Brazil’s paper industry giant Klabin secures US$280m loan from IFC to increase capacity and enhance efficiency

BRAZIL – Brazil’s largest producer, exporter and recycler of packaging paper, Klabin has secured a US$280 million for its Puma Project II from the International Finance Corporation (IFC).

IFC said in a statement that financing to one of the largest producers of paper in Latin America will support the company’s growth as well as improve Brazilian pulp and paper sector competitiveness and social-environmental standards in addition to promoting job creation.

The Puma II Project comprises the construction of two new kraftliner packaging paper machines with integrated pulp production which are expected to increase Klabin’s paper production capacity by 920,000 tons per year.

The project, which estimated cost is of BRL 9.1 billion (US$2.23 billion), will be built in the city of Ortigueira, Paraná State, Brazil, where Klabin currently operates the Puma I Unit, market pulp mill.

IFC’s financing package for Puma II comprises three parts: a ten-year US$ 103 million loan of IFC’s own resources; a seven-year US$ 127 million syndicated loan from eight commercial banks, and a US$ 50 million ten-year loan through the IFC Managed Co-Lending Portfolio Program (MCPP).

IFC financing is part of an overall US$ 800 million investment, which also includes: (i) US$ 180 million from IDB Invest, (ii) US$ 72 million from an international agency (which will be effective in the coming months), (iii) US$ 45 million from the China Co-financing Fund, and (iv) US$ 350 million from commercial banks.

The commercial banks include: Santander, Rabobank, HSBC, Sumitomo Mitsui Banking Corporation, Crédit Agricole, BNP Paribas, Sumitomo Mitsui Trust Bank and KEB Hana. IFC and IDB Invest are the lenders of record for the portion coming from commercial banks.

 The project aims to increase Brazil’s industrial production and efficiency while at the same time promoting global and regional trade through export growth.

According to the IFC, the project will also result in the expansion and streamlining of the pulp and paper industry value chain.

It will also create jobs, increase renewable energy generation, and promote the improvement of the social and environmental practices in the sector in Brazil.

The IFC in 2014 participated in Klabin’s Puma 1 project which currently contributes to the company’s current capacity of 3.5 million tons a year of pulp and paper.

The pulp and paper industry accounts for a significant part of the Brazilian economy and has a Presence in about 1,000 municipalities in Brazil.

The sector generates revenues that represent approximately 6% of the industrial GDP and 4% of Brazil’s total exports.

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