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v3.19.1

Financing | 12 Months Ended
--- | ---
Dec. 31, 2018
Financing |
Financing | 19. Financing 19.1. Loans and Financing
|  |  |  |  | Annual average |  |  |  |  |  |
|  |  |  |  | interest Rate |  |  |  |  |  |
|  |  | Index |  | on 12/31/2018 |  | Maturity |  | 12/31/2018 |  | 12/31/2017
Property, plant and equipment: |  |  |  |  |  |  |  |  |  |  |
BNDES - Finem |  | (a) (b) | Fixed rate /TJLP |  | 7.18 | % | 2019 to 2030 |  | 333,289 |  | 339,798
BNDES - Finem |  | (b) | Currency basket / US$ |  | 7.13 | % | 2019 to 2022 |  | 161,517 |  | 165,125
BNDES - Finame |  | (a) | Fixed rate /TJLP |  | 5.08 | % | 2018 to 2024 |  | 2,980 |  | 4,708
FNE - BNB |  | (b) | Fixed rate |  | 6.46 | % | 2024 to 2026 |  | 217,014 |  | 244,452
FINEP |  | (b) | Fixed rate |  | 4.00 | % | 2020 |  | 12,860 |  | 20,577
Financial lease |  |  | CDI/US$ |  | — |  | 2019 to 2022 |  | 18,225 |  | 19,686
Export Credit Agency - ECA |  | (b) (c) | US$/LIBOR |  | 4.13% | % | 2022 |  | 797,074 |  | 864,761
|  |  |  |  |  |  |  |  | 1,542,959 |  | 1,659,107
Working capital: |  |  |  |  |  |  |  |  |  |  |
Export financing |  |  | US$/LIBOR |  | 4.27 | % | 2021 a 2022 |  | 2,171,390 |  | 844,388
Export credit note |  | (f) | CDI |  | 6.69 | % | 2019 a 2026 |  | 3,799,257 |  | 2,907,200
Senior Notes |  | (d) | US$/Fixed rate |  | 6.28 | % | 2021 a 2047 |  | 11,406,027 |  | 4,730,800
Trade notes discount-Vendor |  |  | — |  | — |  | — |  | — |  | 33,363
Syndicated Loan |  | (e) | US$/LIBOR |  | 3.95 | % | 2023 |  | 11,825,134 |  | 1,986,691
Fund of Investments in Receivables |  | (h) | — |  | — |  | 2019 |  | 22,054 |  | 24,665
Rural Producer Certificate |  | (g) | CDI |  | 7.43 | % | 2026 |  | 279,838 |  | —
Other |  |  | — |  | — |  | 2019 a 2025 |  | 27,397 |  | 5,642
|  |  |  |  |  |  |  |  | 29,531,097 |  | 10,532,749
|  |  |  |  |  |  |  |  | 31,074,056 |  | 12,191,856
Current Portion (includes interest payments) |  |  |  |  |  |  |  |  | 3,425,399 |  | 2,115,067
Non-current Porties |  |  |  |  |  |  |  |  | 27,648,657 |  | 10,076,789
Non-current loans and financing mature as follows: |  |  |  |  |  |  |  |  |  |  |
2019 |  |  |  |  |  |  |  |  | — |  | 2,122,767
2020 |  |  |  |  |  |  |  |  | 2,229,429 |  | 2,599,279
2021 |  |  |  |  |  |  |  |  | 2,595,525 |  | 1,121,216
2022 |  |  |  |  |  |  |  |  | 3,259,465 |  | 123,745
2023 |  |  |  |  |  |  |  |  | 7,481,430 |  | 53,160
2024 |  |  |  |  |  |  |  |  | 39,960 |  | 34,084
2025 |  |  |  |  |  |  |  |  | 792,508 |  | 4,022,538
2026 onwards |  |  |  |  |  |  |  |  | 11,250,340 |  | —
|  |  |  |  |  |  |  |  | 27,648,657 |  | 10,076,789
| (a) |  | Transaction subject to Long-term Interest Rate (“TJLP”) published by the Central Bank of Brazil. If the index rate exceed 6% p.a., the exceeding portion is included within the principal and subject to the interest.
| (b) |  | Loans and financing are secured, depending on the agreement, by (i) plant mortgages; (ii) rural properties; (iii) fiduciary sale of the asset being financed; (iv) guarantee from shareholders and (v) bank guarantee.
| (c) |  | In order to finance the importation of equipment for the production of pulp at the plant located in Maranhão, Suzano obtained financing in the approximate amount of US$ 535 million, with a term of up to 9.5 years, guaranteed by Finnvera and EKN ("Export Credit Agency"). These agreements establish clauses related to the maintenance of certain levels of leverage, which are checked for compliance twice a year (June and December). To date, the Company has complied with all covenants established in the contracts: consolidated net debt / consolidated EBITDA ratio of less than 2.85 and consolidated EBITDA / net interest expense greater than 2.0.
