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Updated on 02.09.2015

MídiaReleases

September 02, 2015 - Fibria advances the financing strategy for its expansion project at the Três Lagoas Unit, with investment of R$ 7.7 billion

In the fourth edition of the Investor Tour event for analysts and investors, Fibria announces the contracting of US$400 million Export Prepayment Facility Agreement and the launch of R$500 million offering of CRAs

São Paulo, September 2, 2015 – Fibria, a Brazilian forestry company and the world’s largest eucalyptus pulp producer, reveals its financing strategy for the Horizonte 2 Project, which will expand the production capacity of its Três Lagoas Unit located in the state of Mato Grosso do Sul for investment of R$ 7.7 billion (equivalent to around US$ 2.5 billion). During the fourth edition of Investor Tour, an event held today and tomorrow in southern Bahia state that brings together around 80 investors and analysts, the company announced details of its contracting of US$ 400 million Export Prepayment Facility Agreement and the launch of R$ 500 million offering of Agribusiness Receivables Certificates (CRAs).

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

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

Competitiveness and Sustainability

Fibria new operations at Três Lagoas will have one of the lowest cash costs of pulp production in the world, and will reduce the company’s average cost to US$155 per ton. Today, Fibria already has one of the industry’s lowest cash costs, which stood at US$ 170/t in the second quarter of this year, compared to the average cost in Brazil of US$ 214/t and in the United States of US$ 421/t, according to the consulting firm Hawkins Wright.

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

As is the case of all of Fibria’s projects, Horizonte 2 will have sustainability as a core principle. The new industrial complex will have even cleaner production processes, with all of the energy consumed generated by the actual facility using the biomass resulting from the industrial process. The project will not only generate and consume its own power, but also produce surplus power of 120 MWh, which will complement the surplus power of 70 MWh already generated by the entire company today.

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

Another major source of the competitiveness of the Horizonte 2 Project is its access to wood resources. With the new mill, the average distance from the forest to supply the current production line and the new line at the Três Lagoas Unit, which will produce more than 3 million tons of pulp annually, will be only 95 kilometers.

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

Investor Tour 2015

The transparency adopted in its relations with capital market analysts and investors is of primordial importance to Fibria. The Investor Tour, an annual event now in its fourth edition, brings together the company’s officers and various investors and analysts from Brazil and abroad. The 2015 edition, which lasts through tomorrow, will be held at the Veracel Unit, a joint venture with Stora Enso located in the state of Bahia.

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