Allen & Overy advises on USD 1.14 billion LD Celulose Pulp Mill Financing in Brazil
16 June 2020
Allen & Overy has advised Inter-American Investment Corporation (“IDB Invest”), International Finance Corporation (“IFC”), BNP Paribas Fortis SA/NV (“BNP Paribas”) and a syndicate of commercial bank lenders on the $1.14 billion financing of LD Celulose S.A. to develop, construct and operate a dissolving wood pulp (DWP) plant in Minas Gerias, Brazil.
The Project is expected to be among the most efficient dissolving wood pulp mills in the world, with the capacity to produce 500,000 tons of DWP per year that will be exported and used to manufacture textiles and non-woven fabrics. LD Celulose will plant and manage about 70,000 hectares of eucalyptus plantations. Demand for DWP is expected to increase as a more climate-friendly and sustainable alternative to other textile fibers.
The financing consisted of three loan tranches: one provided by IDB Invest; a second provided by IFC; and a third provided by a syndicate of commercial banks (led by BNP Paribas Fortis SA/NV) through a Finnvera guaranteed and FEC funded loan. IFC and IDB each financed their portion of the loan through their A/B loan structure, which includes a syndicate of commercial banks as participants under its B Loans.The Project is sponsored as a joint venture between the Austrian group, Lenzing, a global leader in the production of wood-based cellulose fibers, and the Brazilian group, Duratex, the largest producer of wood panels in the southern hemisphere. The Sponsors provided full corporate guarantees and other financial support for the life of the loans, blending traditional limited recourse project financing with corporate and other financing structures.
The Allen & Overy project finance team was led by New York based partner Sami Mir and associates Chris Jung, Christine Steenman and Natasha Robbins.
“We are pleased to have advised on the cross-border financing of this exciting joint venture in Brazil to develop, construct and operate what is expected to be one of the most efficient dissolving wood pulp mills in the world,” said Mir.
The deal closed on 29 May 2020.
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