Klabin Rises on Report It May Cancel Share Sale: Sao Paulo Mover

Klabin SA, Latin America’s third-biggest paper maker by sales, rose after indicating it may scrap a share sale following a plunge in the Ibovespa index.

The shares advanced 1.8 percent to 10.89 reais at the close of trading in Sao Paulo. The stock has fallen 15 percent in 2013. The Ibovespa has dropped 24 percent this year, the steepest decline among the world’s top 20 equity gauges tracked by Bloomberg.

Klabin said in a regulatory filing today that it will only sell stock “if market conditions allow the preservation of shareholders’ best interests.” It sent the statement after Sao Paulo-based Valor Economico newspaper reported that the company may cancel the sale because it would have to issue more shares than it wants to raise the 1.7 billion reais ($754 million) it’s seeking to pay for a new plant in the state of Parana.

“If the company is suspending the sale because of the risk that the shares are priced too cheap, then it’s positive for investors,” Felipe Rocha, an analyst at brokerage firm Omar Camargo, said by phone from Curitiba, Brazil.

A Klabin official declined to comment further when contacted by Bloomberg News.

The paper maker is also in discussions with the investment funds Government of Singapore Investment Corporation Pte. Ltd. and Temasek Holdings Pvt. Ltd. as alternative options to raise the money for the new plant, Valor reported.

“This project has a lot of value for the company and its shareholders,” Rocha said. “It’s planned to be a very efficient plant. Klabin needs to find a good way of financing it.”

Press officials for GIC, as Government of Singapore Investment Corporation is also known, and Temasek declined to comment on the report in an e-mailed responses to questions.

Klabin’s planned Parana plant, called Projeto Puma, is designed to produce 1.5 million tons of cellulose per year starting in 2016, according to a regulatory filing on June 11.

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