Fitch affirms Aracruz ratings

Fitch Ratings said it has affirmed the BBB senior secured local currency rating and the B+ foreign currency rating of Aracruz Celulose SA. In conjunction with these rating actions, Fitch has affirmed the AAA rating of the 2009 notes of its wholly owned subsidiary, Arcel Finance Ltd., as well as the BBB rating of Arcel's notes due in 2011.

The outlook is stable.

These rating actions take into consideration the proposed issuance of another $150 million of debt by Arcel. Proceeds from this issuance will be issued to refinance existing debt and for general corporate purposes.

Aracruz's BBB senior secured local currency credit rating is supported by its strong business position, which is primarily a result of the company's low-cost production capabilities and its high-quality bleached eucalyptus kraft market pulp (BEKP). During 2003, the company's cash cost of production was one of the lowest in the world at $144 per ton of BEKP.

Aracruz's excellent cost structure has enabled it to generate positive cash flows during troughs in the volatile pulp cycle, allowing it to grow without compromising its balance sheet.

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