Brazil's Fibria reaches 7½% notes' tender cap, accepts no 6¾% notes

By Toni Weeks

San Luis Obispo, Calif., May 7 - Fibria Celulose SA said it received tenders for $952,659,000, or 77%, of its 7½% senior notes due 2020 and $443,526,000, or 63%, of its 6¾% senior notes due 2021 by 5 p.m. ET on May 6, the early deadline for the company's cash tender offer for the two notes series.

Fibria announced on April 23 that it had begun a cash tender offer for up to $480 million of the 7½% notes and then a principal amount of the 6¾% notes equal to $480 million less the principal amount of 7½% notes accepted for purchase. The notes were issued by Fibria Overseas Finance Ltd.

According to a press release, the company has increased the maximum tender amount to $486 million from $480 million.

Because the amount of tenders received for the 7½% notes exceeds the cap, the company will use a proration factor of 51.02% to determine the amount of notes accepted for purchase from each noteholder.

In addition, because the offer for the 7½% notes was oversubscribed by the early tender date, the company will not accept any of these notes tendered after the early tender date. Fibria also said that because tenders for the 7½% notes reached the offer cap, it will not accept any of the 6¾% notes that were tendered.

As previously reported, for the 7½% notes, the purchase price is $1,150 per $1,000 principal amount, including a $30 early tender payment. Fibria will also pay accrued interest up to but excluding the settlement date, which is expected to be May 8.

If any of the 6¾% notes had been accepted, the purchase price for them was to be $1,130 per $1,000 principal, also including a $30 early tender payment.

Holders may no longer withdraw tendered notes.

The company said total consideration for the $486 million principal amount of 7½% notes is $559,305,000.

The offer ends at midnight ET on May 20, but no further notes will be accepted.

At the start of the offer, Fibria said it currently had $1,237,200,000 of the 7½% notes outstanding and $699.6 million of the 6¾% notes.

Fibria said the settlement of the 7½% notes will increase its "other financial expenses" by about $106 million in the second quarter of 2013, which will impact the company's net profit for the quarter. However, it will also result in a reduction of Fibria's annual interest expense by about $36 million from the second quarter on, saving $215 million in present value of future net interest expenses. This will make additional cash available for other corporate purposes, the release said.

The company said it may continue to pursue actions that will generate free cash flow and reduce debt, including but not limited to acquiring notes through open-market purchases, privately negotiated transactions, tender offers, exchange offers or redemptions.

The offer was subject to conditions. There was no minimum response necessary for the tender to be completed.

Credit Agricole Securities (USA) Inc. (866 807-6030 or call collect +44 20 7214 7440), Deutsche Bank Securities Inc. (866 627-0391 or call collect 212 250-7527) and Morgan Stanley & Co. LLC (800 624-1808 or call collect 212 761-1057) are lead dealer managers and Banco Votorantim Securities, Inc. is co-dealer manager. D.F. King & Co., Inc. is tender and information agent (800 488-8075 or call collect 212 269-5550 or fibria@dfking.com.)

Fibria is a Sao Paulo-based pulp and paper company.

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