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Fitch Revises Votorantim's Rating Outlook to Negative



  Fitch Revises Votorantim's Rating Outlook to Negative

Business Wire

CHICAGO -- August 27, 2013

Fitch Ratings has affirmed the following ratings for Votorantim Participacoes
S.A. (Votorantim) and its subsidiaries and revises the Rating Outlook to
Negative from Stable:

Votorantim Participacoes S.A. (Votorantim)

--Foreign and local currency Issuer Default Ratings (IDRs) at 'BBB';

--National scale rating at 'AAA(bra)'.

Votorantim Industrial S.A. (VID)

--Foreign currency IDR at 'BBB'.

Votorantim Cimentos S.A. (VCSA)

--Foreign currency IDR at 'BBB';

--2041 and 2017 guaranteed notes at 'BBB';

Companhia Brasileira de Aluminio (CBA)

--Foreign currency IDR at 'BBB';

--2019 and 2021 guaranteed notes at 'BBB'.

Voto-Votorantim Overseas Trading Operations IV Limited

--Foreign currency IDR at 'BBB';

--2020 notes at 'BBB'.

These negative rating actions follow the announcement by Votorantim on Aug.
21, 2013 that it had indefinitely postponed existing studies between its
subsidiary, Votorantim Financas, and Banco do Brasil (BB) that could have
resulted in an increase in BB's participation in the capital of Banco
Votorantim. This announcement came on the heels of a decision by the company
to postpone the IPO of its cement subsidiary, VCSA, which was targeted to
raise BRL10.3 billion. The postponement of these initiatives will delay the
company's ability to reach a targeted net debt level of around 2.0x, an
expectation that was built in the existing rating categories.

KEY RATING DRIVERS

EXCELLENT CEMENT BUSINESS

The cement division is the backbone of VID, accounting for 41% of its revenues
and 60% of its EBITDA during 2012. Brazil is the key market for company.
During 2012, VCSA sold 24.4 million tons of cement in Brazil and 3.0 million
tons of cement in other markets - namely the United States and Canada. While
the company's business has benefited from the incorporation of Cimpor's assets
in Spain, India, China, Turkey, Morocco, Tunisia and Peru at the end of 2012,
Brazil continues to be the driver of VCSA's cash flow, accounting for 77% of
VCSA's EBITDA in the second quarter. Due to sales growth in Brazil of 7%
during the past quarter, VCSA has increased its market share to 36% from 35%.
VCSA's EBITDA for the six months ended June 30, 2013 was BRL1.548 billion.

STRONG MARKET PULP POSITION

Through VID, Votorantim owns 29% of Fibria, which is the world's largest
producer of market pulp with 5.250 million tons of bleached eucalyptus kraft
market pulp capacity. The company shares control of Fibria with BNDESPAR,
which owns 30.42% of the company. Due to this shareholder structure, VID no
longer proportionally consolidates Fibria after adopting IFRS 11 in 2013.
Fibria is among the lowest cost producers of pulp globally. Fibria's leading
position is viewed as sustainable due to its ownership of 970,016 hectares of
land in Brazil upon which it has developed 562,995 hectares of eucalyptus
plantations. The nearly ideal conditions for growing trees in Brazil makes
these plantations extremely efficient by global standards and gives the
company a sustainable advantage in terms of the cost of fiber and
transportation costs between forest and mills. During the first six months of
2013, Fibria generated BRL1.2 billion of EBITDA, an improvement from BRL977
million during 1h2012.

STRONG GROWTH PROSPECTS IN MINING

VID owns 50.06% of Milpo, which is a low-cost polymetals miner based in Peru
with zinc accounting for 38% of its 2012 revenues, followed by copper
concentrates (29%), copper cathodes (8%), silver (20%), lead (4%) and gold
(1%). Milpo is ranked by Wood Mackenzie as the fourth lowest cost producer of
zinc globally on a C1 cash cost basis of USD0.28 per pound in the third
quarter of 2012. This allows the company to generate positive cash flow from
operations during periods of low zinc prices. Milpo had eight years of mine
life and 22 years of reserves and resources as of 2011 according to the Joint
Ore Reserves Committee (JORC) Code. Milpo has been granted a total of 357,777
hectares of mining concessions in Peru and Chile, of which approximately 2,975
hectares, or 1%, are currently being exploited.

LEVERAGE INCREASES IN 2013

The main subsidiaries of Votorantim that are not part of VID are the company's
50%/50% orange juice joint venture and Votorantim Finance (VF), which is the
holding company for Banco Votorantim, which is 49.9% owned by Banco do Brasil
(BdB) and 50.1% owned by Votorantim. Analytically, Fitch strips away the
financial metrics of VF from Votorantim's consolidated figures and focuses on
the standalone credit metrics of VID. As of June 30, 2013, VID had BRL23.2
billion of total debt and BRL5.2 billion of cash and marketable securities.
The company's debt amortization schedule is manageable BRL800 million of debt
falling due during the second half of 2013 and BRL1.6 billion amortizing in
2014. For 1h2013, VID generated BRL2.389 billion of consolidated EBITDA, which
represents an improvement from BRL1.970 billion during 1h2012. On an
annualized basis, this represents a total debt/EBITDA ratio of 4.8x and a net
debt/EBITDA ratio of 3.8x. Both ratios are high for the rating category and
should trend down during the second half of the year.

RATING SENSITIVITIES

Votorantim's efforts to lower total debt through asset sales and an IPO of
VCSA were stymied by market conditions and additional considerations. Fitch
will likely downgrade the company's credit ratings by one notch if the company
is not able to materially lower debt within the next 12 to 24 months.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology' (Aug. 5, 2013);

--'Parent and Subsidiary Rating Linkage' (Aug. 8, 2012);

--'National Ratings Criteria' (Jan. 19, 2011).

Applicable Criteria and Related Research:

Corporate Rating Methodology: Including Short-Term Ratings and Parent and
Subsidiary Linkage

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=715139

Parent and Subsidiary Rating Linkage

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=685552

National Ratings Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=595885

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=800550

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS.
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING
DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL,
COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM
THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER
PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS
OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN
EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER
ON THE FITCH WEBSITE.

Contact:

Fitch Ratings
Primary Analyst:
Joe Bormann, CFA, +1 312-368-3349
Managing Director
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Secondary Analyst:
Gisele Paolino, +55-21-4503-2600
Director
or
Committee Chairperson:
Dan Kastholm, CFA, +1 312-368-2070
Managing Director
or
Elizabeth Fogerty, +1 212-908-0526
New York, Media Relations
elizabeth.fogerty@fitchratings.com
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