Winner: LD Celulose
Structuring a $1 billion syndicated loan is not an easy task in the best of times. It gets really challenging when a global pandemic hits the economy in the middle of negotiations.
That was the situation that LD Celulose found itself as its advisers, headed by development banks IDB Invest and the IFC, tried to set up a loan with a group of financial institutions to fund more than half the building of a $1.8 bln dissolving wood pulp plant in Brazil.
IDB Invest and the IFC started to the syndication effort in January, hoping to have it closed by March. The workings of the group coincided therefore with the progression of the novel coronavirus, first ravaging Europe and then Latin America, with Brazil being dramatically affected by the pandemic.
LD Celulose is a joint venture between Brazil’s industrial group Duratex and Austria’s Lenzing group. The early damages made by COVID-19 in Europe meant some prospective participants in the syndication based in the Old World became reluctant to go ahead with the deal, recalled Aitor Ezcurra, a division chief at IDB Invest.
“They were suffering the shock of the pandemic, and that was the first difficulty that we met,” he said. “Also, because of COVID-19, pulp prices came down, and we had to redo financial projections and re-evaluate the project.”
The challenges were compounded by operational issues such as restricted visits to the site, in the state of Minas Gerais, perspectives of delays to construction work, and the need to perform due diligence tasks by using virtual meeting tools.
“Overall, however, the syndication worked as expected, and the book was closed in March with a slight oversubscription,” Ezcurra said.
In the end, eight commercial banks combined to provide $500 mLn in 9-year loans, while IDB Invest and the IFC Invest will fork out $250 mLn each via 11-year loans.
In Ezcurra’s view, the deal was a successful one, especially considering the circumstances. LatinFinance agrees: it is our Syndicated Loan of the Year. This transaction is rare in that it was also deemed the winner of the Project and Infrastructure Finance Loan of the Year award earlier in 2020. – LF
SPONSORS: Lenzing AG of Austria (51%) and Duratex S.A. of Brazil (49%)
BANKS: BNP Paribas, Banco Santander, Commerzbank Aktiengesellschaft (Luxemburg Branch), Erste Group Bank AG, Finnvera – Finnish Export Credit Ltd., HSBC Bank plc, International Finance Corporation (IFC), Inter-American Investment Corporation (IDB Invest), KfW IPEX-Bank GmbH and Raiffeisen Bank International AG, Wells Fargo Bank, N.A.
LAW FIRMS: Allen & Overy LLP; Binder Grosswang Rechtsanwalte, Austria; Eisenberger & Herzog Rechtsanwalts GmbH; Kelley Drye & Warren LLP; Linklaters LLP; Machado Mayer Advogados; Pinheiro Guimaraes-Advogados
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