Brazilian pulp and paper producer Suzano is looking forward to completing its BRL22 billion ($4.4 billion) investment program in its new Cerrado plant this year. While the capital expenditures are huge, CFO Marcelo Bacci is not only relaxed but he is thinking of new potential acquisitions.

“I do not expect to announce a new transaction any time soon,” he said in an interview earlier this month.

“We have decided to be quite conservative, and we have been operating with a high level of cash. All investments have already been financed. We do not need to raise any more funds. We are quite buffered, as required in the current environment of uncertainty,” Bacci said.

Suzano has raised some $780 million in export pre-payment funds from a pool of 10 banks for a period of five years, as well as BRL2.6 billion from the Brazilian development bank BNDES as part of a new forest financing facility, the company said in a SEC filing on February 6. The 20-year BNDES loan includes a seven-year grace period at the bank’s benchmark TLP rate plus 1.75%, it added.

“There will be nothing new this year,” Bacci said. “We do not have any transactions on the horizon.”

NO BONDS, BUT MAYBE M&A

Bacci said, however, that the bond market may be attractive to companies that need to refinance debt.

“In terms of spreads over Treasury, we are at a very good level for companies like ours,” he said. “But Treasuries are still at a relatively high level compared to recent years. Historically speaking, it is not the best level of costs, but it is not bad either. There are quite alright for investment-grade companies that need to raise funds now … But this is not our case, as Suzano is a company that does not need new funds.”

As the Cerrado project comes on stream, Bacci also expects the company’s gross debt to peak at around $12 billion in the middle of this year before declining.

“From then on, we will have a gradual debt reduction thanks to cash generation. This will give us more opportunities for fresh capital allocations. We are now looking at alternatives in terms our organic and inorganic growth. We do not have anything ready to announce yet, but we are consistently on the lookout,” he said.

Bacci said Suzano will make these decisions in the second half of the year.