International Paper and Fibria Agree to Paper Machine Option Extension
Monday, January 11, 2010
Press release from the issuing company
MEMPHIS, Tenn. -- International Paper and Fibria (formerly Votorantim Celulose e Papel) have agreed to extend IP's option to build a second uncoated freesheet paper machine at the Tres Lagoas mill site. This option, which would have expired on Jan. 31, 2010, has been extended until Jan. 31, 2013.
In 2006, IP entered into a 90-year agreement in which Fibria agreed to furnish pulp and certain utilities to IP's co-located paper mill for the production of up to 250,000 tons of paper annually. The agreement also granted IP the option to build a second paper machine and to be provided with certain utilities and pulp to produce up to an incremental 250,000 tons of paper annually.
The three-year extension is the only change to the original agreement. If IP were to exercise this option, the second paper machine would need to begin production between Jan. 31, 2014, and Jan. 31, 2015.
This agreement to extend the option, which is aligned with the business strategies of both companies, will allow more time for the completion of all technical and commercial analyses, and will provide greater flexibility to start up the second machine in line with Latin American market demand growth.