24 May, 2022 Chile

CMPC gets US$500 million sustainability-linked loan

Sullivan & Cromwell LLP in New York and Cuatrecasas (Chile) have helped paper and pulp company CMPC obtain a sustainability-linked loan worth US$500 million. 

White & Case LLP in New York and Miami and Philippi Prietocarrizosa Ferrero DU & Uría (Chile) advised the lenders.

The financing closed on 10 May. 

The borrower has agreed to pay off the credit in April 2026 in a single instalment.

CMPC will use the proceeds to fund sustainable investments that will help it reduce greenhouse gas emissions by 50% before 2030. It has also committed to reducing its water consumption by 25% and planting trees on more than 100,000 hectares of land by the same year.

Sustainability-linked debt issuances occur relatively frequently in Latin America, but sustainability-linked loans are still less common. In November, Mexican cement maker Cemex borrowed US$3.25 billion, a deal that is thought to be Latin America’s largest sustainability-linked loan. Earlier in 2021, Mexico’s Grupo Bimbo obtained a sustainability-linked credit line of US$1.75 billion.

This is not the first time that CMPC has obtained a sustainability-linked loan. Back in 2020, it got a US$100 million sustainability-linked facility, which was the first of its kind in Chile. Last year, it became the first Chilean company to issue sustainability-linked bonds, raising US$500 million in the deal.

CMPC is one of the world’s largest pulp and paper companies. Headquartered in Santiago, it is also present in Argentina, Brazil, Colombia, Ecuador, Mexico, Peru and Uruguay.

The pulp manufacturer has made several important acquisitions lately. In late 2021, it bought industrial and forestry assets from Brazilian counterpart Iguaçu Celulose Papel for 945 million reais (US$168 million). Two months prior, it acquired fellow Chilean paper group Carta Fabril for 1.1 billion reais (US$195 million). 

Counsel to CMPC 

Sullivan & Cromwell LLP

Partner Werner Ahlers, special counsel Benjamin Kent and associate Leo Held in New York

Cuatrecasas (Chile) 

Partner Macarena Ravinet and associates Federico Espinosa and Tomás Montes in Santiago

Counsel to The Bank of Nova Scotia, BOFA Securities, BNP Paribas Securities, The Hongkong and Shanghai Banking Corporation Limited, Export Development Canada and Mizuho Bank

White & Case LLP

Partner Sabrena Silver in New York, and associates Adrian Leal and Helena Buitrago in Miami

 Philippi Prietocarrizosa Ferrero DU & Uría (Chile)

Partner Marcelo Armas and associates Daniel Parodi and Juan Ignacio Rosales in Santiago

This article was updated on 24 May 2022 to include PPU (Chile) and White & Case’s counsel.

Source: Latin Lawyer

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