Linklaters advises sponsors and borrower on US$1.1bn financing of dissolving wood pulp plant in Brazil

Linklaters has advised Austrian cellulose fiber producer Lenzing AG and Brazilian wood panel manufacturer Duratex S.A. as sponsors, and their joint venture LD Celulose S.A. as borrower, in connection with the US$1.1 billion financing to build one of the largest and most energy-efficient dissolving wood pulp plants in the world. The International Finance Corporation (IFC) and the Inter-American Development Bank (IDB, acting through its private investment arm, IDB Invest) are co-leading the financing to LD Celulose S.A.

The financing will support the construction of a dissolving wood pulp (DWP) mill and the installation of a cogeneration power plant in Minas Gerais, Brazil with a capacity of 144 megawatts. As part of the project, LD Celulose will also sustainably plant and manage approximately 70,000 hectares of eucalyptus plantations which will feed the 40% of excess bioelectricity generated on-site as green energy into the public grid. This project will strengthen the competitiveness of Brazil’s pulp industry, create jobs, and support the country’s efforts towards climate change mitigation. LD Celulose plans to be operational in 2022.

Linklaters had previously advised Duratex in June 2018 in structuring the joint venture with Lenzing for the development of the project. The Linklaters team was led by partners Gabriel Silva and Andrew Compton with support from partner Vanessa Havard-Williams, managing associates Aileen Buchanan and Michelle Lo, and associates Alex Weaver, Audrey Telfer, Isabella Correa and Enrico Gätsch.