Brazilian pulp and paper company Suzano will draw on BRL10.1 billion ($1.99 billion) in cash reserves to fund all of its capital expenditure (capex) program for 2021 and pay down debt, CFO Marcelo Feriozzi Bacci told LatinFinance in an email.
“In the 12 months ended in September 2020, operating cash generation totalled BRL10.1 billion, a volume more than enough to meet the capex announced for 2021,” Bacci said in a written response to questions.
Suzano’s board approved a BRL4.9 billion investment plan for 2021 with more than 80% earmarked for maintenance costs. The rest of the money will be used to expand existing facilities and acquire land and forests, the company said in a securities ling on Tuesday.
The 2021 investment plan is BRL700 million higher than the capex budget for 2020 due to the appreciation of the US dollar against the Brazilian real, the company said.
Suzano became the largest eucalyptus pulp producer in the world with annual production of 11 million metric tons after its BRL10.5 billion acquisition of Fibria last year.
Bacci told LatinFinance in December last year that the merger would lead to savings of between BRL800 million and BRL900 million per year.
Suzano sold BRL4 billion in one-year debentures at 103% of the DI interbank lending rate to round out the acquisition nancing for Fibria at the end of 2018. The company previously sold BRL4.68 billion in eight-year debentures at 112.5% of the DI in June 2018 and received $6.9 billion in three-year acquisition nancing from BNP Paribas, JPMorgan, Mizuho and Rabobank in August.
Earlier this year, the São Paulo-based company said it plans to pay o BRL5 billion in debt from the Fibria acquisition over the next five years and lower net debt to three times EBITDA, down from 4.9 times at the end of 2019.
Suzano’s “commitment to nancial discipline” and eciency have allowed it to lower its debt levels in 2020, Bacci said in the email.
“Suzano has shown resilience to the scenario of uncertainty caused by the pandemic and continues to be able to generate cash and reduce its nancial leverage,” he said.