Fitch Rates Aracruz Future Flow Securitization Series 2003.Business Editors CHICAGO--(BUSINESS WIRE)--Aug. 7, 2003 Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has assigned a foreign currency rating of 'BBB' to Arcel Finance Ltd's new 2003 issuance of US$400 million. Fitch has also affirmed the 'AAA' rating with an underlying rating of 'BBB' for the existing 2002 issuance of US$250 million, which is insured by an unconditional financial guaranty As a verb, to agree to be responsible for the payment of another's debt or the performance of another's duty, liability, or obligation if that person does not perform as he or she is legally obligated to do; to assume the responsibility of a guarantor; to warrant. from XL Capital Assurance Corporation. The unwrapped series 2003 senior secured notes represent senior undivided UNDIVIDED. That which is held by the same title by two or more persons, whether their rights are equal, as to value or quantity, or unequal. 2. Tenants in common, joint-tenants, and partners, hold an undivided right in their respective properties, until beneficial interest in the Trust assets. Arcel Finance Ltd, the issuer, is a Cayman Island Trust. The 2002 and 2003 series notes are backed by the receivables generated by the future sale of Bleached Eucalyptus eucalyptus (y  'kəlĭp`təs): see myrtle. eucalyptus Kraft Pulp (BEKP BEKP Bleached Eucalyptus Kraft Pulp ) produced by Aracruz Celulose Aracruz Celulose S.A. is a major Brazilian manufacturer of pulp. It is headquartered in São Paulo. The company is the world's leading supplier of bleached eucalyptus pulp. S.A. (Aracruz). Aracruz will sell BEKP to Aracruz Trading S.A., the Seller, which will then sell product to Aracruz'a global customer base and will sell all related receivables to Arcel Finance Ltd, the Issuer. The assigned 'BBB' rating for the 2003 series is higher than Brazil's foreign and local currency ratings of 'B' as the transaction mitigates certain sovereign risks Sovereign Risk The risk that a foreign central bank will alter its foreign-exchange regulations thereby significantly reducing or completely nulling the value of foreign-exchange contracts. associated with Brazil. Due to the high quality and consistency of BEKP, Aracruz has enjoyed long-term relationships with some of the world's largest tissue manufacturers. As a result, the company does not sell much pulp on the spot market. During 2002, long-term supply contracts accounted for approximately 80% of the company's sales. Contracts typically adjust volumes annually and revert re·vert v. 1. To return to a former condition, practice, subject, or belief. 2. To undergo genetic reversion. to market prices. For this transaction, all customers receive Notices to make payments into an offshore collection account controlled by the Trustee. Fitch has stressed the coverage levels and believes that Aracruz' current and future production is adequate to support this additional series of future flow notes. Aracruz is the world's largest producer of BEKP, and exports comprise over 95% of the company's total production. The series 2003 transaction securitizes 80% of Aracruz's exports of BEKP, and Aracruz has covenanted to sell this amount to Aracruz Trading S.A. throughout the life of the transaction. Aracruz has a history of successful expansion projects, including the Fiberline C expansion project in May 2002, which brought production to approximately 2 million metric tons per year, and the recent acquisition of RioCell in the second quarter 2003, which added 415 thousand metric tons per year. Future projects are expected to bring up annual production to approximately 2.9 million metric tons. A report for this transaction can be found on Fitch's web site at 'www.fitchratings.com' titled 'Arcel Finance Limited (Aracruz): $500 Million Senior Secured Notes Due 2010.' |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion