Suzano and Fibria: From dream to paper, from paper to reality

 

Suzano Papel e Celulose announces the signing of an agreement that will result in the combination of assets and shares of Suzano and Fibria Celulose S.A. The transaction will be concluded after approval from the Shareholder Meetings of both Suzano and Fibria, as well as regulatory authorities, and the fulfillment of conditions precedent that are typical to transactions of this nature.  After the transaction is concluded, Suzano will be the largest Brazilian company in the agribusiness sector and the 5th largest non-financial company in the country.

“Our dream of creating this company is now becoming a reality,” says Walter Schalka, CEO of Suzano Papel e Celulose.  “We plant, harvest, produce and transform pulp, a renewable raw material that is the basis for products that are part of the lives of people all over the world.”

Suzano and Fibria, which already share similar values and principles, will build a future together. The company resulting from this combination will have 37,000 employees and contractors, with assets positioned strategically in Brazil and around the world. Its 11 industrial units will produce annually 11 million tons of market pulp and 1.4 million tons of paper, with annual exports of around BRL 18 billion and investments planned for 2018 of about BRL 6.4 billion. Its cash cost will be among the lowest in the sector globally, underlining its efficiency and strengthening its competitiveness in a global market of more than 50 players.

“We are announcing a balanced transaction that underscores our business strategy,” explains Schalka.  The commitment signed by Suzano and Fibria stipulates that each share of Fibria will receive BRL 52.50, adjusted for inflation by the CDI rate from today to the date of financial settlement of the operation, and 0.4611 share of Suzano, adjusted as per the transaction documents.

Suzano will list Level 3 ADRs on the New York Stock Exchange (NYSE), keeping only one class of shares with 100% tag along rights, and will have free float of over 50%.  In the coming months, Suzano will request the registrations to the U.S. Securities and Exchange Commission (SEC) or applicable exemptions; and both Suzano and Fibria’s shareholders meetings will be called to approve the transaction.

With today’s announcement, Suzano reinforces its commitment to the highest standards of corporate governance based on transparency, fairness, accountability and corporate responsibility.  In November 2017, the company joined the “Novo Mercado” segment of B3, converting all its preferred shares into common shares at the ratio of one common share for each preferred share. This move represented an important strategic step towards new growth cycles such as the one being announced today and reaffirms Suzano’s commitment to Brazil, the capital markets and all its stakeholders.

The company will have strong cash generation and focus on the investment grade rating, while reinforcing its Financial Policy, which envisages target leverage between 2.0 and 3.0 times Net Debt/EBITDA in the long run. Preliminary estimates by market analysts indicate a present value of synergies of between BRL 8 billion and BRL 10 billion in the forestry, logistics and procurement areas, among others.  The transaction is being financed by a syndicate of international banks (BNP Paribas, J.P. Morgan, Mizuho and Rabobank).

Suzano will remain committed to the principles of meritocracy and to the creation and sharing of value. Its purpose is to pioneer cultivating life through its values: exploring innovation, planting the seeds of care, harvesting pride and improving every day, always with transparency, respect and trust.  “We are creating a future that is strong and kind,” says Schalka.

 

PLANIN – PR Agency from Suzano Papel e Celulose

Angélica Consiglio, Beatriz Imenes and team – www.planin.com;

Team e-mail: suzano@planin.com – Tel.: (+5511) 2138-8940

 

Check out the Material Fact released to the market:

São Paulo, March 16, 2018 – The Management of SUZANO PAPEL E CELULOSE S.A. (the “Company” or “Suzano”) (SUZB3), in compliance with article 157, paragraph 4th, of Federal Law nº 6.404/76, as amended, and with CVM Instruction nº 358, dated January 3rd, 2002, disclose to its shareholders and to the market in general that:

On March 15th, 2018, Suzano Holding S.A., together with the other controlling shareholders of the Company (jointly, the “Controlling Shareholders of the Company”) entered into the Voting Agreement and Obligation Undertakings with the controlling shareholders of Fibria Celulose S.A. (“Fibria” and, together with Suzano, the “Companies”), Votorantim S.A. and BNDES Participações S.A. – BNDESPAR (“BNDESPAR”) (together, the “Controlling Shareholders of Fibria”), and Suzano as an intervening party, by which the Controlling Shareholders of the Company and the Controlling Shareholders of Fibria agreed to exercise their voting rights so as to to make the combination of the operations and the shareholdings of the Company and Fibria (“Voting Agreement”), by means of a corporate reorganization (the “Transaction”).

