Fibria Plans Follow-on, Unloads Land

Continuing with its multiyear plan to strengthen finances, Brazil’s Fibria is planning to raise BRL1.25bn ($710m) in an equity follow-on, and has agreed to offload land assets to raise $235m, it says. The pulp and paper producer is preparing to file for an equity offering to raise additional funds, but does not offer any additional details. Barclays spots the offering at 17.6% of Fibra’s market cap, it says in a report. It would be the first offering under the new Fibria name, though both Votorantim Celulose e Papel and Aracruz are longtime Bovespa members. VCP last issued for $253m equivalent in 2003, and VCP for $234m equivalent in 1995, according to Dealogic data. Fibria shares closed at BRL15.20 Thursday. Fibria also has agreed to sell forestry assets in the southern part of Bahia state Corus Agroflorestal, for BRL235m. Corus also has the option to buy Fibria’s 33% stake in the Bahia Produtos de Madeira sawmill, located in the same region. It hopes to finalize the land sales by June. “Although the announced measures will help the company to respect covenants in 1Q and 2Q 2012, we do not see them as the ultimate solution for leverage,” Barclays says. The shop sees net debt to Ebitda reaching 3.8x, under a bullish pulp price scenario, noting it would prefer 3.0x-3.5x.