Klabin to issue R$1.7 billion convertibles through rights offering

By Angela McDaniels

Tacoma, Wash., Dec. 2 - Klabin SA will issue up to R$1.7 billion of mandatorily convertible debentures due Jan. 8, 2019 through a rights offering, according to a company news release.

The issue is subject to a minimum issue size of R$1.65 billion.

The price is par of R$62.50.

The interest rate will be 12.24% for the first 18 months, 3.92% for the next six months and 8% for the remainder of the term.

Each debenture is convertible into one unit, and each unit will be composed of one common share and four preferred shares.

Prior to maturity, the debentures will be convertible only under certain circumstances. If they have not already been converted, they will be mandatorily and automatically converted at maturity.

The settlement date will be Jan. 6, and the debentures will be subject to a lock-up period that ends July 6, 2015.

Proceeds will be used to construct a pulp plant.

If the plant produces and sells at least 300,000 tons of pulp within 30 months of issuance, the debentures become callable on the 48th month after issuance.

Klabin is a Sao Paolo-based pulp, paper and paper products company.

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