Brazil’s Suzano Swaps Debt for Equity; BNDES 2nd-Largest Holder

Suzano Papel e Celulose SA, Brazil’s second-largest pulpmaker, increased its number of shares outstanding by 43 percent by converting bonds into equity, making Brazil’s development bank its second-largest holder.

Suzano converted 1.2 billion reais ($600 million) in bonds into 332.9 million shares, bringing its total shares outstanding to 1.11 billion.

BNDES, Brazil’s development bank, held about 45 percent of the convertible bonds and the swap takes its stake to about 18 percent of equity from 6.5 percent, according to data on Suzano’s website. BNDES converted the bonds at 4 reais a share, the data show.

Suzano is struggling to lower leverage after debt reached a 10-year high in the second quarter as the company pushes ahead with expansion plans amid a slump in pulp demand. Suzano’s net debt rose to 6.85 billion reais in the second quarter from a year ago, and was 5.7 times earnings before interest, taxes, depreciation and amortization, or Ebitda.

Had BNDES waited until the end of the year to make the conversion, it would have been at 17.39 reais a share, giving the bank a lesser total stake of 7.6 percent in Suzano.

To contact the reporters on this story: Rodrigo Orihuela in Rio de Janeiro at rorihuela@bloomberg.net; Lucia Kassai in Sao Paulo at lkassai@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

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