Investor Relations

POR

Indebtness and Ratings

Indebtedness and Financial Investments

Gross debt on September 30 was R$ 27,249 million, a R$ 2,647 million increase in relation to the end of 2Q19, mainly due to BRL devaluation and new funding. It was partially offset by pre-payment of less attractive loans in terms of maturity and cost. Among these funding operations, it is important to highlight the retap of the 2029 Notes for US$ 250 million, with a yield of 4.90% p.y. Of the Company’s total debt, R$ 20,408 million, or 75% (US$ 4,901 million) are US dollar denominated including financing with BRL for dollar rate swap operations.

During the period, average loan maturities remained at the same level decreasing to 91 months at the end of 3Q19 from 94 months at the end of 2Q19, 49 months for domestic loans and 104 for currency loans. In the light of the Company’s liability management and the decrease in global interest rates, worthy of note is the decline in the average loan cost from 7.6% p.a. in 2Q19 to 6.9% p.a. in the current quarter for local currency debt, and for currency denominated loans from 5.6% p.a. plus exchange rate fluctuation to 5.4% p.a. plus exchange rate fluctuation on the same comparative basis.

The company’s position in cash and cash equivalents at the end of the quarter amounted to R$ 12,153 million, R$ 695 million more than at the end of the 2Q19, mainly explained by new funding operations. On the other hand, disbursements related to the Puma II Project impacted the cash position, but to a lesser extent. Mention should be made that at the beginning of the year, Klabin contracted a Revolving Credit Facility of US$ 500 million, maturing in December 2023 and a financial cost of 0.4% p.a. Should the line be drawn down, the cost of this financing would be Libor + 1.35% p.y.

Consolidated net debt on September 30, 2019 amounted to R$ 15,096 million, a R$ 1,952 million increase compared with June 30, 2019, largely reflecting the FX rate variation impact on currency loans, in addition to disbursements for the Puma II Project. These impacts, even though partially offset by an increase to adjusted EBITDA, meant that Klabin’s financial leverage, measured by Net Debt/adjusted EBITDA ratio, increased to 3.4x from 3.0x. The Net Debt/EBITDA ratio in dollars, and which moderates the impact of the FX variation on debt, ended the quarter at 3.1 times.

Rating

Agency Rating Outlook Latest Update
Standard & Poor's BB+ Stable Dec-19
Fitch Ratings BB+ Stable May-19
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