Suzano Papel e Celulose SA, Brazil’s second-largest pulpmaker, climbed the most in five months after the country’s development bank became the company’s second-largest shareholder.
Suzano rose 6.9 percent to close at 4.35 reais in Sao Paulo trading, the steepest gain since March 2.
The company led by Chief Executive Officer Antonio Maciel Neto said bondholders converted 1.2 billion reais ($600 million) in local bonds into 332.9 million shares, boosting the total shares outstanding by 43 percent to 1.11 billion. BNDES, as Brazil’s development bank is known, held about 45 percent of the convertible bonds and the swap takes its stake to 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.