Subject: Cenibra/JBP Market Rumor
From: [email-masked]
To: [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked]
Cc: [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked]
Date: Mon, 15 Oct 2001 15:31:05 -0700 (PDT)

Our internal intelligence group informed us that the following rumor is circulating in the Brazilian market:  JBP is considering putting the Cenibra assets (note that these are the assets they recently purchased from CVRD) up for sale.  They indicated that JBP was interested in improving the assets (they are currently implementing a debottlenecking project at Cenibra) and then selling them for cash flow reasons.  The strongest possible buyer at this point would be VCP as they're currently in a very strong financial position (low leverage and are part of the Votorantim conglomerate which throws off considerable cash from its cement and financial services businessnes).  Also look for the Scandinavians to possibly make a bid for the assets as they've expressed interest in obtaining eucalyptus assets in the past.  We can most likely discount Aracruz from the running as they're currently rumored to be an acquisition target themselves (most likely buyer would again be VCP as they recently purchased Mondi's stake in the company and presently holds a 28% share in Aracruz --- however, it's doubtful that VCP would be able to swallow Cenibra and Aracruz simultaneously).  What does this mean for the market?  Any purchase by VCP would make them the strongest eucalyptus pulp producer globally with over 2 million tons (estimated market pulp would be about 1.7 million tons) and give them considerable pricing power as they would represent roughly 30% of global market capacity for eucalyptus pulp.

Please note that this is a rumor at this point and should be viewed as such.  I'll keep you updated regarding any developments.

KC