Fibria Rallies After Joining Vale in Brazilian Tax Settlement

Fibria Celulose SA (FIBR3), Brazil’s largest pulpmaker by market value, rose the most in a month after joining a federal program to refinance a 587 million reais ($252 million) tax bill and agreeing to sell land.

Brazil’s biggest exporters had been fighting a combined 75 billion reais in tax claims on profit of their foreign subsidiaries, according to the country’s tax agency. Vale SA, the world’s largest iron-ore producer, climbed for a third straight day as it said this week that its board decided to join the government’s tax settlement program.

The shares of Fibria climbed 1.6 percent to 27.92 reais at 3:38 p.m. in Sao Paulo, the biggest gain on a closing basis since Oct. 29. The stock pared its monthly decline to 3.9 percent. The benchmark Ibovespa index added 0.9 percent today. Vale rose 1.1 percent to 32.65 reais.

Fibria’s decision to join the tax settlement program, known as Refis, addresses concern related to foreign subsidiaries’ liabilities, Lucas Ferreira, Rodolfo Angele and Mandeep Singh Manihani, analysts at JPMorgan Chase & Co., wrote in a research note to clients. While Fibria agreed to pay its taxes, the company “will continue its fight in courts and any outcome now should be upside risk to Fibria’s base case,” the analysts wrote.

The company said in a regulatory filing after the market closed yesterday that it was granted discounted interest and penalties. The pulp producer also announced the sale of land in the state of Sao Paulo for 24 million reais to Votorantim Cimentos SA (VEBM11), according to the filing.

Vale agreed this week to pay 5.97 billion reais at the end of this month and 16.4 billion reais in 179 monthly installments, plus interest.

To contact the reporters on this story: Denyse Godoy in Sao Paulo at dgodoy2@bloomberg.net; Katerina Petroff in Sao Paulo at kpetroff@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.