and has not been cured, the trustee may, or at the written
request of holders of not less than 25% in principal amount of the outstanding debt securities of the applicable series will, declare all unpaid principal of (and premium, if any, on) and accrued and
unpaid interest on all debt securities of that series to be due and payable immediately, and upon any such declaration, such amounts will become immediately due and payable. If an event of default
occurs because of a bankruptcy, insolvency or reorganization relating to Fibria Celulose, the unpaid principal of (and premium, if any, on) and accrued and unpaid interest on the debt securities under
the applicable indenture will be automatically accelerated, without any declaration or action by the trustee or any holder.
Each
of the situations described above is called an acceleration of maturity. If the maturity of the debt securities of any series is accelerated and a judgment for payment has not yet
been obtained, the holders of a majority in aggregate principal amount of the outstanding debt securities of that series may cancel the acceleration of the debt securities of that series,
provided
that
(1) Fibria Celulose or Fibria Finance, as applicable, has paid or deposited with the trustee under the applicable indenture a sum
sufficient to pay (a) all overdue interest on all of the debt securities of the applicable series, (b) the principal of (and premium, if any, on) any debt securities of the applicable
series that has become due (other than amounts due solely because of the acceleration), (c) interest upon overdue interest on such overdue interest as provided in the applicable indenture and
supplemental indenture (to the extent that payment of this interest is lawful), and (d) all sums paid or advanced by the trustee under the applicable indenture and the reasonable compensation,
expenses, disbursements and advances of the trustee, its agents and counsel, and (2) all other Events of Default with respect to the debt securities of the applicable series have been cured or
waived, other than the nonpayment of principal that has become due solely because of acceleration.
The
trustee is not required under any of the indentures to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties under the
applicable indenture, or in the exercise of any of its rights or powers, if the trustee has reasonable grounds for
25
Table of Contents
believing
that repayment of the funds or adequate security and/or indemnity against such risk or liability is not assured to it.
Before
you bypass the trustee and bring your own lawsuit or other formal legal action or take other steps to enforce your rights or protect your interests relating to the debt securities
of any series, the following must occur:
-
-
you must give the trustee under the applicable indenture written notice that an event of default has occurred and remains
uncured;
-
-
the holders of not less than 25% in principal amount of the outstanding debt securities of that series must make a written
request that the trustee take action because of the default, and they or other holders must offer to the trustee security and/or indemnity reasonably satisfactory to the trustee against the costs,
expenses and liabilities to be incurred in taking that action;
-
-
the trustee must not have taken action for 60 days after the above steps have been taken; and
-
-
during those 60 days, the holders of a majority in principal amount of the outstanding debt securities of the
applicable series must not have given the trustee directions that are inconsistent with the written request of the holders that the trustee take action because of the default.
However,
under each indenture, you are entitled at any time to bring a lawsuit for the payment of money due on your debt security on or after its due date if it has not been paid in full
by Fibria Celulose or Fibria Finance, as applicable.
Street name and other indirect holders should consult their banks or brokers for information on how to give notice or direction to or make a request of the
trustee and how to declare or cancel a declaration of acceleration.
Waiver of Past Default
The holders of not less than a majority in principal amount of the debt securities of any series may waive any past default for the
debt securities of that series, except for payment defaults and other defaults that cannot be waived without the consent of each holder. If this happens, the default will be treated as if it had not
occurred.
Street name and other indirect holders should consult their banks or brokers for information on how to give notice or direction to or make a request of the
trustee and how to waive a default.
Certain Defined Terms
The following is a summary of certain defined terms used in each of the Fibria Celulose and Fibria Finance indentures. Reference is
made to the relevant indenture for the full definition of all such terms as well as other capitalized terms used in this section of this prospectus for which no definition is provided.
"
Advance Transaction
" means an advance from a financial institution involving either (1) a foreign exchange contract
(ACC
Adiantamento sobre Contrato de Câmbio
) or (2) an export contract
(ACE
Adiantamento sobre Contrato de Exportação
).
"
Capital Lease Obligations
" means, with respect to any person, any obligation which is required to be classified and accounted for as a
capital lease on the face of a balance sheet of such person prepared in accordance with GAAP; the amount of such obligation will be the capitalized amount thereof, determined in accordance with GAAP;
and the "
Stated Maturity
" thereof will be the date of the last payment of rent or any other amount due under such lease prior to the first date upon
which such lease may be terminated by the lessee without payment of a penalty.
26
Table of Contents
"
Capital Stock
" means, with respect to any person, any and all shares of stock, interests, rights to purchase, warrants, options,
participations or other equivalents of or interests in (however designated, whether voting or non-voting), such person's equity including any preferred stock, but excluding any debt securities
convertible into or exchangeable for such equity.
