Arauco's board called an extraordinary shareholders' meeting to approve a capital contribution commitment agreement of US$450 million for the company. The meeting was set for next September 10.
Previously, on June 25, Empresas Copec's board had agreed to approve the operation, called an equity support agreement (ESA), for its forestry arm Arauco.
The company is developing a megaproject in Brazil, Sucuriú, which involves an investment of US$4.6 billion and will produce 3.5 million tons of pulp per year.
"Empresas Copec will commit, irrevocably and unconditionally, to keep available to Arauco an amount of up to US$450 million, which may be requested, in a single sum or in several installments, from January 1, 2027, to December 31, 2028, upon the occurrence of certain activation events," the company stated in a material fact notice.
While the ESA is in effect, Arauco will pay an escalating commission of 0.3% per year, calculated on the undisbursed balance of the committed amount.
"The execution of the ESA will not imply an immediate disbursement for Empresas Copec. Its potential financial effects will depend on the occurrence of any of the activation events and on the amount Arauco requests, so it is not possible to quantify them as of this date," Empresas Copec stated.
Additionally, the board appointed EY Consultores Limitada as independent evaluators of the process, so that they may inform shareholders of the operation's conditions, timelines, and its possible impact on Arauco.
The process takes place amid significant financial pressure on the company due to the investment it is making in Brazil. In May of this year, Empresas Copec's Administration and Finance Manager, Rodrigo Huidobro, said during the firm's conference call that they had committed a capital injection of US$1.2 billion from Empresas Copec to Arauco, and that they had already injected US$750 million. There, he stated that "the remaining US$450 million will be injected with US$200 million in June and US$250 million by the end of the year."
Another financial avenue the company has is selling forests. "We are considering selling some forest. The idea is to sell standing trees, mainly in Chile, where we have many biological assets. We have around US$2.5 billion in biological assets. The idea is to sell standing trees with a contract that makes that fiber available to us if we need it. Only that I have the option to buy that fiber further away. That is the first option," Arauco's Chief Financial Officer, Gianfranco Truffello, explained at that time.
The latest progress reported by the company regarding Sucuriú was communicated by Arauco's own corporate treasurer, Marcelo Bennett, in the same corporate forum.
"The update on the Sucuriú project is that in March it was 58%, but we can update that figure with an overall progress of 62% in April, which means we are 7% ahead of our schedule. We reached a milestone of 200 thousand hectares of forest already planted, and we have a workforce of more than 12 thousand people working on site," he noted.
Source:La Tercera
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