Fibria Celulose SA said banks allowed it to exceed debt caps agreed on 2.5 billion reais ($1.35 billion) of loans without paying a waiver fee or higher rates after a declining real boosted foreign obligations.
Banks increased debt-to-earnings limits through the second quarter of 2012, Fibria said in a Dec. 23 statement, without disclosing the new covenants. Accords with Banco Santander SA, Citigroup Inc. and Bank of America Corp. previously limited net debt to four times earnings before interest, taxes, depreciation and amortization, or Ebitda, in the fourth quarter, Chief Financial Officer Joao Elek Jr. said Oct. 26.
Fibria, the world’s largest pulp producer, renegotiated covenants with banks as the Brazilian currency’s 17 percent decline in the past five months boosts foreign liabilities in local-currency terms. The Sao Paulo-based company’s net debt reached 4.2 times Ebitda in the third quarter.
“The new limits were set at levels resilient to stress scenarios,” Elek said in the statement.
The company said Dec. 20 it agreed to limit dividends to the “mandatory minimum” of 25 percent of net income until July 2012, as part of covenant renegotiations with banks.
“In our view, leverage will continue to be an overhang in the near term, although to a lesser extent,” Pedro Grimaldi, an equity analyst at Barclays Plc who rates the stock “underweight,” wrote in a note to clients dated Dec. 25. Leverage will continue to curb “the company’s capacity to grow.”
Fibria climbed 65 centavos, or 4.7 percent, to close at 14.45 reais on Dec. 23, the biggest rise in two months.