"
Consolidated Total Assets
" means the total amount of assets of Fibria Celulose and its Subsidiaries as set forth in the most recent
financial statements delivered by Fibria Celulose to the trustee in accordance with the terms of the applicable indenture, after giving
pro forma
effect
to any acquisition or disposition of companies, divisions, lines of businesses, operations or assets by Fibria Celulose and its Subsidiaries subsequent to such date and on or prior to the date of
determination.
"
CVM
" means the Brazilian Securities Commission (
Comissão de Valores
Mobiliários
).
"
Event of Default
" is has the meaning specified in "Description of the Debt SecuritiesEvent of Default."
"
GAAP
" means, as elected from time to time by Fibria Celulose, (1) collectively, the accounting principles prescribed by Brazilian
Corporate Law, the rules and regulations issued by the applicable regulators, including the CVM, as well as technical releases issued the Brazilian Institute of Accountants
(
Instituto Brasileiro de Contadores
), (2) International Financial Reporting Standards, or (3) accounting practices generally accepted in
the United States, in each case, as in effect from time to time.
"
guarantee
" means any obligation, contingent or otherwise, of any person directly or indirectly guaranteeing any Indebtedness or other
obligation of any person and any obligation, direct or indirect, contingent or otherwise, of such person (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation of such person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay,
or to maintain financial statement conditions or otherwise) or (b) entered into for purposes of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or in part);
provided, however
, that the term "guarantee" will not include
endorsements for collection or deposit in the ordinary course of business. The term "guarantee" used as a verb has a corresponding meaning.
"
Hedging Obligations
" at any date of determination means the net amount, exclusive of any commissions or administrative fees, that a
Person would be obligated to pay upon the termination of any interest rate swap agreement, foreign currency exchange agreement, interest rate collar agreement, option, forward or futures contract or
other similar agreement or arrangement designed to protect such person against changes in interest rates or foreign exchange rates.
"
Indebtedness
" means, with respect to any person (a "
Debtor
"), without
duplication:
-
(a)
-
the
principal of (and premium, if any, on) (1) indebtedness of such person for money borrowed and (2) indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the payment of which such person is responsible or liable (but excluding trade accounts payable or other short-term obligations to suppliers or
customers payable within 360 days, in each case arising in the ordinary course of business);
-
(b)
-
all
Capital Lease Obligations of such person;
-
(c)
-
all
obligations of such person issued or assumed as the deferred purchase price of property, all conditional sale obligations of such person and all
obligations of such person under any title retention agreement (but excluding trade accounts payable or other short-term obligations to suppliers or customers payable within 360 days, in each
case arising in the ordinary course of business);
27
Table of Contents
-
(d)
-
all
obligations of such person for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction (other than
obligations with respect to letters of credit securing obligations (other than obligations described in clauses (a) through (c) above) entered into in the ordinary course of business of
such person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the tenth business day following receipt by such
person of a demand for reimbursement following payment on the letter of credit);
-
(e)
-
all
Hedging Obligations;
-
(f)
-
all
obligations of the type referred to in clauses (a) through (d) above of other persons and all dividends of other persons for the payment
of which, in either case, such person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any guarantee (other than obligations of other persons
that are customers or suppliers of such person for which such person is or becomes so responsible or liable in the ordinary course of business to (but only to) the extent that such person does not, or
is not required to, make payment in respect thereof); and
-
(g)
-
all
obligations of the type referred to in clauses (a) through (e) above of other persons secured by any Lien on any property or asset of such
Debtor other than the Capital Stock of such other person (whether or not such obligation is assumed by such Debtor), the amount of such obligation being deemed to be the lesser of the value of such
property or assets or the amount of the obligation so secured;
if
and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified person prepared in accordance
with GAAP.
"
investment
" means, with respect to any person, any loan or advance to, any acquisition of Capital Stock, equity interest, obligation or
other security of, or capital contribution or other investment in, such person.
"
Lien
" means any mortgage, pledge, security interest, conditional sale or other title retention agreement or other similar lien.
"
Significant Subsidiary
" means any Subsidiary of Fibria Celulose which at the time of determination either (1) had assets which, as
of the date of Fibria Celulose's most recent quarterly consolidated balance sheet, constituted at least 10% of Fibria Celulose's total assets on a consolidated basis as of such date, or (2) had
revenues for the 12-month period ending on the date of Fibria Celulose's most recent quarterly consolidated statement of operations which constituted at least 10% of Fibria Celulose's total revenues
on a consolidated basis for such period.