The terms and conditions of the Transaction, summarized below, will be provided for in the Merger Protocol (“Merger Protocol”), to be submitted together with the evaluation reports and other relevant documents to the Boards of Directors of the Companies, and executed by their management, as well as be submitted to the approval of the shareholders of both Companies at their extraordinary shareholders’ meetings.

I. CORPORATE REORGANIZATION AND FINANCIAL ASPECTS OF THE TRANSACTION

It is intended to submit a proposal of corporate reorganization to the Companies’ shareholders, which will result in: (a) Suzano being entitled to the total share capital of Fibria; and (b) Fibria’s shareholders receiving, in exchange for each common share of Fibria (i) the amount of R$ 52,50 (fifty two Brazilian reais and fifty cents), adjusted by CDI from March 15th, 2018 up until the effective payment date, to be paid in one installment on the closing date of the Transaction (“Cash Payment”); and (ii) 0,4611 common share issued by Suzano, adjusted as mentioned below (“Exchange Ratio”), to be delivered on the closing date of the Transaction.

The Cash Payment will be adjusted according to the amount of dividends, interest on equity and other proceeds declared by the Companies, as from the date hereof, except for the dividends that Suzano and Fibria have already announced to the market. The Exchange Ratio will be adjusted proportionally by any share split, grouping of shares and bonus shares issued by Suzano and Fibria.

The Fibria’s shareholders holding Fibria’s American Depositary Receipts (“ADRs”) shall have the right to receive Suzano’s ADRs, according to the Exchange Ratio. For that purpose, Material Fact Suzano will take the necessary actions to (i) register the Transaction with (or obtain its exemption, as applicable) the Securities and Exchange Commission and (ii) list Suzano’s ADRs in the same listing segment of the New York Stock Exchange on which Fibria’s ADRs are currently listed.

Upon closing of the Transaction, the shares and ADRs issued by Fibria will cease to be traded on B3 S.A. nor on the New York Stock Exchange, respectively.

According to the terms of the Voting Agreement, in the event burdensome restrictions are imposed by the antitrust authorities in Brazil and / or in other jurisdictions, Suzano may not close the Transaction, upon the payment by Suzano to Fibria of a break-up fee equivalent to R$ 750,000,000.00 (seven hundred and fifty million Brazilian reais). The break-up fee may apply to certain other conditions that prevent the closing of the Transaction, as expressly provided for in the Voting Agreement.

II. CONDITIONS PRECEDENT TO THE TRANSACTION

The closing of the Transaction is subject to certain conditions typical to transactions of this nature, including the approval by antitrust authorities in Brazil and in other jurisdictions.

III. EXCLUSIVITY AND RESTRICTIONS OF TRANSFERRING STOCKS

In accordance with the terms of the Voting Agreement, the Controlling Shareholders of Fibria shall refrain from negotiating or engaging in any discussions with any third party, under whatsoever form, aiming at implementing any transaction equal or similar to the Transaction, or which might affect or frustrate the consummation of the Transaction. In addition, during the term of the Voting Agreement, the Controlling Shareholders of the Company and the Controlling Shareholders of Fibria undertake not to sell or in any form dispose of their shares in Suzano or in Fibria, as applicable.

IV. VOTING AGREEMENT WITH BNDESPAR

In the context of the Transaction and subject to the closing of the Transaction, on March 15th , 2018, the Controlling Shareholders of the Company entered into a Voting Agreement and Other Covenants with BNDES (“BNDESPAR Voting Agreement”), establishing certain governance commitments, financial and environmental policies of the Company, and limiting the transfer of the shares in the Company held by the Controlling Shareholders of the Company.

V. FINANCING OF THE TRANSACTIONS

The Company has executed binding commitments with certain international financial institutions to ensure financing lines summing up US$ 9,200,000,000.00 (nine billion and two hundred million US dollars), being the disbursement conditioned, among others, to the closing of the Transaction. The proceeds of such financing will be used to finance part of the Cash Payment and the exports of the companies.

VI. ACCESS TO THE INFORMATION AND DOCUMENTS

The Voting Agreement and its exhibits, including the Merger Protocol, as well as the BNDESPAR Voting Agreement are available to all shareholders of the Company, in the headquarters of the Company and in the Investors’ Relations website of the Company (ri.suzano.com.br), in the website of the Comissão de Valores Mobiliários (www.cvm.gov.br) and B.3 S.A. – Brasil, Bolsa, Balcão (www.b3.com.br). Additional information to the market will be disclosed in accordance with the law, including the information required by CVM Instruction nº 565, dated of June 15th, 2015. São Paulo, March 16, 2018.

 

MARCELO FERIOZZI BACCI

Chief Financial and Investor Relations Officer