Investor Relations

POR

Indebtness and Ratings

Indebtedness and Financial Investments

Gross debt on June 30, 2018 was R$ 19,492 million, a R$ 1,794 million increase in relation to the end of 1Q18, mainly due to the impact of FX rates on Company debt denominated in US Dollars. Out of total debt, R$ 14,449 million, or 71% (US$ 3,756 million), is US Dollar denominated. Average maturity all outstanding debt is now 45 months, of which 37 months for loans in Reais and 50 months in currency-denominated lines. Short-term debt at the end of the quarter was 11% of the total with the average cost of local funding and currency-denominated lines being 7.2% p.a. and 4.9% p.a. respectively.

The company’s position in cash and cash equivalents at the end of 2Q18 amounted to R$ 6,895 million, R$ 305 million more than at the end of the 1Q18 due mainly to cash generation during the period. This amount is sufficient to cover debt payments maturing over the next 34 months.

Consolidated net debt on June 30, 2018 amounted to R$ 12,597 million, a R$ 1,489 million increase compared with March 31, largely reflecting the devaluation of the Real in relation to currency denominated debt. For this reason, despite strong cash generation during the period, the net debt/EBITDA ratio was flat in relation to the end of 1Q18, as shown in the chart below. However, the leverage in dollar terms continued its downward trend, going from 3.6x at the end of the first quarter of the year to 3.4x in 2Q18. For this analysis, the total net debt is divided by the final exchange rate of each period and the Adjusted Ebitda divided by the average exchange rate of the respective quarters. This analysis shows, with the stabilized exchange rate, the Company's continued deleveraging since the beginning of the Puma Unit's operations

Rating

Agency Rating Outlook Latest Update
Standard & Poor's BB+ Stable Jun-16
Fitch Ratings BB+ Stable may-17
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