VCP Seeks Lenders for $1.8bn Bridge

Brazil’s Votorantim Celulose e Papel (VCP), is days away from signing a $1.8bn bridge loan from JPMorgan, according to company executives. A contract must be inked by October 6, when VCP is slated to acquire a 28% stake in Aracruz from shareholder Arapar. Loan market participants say JPMorgan is already seeking to form a club of banks to join the facility until a longer-term takeout plan is put in motion. Pricing on the jumbo facility is rumored to be aggressive, in the 100bp-125bp area for one or two years, say executives away from the process. So far there have been few takers for the transaction, says a banker away from it. With the liquidity constraints of today’s market, taking on tickets of hundreds of millions of dollars, or, in JPM’s case, making a $1.8bn commitment, make for a tall order. Final terms and conditions on the bilateral bridge are still being hammered out, with lawyers and bankers working furiously to meet the deadline, says a VCP executive. “Syndicating [the loan] is one of the things we’re considering,” he adds, declining to provide further details. If the bridge turns out to be longer than 12-18 months and market conditions continue hostile, syndication may not take place for several months, say bankers way from the process. JPMorgan declines to comment.