"
Stated Maturity
" when used with respect to any debt security or any installment of principal thereof or interest thereon, means the date
specified in such debt security as the fixed date on which the principal of such debt security or such installment of principal or interest is due and payable.
"
Subsidiary
" means any corporation, association, partnership or other business entity of which more than 50% of the total voting power of
shares of Capital Stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by (a) Fibria Celulose, (b) Fibria Celulose and one or more Subsidiaries or (c) one or more Subsidiaries.
"
Wholly-owned Subsidiary
" means a Subsidiary of which at least 95% of the Capital Stock (other than directors' qualifying shares) is owned
by Fibria Celulose or another Wholly-owned Subsidiary.
28
Table of Contents
DESCRIPTION OF THE GUARANTEE
Fibria Celulose fully, unconditionally and irrevocably guarantees the debt securities issued by Fibria Finance, a 100%-owned finance
subsidiary of Fibria Celulose, and all obligations due under the related indenture. The following description summarizes the general terms and provisions of the guarantee that is provided by Fibria
Celulose in the Fibria Finance Indenture. You should read the more detailed provisions of the Fibria Finance indenture, including the defined terms, for provisions that may be important to you. This
summary is subject to, and qualified in its entirety by reference to, the provisions of the Fibria Finance indenture.
Pursuant
to the Fibria Finance Indenture, Fibria Celulose has fully, irrevocably and unconditionally agreed, from time to time upon the receipt of notice from the trustee that Fibria
Finance has failed to make the required payments under a series of debt securities and the Fibria Finance indenture to make any required payment, whether of principal, interest or any other amounts.
The amount to be paid by Fibria Celulose under the guarantee will be an amount equal to the amount of the payment Fibria Finance fails to make.
The
obligations of Fibria Celulose under the guarantee will rank:
-
-
equal in right of payment to all other existing and future senior unsecured debt of Fibria Celulose subject to certain
statutory preferences under applicable law, including labor and tax claims;
-
-
senior in right of payment to Fibria Celulose's subordinated debt; and
-
-
effectively subordinated to the debt and other liabilities (including subordinated debt and trade payables) of Fibria
Celulose's subsidiaries (other than Fibria Finance) and jointly controlled companies and to secured debt of Fibria Celulose to the extent of the value of the assets securing such secured debt.
29
Table of Contents
PLAN OF DISTRIBUTION
We will set forth in the applicable prospectus supplement a description of the plan of distribution of the debt securities that may be
offered pursuant to this prospectus.
30
Table of Contents
VALIDITY OF SECURITIES
Unless otherwise specified in the applicable prospectus supplement, White & Case LLP will provide an opinion regarding
the validity of the debt securities and guarantees, if applicable, under New York law; Pinheiro GuimarãesAdvogados will provide an opinion regarding the authorization of
the debt securities and guarantees, if applicable, of Fibria Celulose under Brazilian law; and Walkers will provide an opinion regarding the authorization of the debt securities issued by Fibria
Finance under Cayman Islands law.
31
Table of Contents
EXPERTS
The financial statements and management's assessment of the effectiveness of internal control over financial reporting (which is
included in Management's Report on Internal Control over Financial Reporting) incorporated in this prospectus by reference to the Annual Report on Form 20-F for the year ended
December 31, 2013 have been so incorporated in reliance on the report of PricewaterhouseCoopers Auditores Independentes, an independent registered public accounting firm, given on the authority
of said firm as experts in auditing and accounting. PricewaterhouseCoopers Auditores Independentes is a member of the Regional Accounting Council (
Conselho Regional de
ContabilidadeCRC
) of the State of São Paulo.
32
Table of Contents
SERVICE OF PROCESS AND ENFORCEMENT OF JUDGMENTS
Fibria Celulose is incorporated under the laws of Brazil. All of our directors and officers reside outside the United States.
Substantially all of our assets are located in Brazil. As a result, it may not be possible (or it may be difficult) for you to effect service of process upon us or these other persons within the
United States or to enforce judgments obtained in United States courts against us or them, including those predicated upon the civil liability provisions of the federal securities laws of the United
States.
We
have been advised by Pinheiro GuimarãesAdvogados, our Brazilian counsel, that a judgment of a United States court for civil liabilities predicated upon the
federal securities laws of the United States may be enforced in Brazil, subject to certain requirements described below. Our Brazilian counsel has advised that a judgment against us, our directors and
officers or certain advisors named herein obtained in the United States would be enforceable in Brazil upon confirmation of that judgment by the
Superior Tribunal de
Justiça
(Superior Court of Justice, or STJ). That confirmation will only occur if the U.S. judgment:
-
-
fulfills all formalities required for its enforceability under the laws of the United States;
-
-
is issued by a court of competent jurisdiction after proper service of process on the parties, which services must comply
with Brazilian law if made in Brazil, or after sufficient evidence of the parties' absence has been given, as established pursuant to applicable law;
-
-
is not subject to appeal;
-
-
is for payment of a determined sum of money;
-
-
is authenticated by a Brazilian consulate in the United States and is accompanied by a sworn translation into Portuguese;
and
-
-
does not violate Brazilian public policy, good morals or national sovereignty (as set forth in Brazilian law).
