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Empresas to Expand Guaiba Mill BEP Capacity by 1.3 Million Metric TPY

Empresas CMPC, Santiago, Chile, will expand its Guaiba mill, in the state of Rio Grande do Sul, Brazil. The project includes a new bleached eucalyptus pulp production line with a total capacity of 1.3 million metric tpy. The unit will be in addition to the existing bleached eucalyptus line at the site, which currently has an annual capacity of 450,000 metric tpy. The second line is expected to begin producing pulp by the first quarter of 2015.

"This investment is a milestone for CMPC, the largest in the company's history. The Guaiba II project will almost double our market share of global pulp and help us meet a growing demand for high quality wood pulp from clients in all of our markets," said Hernan Rodriguez, CEO of CMPC. "This important decision taken by the board of directors is another step in CMPC's internationalization, and takes our total investment in Brazil to $4.5 billion."

The expansion increases CMPC's pulp production capacity to 4.1 million metric tpy, consolidating its position as a leading worldwide pulp manufacturer. Guaiba II will incorporate the latest technologies in the production of pulp, and will be 100% self-sufficient in terms of pulpwood supply. In this way, CMPC will be adding production scale while also maximizing efficiency, in keeping with its track record as a cost-advantaged producer.

CMPC has obtained all state, municipal, and environmental permits and authorizations necessary to carry out the expansion of the Guaiba plant.

"This investment demonstrates the company's capacity to grow via world-class, geographically diversified production facilities," Rodriguez said.

The expansion of Guaiba involves a total investment in industrial assets of approximately $2.1 billion. In relation to the financing of this project, the company's board agreed:

To propose a capital increase for Empresas CMPC S.A. of up to $750 million. This capital increase is expected to be carried out in two stages: $500 million during the first half of 2013, and the remaining $250 million within the following three years, according to the needs of the company or the project. This capital increase will be considered in an extraordinary shareholder meeting on January 24.
To authorize CMPC Celulose Riograndense Ltda., the company's Brazilian unit, to obtain credit worth up to BRL$2,510 million (approximately $1.2 billion) with Banco Nacional do Desenvolvimiento Economico e Social de Brasil (BNDES). This facility is structured as a 10-yr term loan with amortization of principal and interest payment on a monthly basis, starting after the investment plan is complete.
To use funds from cash held by the company, arrange for a bond offering of up to $500 million in the local or international markets, and the eventual sale of non-core assets such as properties with real estate value as well as the company's 7.7% stake in BICECORP S.A. The sale of the stake in BICECORP will be executed in an open and competitive process, to maximize the selling price of the shares.

Empresas CMPC produces pulp, paper, tissue, paper products, and other forestry products throughout Latin America. The company aims to deliver world-class products, from forestry to finished products, to its important global customer base. Its high quality timber and production facilities are strategically located in countries including Chile, Brazil, Argentina, Mexico, Colombia, Peru, Uruguay, and Ecuador. CMPC sells more than 25 different product lines to some 20,000 clients in more than 55 countries, always seeking long-term relationships.