We
have also been advised by our Brazilian counsel that original actions may be brought in connection with this prospectus predicated solely on the federal securities laws of the United
States in Brazilian courts and that, subject to applicable law, Brazilian courts may enforce liabilities in such actions against us or the directors and officers and certain advisors named herein
(provided that provisions of the federal securities laws of the United States do not contravene Brazilian public policy, good morals or national sovereignty).
In
addition, we have been further advised that a plaintiff, whether Brazilian or non-Brazilian, who resides outside Brazil during the course of litigation in Brazil must provide a bond
to guarantee the payment of the court expenses and the defendant's legal fees , if the plaintiff does not own real property in Brazil that could secure the payment. This bond of guarantee must have a
value sufficient to satisfy the payment of court fees and defendant attorney's fees, as determined by the Brazilian judge.
The
confirmation process may be time consuming and may also give rise to difficulties in enforcing the foreign judgment in Brazil. Accordingly, we cannot assure you that confirmation of
any judgment would be obtained or that the confirmation process would be conducted in a timely manner.
Cayman Islands
Fibria Finance is an exempted company incorporated with limited liability under the laws of the Cayman Islands. Fibria Finance is
incorporated in the Cayman Islands because of certain benefits associated with being a Cayman Islands company, such as political and economic stability, an effective judicial system, a favorable tax
system, the absence of exchange control or currency restrictions and the
33
Table of Contents
availability
of professional and support services. However, the Cayman Islands has a less developed body of securities laws as compared to the United States and provides protections for investors to a
significantly lesser extent. All of Fibria Finance's assets are located outside the United States and all of Fibria Finance's directors and such persons' assets are located outside the United States.
As a result, it may be difficult for investors to effect service of process within the United States upon Fibria Finance, or such persons, or to enforce against them, judgments obtained in U.S.
courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof.
In
the terms and conditions of the securities, Fibria Finance has (1) agreed that the courts of the State of New York and the federal courts of the United States, in each case
sitting in the Borough of Manhattan, The City of New York, will have jurisdiction to hear and determine any suit, action or proceeding, and to settle any disputes, which may arise out of or in
connection with the securities and, for such purposes, will irrevocably submit to the non-exclusive jurisdiction of such courts and (2) named an agent for service of process in the Borough of
Manhattan, The City of New York. See "Description of the Debt Securities."
There
is uncertainty as to whether the courts of the Cayman Islands would (1) recognize or enforce judgments of the courts of the United States or any state thereof obtained
against Fibria Finance or (2) be competent to hear original actions brought in each respective jurisdiction, against the Fibria Finance or such persons predicated upon the securities laws of
the United States or any state thereof. A final and conclusive judgment in federal or state courts of the United States (assuming such courts have jurisdiction over the defendant according to Cayman
Islands conflict of law rules and such final
and conclusive judgment was neither obtained in a manner that was contrary to natural justice or public policy of the Cayman Islands) under which a liquidated sum of money is payable, other than a sum
payable in respect of taxes, fines, penalties or similar charges (or in certain circumstances for
in personam
non-monetary relief), may be subject to
enforcement proceedings (subject to such enforcement not being contrary to natural justice or public policy of the Cayman Islands) by way of an action commenced on the judgment debt in the courts of
the Cayman Islands.
34
Table of Contents
U.S.$700,000,000
Fibria Overseas Finance Ltd.
(incorporated with limited liability in the Cayman Islands)
5.500% Notes due 2027
fully, unconditionally and irrevocably guaranteed by
Fibria Celulose S.A.
(incorporated in the Federative Republic of Brazil)
PROSPECTUS SUPPLEMENT
Joint Book-Running Managers
|
|
|
|
|
|
|
|
|
BNP PARIBAS
|
|
BofA Merrill Lynch
|
|
Citigroup
|
|
HSBC
|
|
J.P. Morgan
|
Co-Managers
|
|
|
|
|
|
|
Mizuho Securities
|
|
MUFG
|
|
Natixis
|
|
Scotiabank
|
January 11,
2017
Fibria Celulose (NYSE:FBR)
Historical Stock Chart
From Apr 2024 to May 2024
Fibria Celulose (NYSE:FBR)
Historical Stock Chart
From May 2023 to May 2024