| (d) |  | In March 2017, Suzano Austria issued Senior Notes in the amount of US$ 300 million maturing in March 2047, with semiannual interest payment of 7.00% per annum and final return for investors of 7.38% per year. Additionally. In the last quarter of 2017, Suzano through its subsidiary Suzano Trading, repurchased Senior Notes in the amount of (i) US$ 456 million and, through Suzano Austria, reopened Senior Notes issues in the amount of US$ 200 million, with maturity in July 2026, and interest corresponding to 4.62% per annum, to be paid semi-annually in January and July, and (ii) US$ 200 million maturing in March 2047, with interest corresponding to 6.30% per annum, to be paid semi-annually in the months of March and September. In September 2018, a new issue of US$ 1.0 billion of Senior Notes with interest of 6% per annum and maturing in 2029 (Note 1.1 a) (iii) was issued. In November 2018 Suzano Austria reopened the issue of Senior Notes maturing in March 2047 in the amount of US$ 500 million, with interest corresponding to 6.85% per annum, to be paid semi-annually in March and September.
| (e) |  | In February 2018, the Company, through its subsidiary Suzano Europa, contracted a syndicated loan in the amount of US$ 750 million, with payment of quarterly interest and amortization of the principal between February 2021 and February 2023 (Note 1.1 a) x)).
| (f) |  | In the third quarter of 2018, two Export Credit Notes were contracted, amount of R$ 1.3 billion, indexed to CDI and maturing in 2026.
| (g) |  | In the third quarter of 2018, a Rural Financial Producer Certificate was contracted, amount of R$ 275 million, indexed to CDI and maturing in 2026.
| (h) |  | See Note 7.1 (a).
Certain financing agreements have financial and non-financial covenants. Financial covenants establish maximum levels of leverage, normally expressed as a ratio of Net Debt to Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), which are met by the Company on the date of these financial statements. Non-financial covenants establish the maximum level of assignment of receivables, guarantees to third parties and sale of operating assets, which are also compliant. 19.2. Changes in loans and financing
Balances on December 31, 2016 |  | 14,012,779
Funding |  | 2,561,954
Exchange variation |  | 81,849
Settlement of principal |  | (4,533,736)
Settlement of interest |  | (1,025,117)
Interest expenses and other costs |  | 1,041,995
Transaction costs and other costs (a) |  | 52,132
Balances on December 31, 2017 |  | 12,191,856
Funding |  | 20,964,722
Addition from acquisition of subsidiaries |  | 79,923
Exchange variation |  | 1,457,989
Settlement of principal |  | (3,738,577)
Settlement of interest |  | (669,088)
Interest expenses and other costs |  | 873,344
Transaction costs and other costs (a) |  | (86,113)
Balances on December 31, 2018 |  | 31,074,056
| (a) |  | Includes, in addition to the funding and amortization costs, goodwill and negative goodwill on the issuance of debt.
19.3. Debentures The debentures 6 issuance occurred on June 29, 2018, in a single series, with a nominal unit value of R$ 1. The Debentures are not convertible into shares and have no covenants (Note 1.1 a) vi)).
|  |  |  |  |  | 12/31/2018 |  |  |  |  |  |
|  |  |  | Issuance |  |  |  |  |  | Current and |  |  |  | Annual rate of |  |
Issue |  | Serie |  | amount |  | Current |  | Non-current |  | Non-current |  | Index |  | interest |  | Due date
6ª |  | Single |  | 4,681,100 |  | 1,297 |  | 4,662,156 |  | 4,663,453 |  | CDI |  | 112.50% |  | 6/29/2026
|  |  |  | Total |  | 1,297 |  | 4,662,156 |  | 4,663,453 |  |  |  |  |  |
19.4. Transaction costs and premiums of securities issues
|  |  |  |  |  | Balance to be amortized
Nature |  | Total cost |  | Amortization |  | 12/31/2018 |  | 12/31/2017
Senior Notes |  | 134,754 |  | (67,565) |  | 67,189 |  | 27,280
NCE |  | 77,457 |  | (57,262) |  | 20,195 |  | 23,076
Import (ECA) |  | 101,811 |  | (85,576) |  | 16,235 |  | 26,386
Syndicated Loan |  | 57,467 |  | (26,915) |  | 30,552 |  | 6,479
Debentures |  | 20,295 |  | (1,351) |  | 18,944 |  | —
Other |  | 7,728 |  | (4,540) |  | 3,188 |  | 2,424
Total |  | 399,512 |  | (243,209) |  | 156,303 |  | 85,645
The cost of funding in foreign currency is amortized on the contractual dates based on the effective interest rate and the currency of origin and is converted into Brazilian reais for reporting purposes. 19.5. Guarantees for loans and financings Some loan and financing contracts have clauses of guarantee of the financed equipment itself or other fixed assets indicated by the Company (Note 15.1). 19.6. Lease agreements i) Financial lease agreements The Company has financial lease agreements related to equipment used in the pulp and paper industrial process, in which the Company assumes the risks and benefits inherent to the property. Some agreements are denominated in U.S. dollar or the CDI overnight rate and contain purchase option clauses for these assets upon the expiration of the lease term, which varies from 5 to 15 years, for a price substantially lower than their fair value. Management intends to exercise the purchase options on the dates estimated in each agreement. The amounts booked as property, plant and equipment, net of depreciation, and the present value of mandatory installments of the agreement (financing) corresponding to these assets are stated below:
|  | 12/31/2018 |  | 12/31/2017
Machinery and equipment |  | 108,160 |  | 108,160
(-) Accumulated depreciation |  | (101,318) |  | (99,452)
Property, plant and equipment, net |  | 6,842 |  | 8,708
Present value of mandatory installments (financing): |  |  |  |
Less than 1 year |  | 5,608 |  | 4,632
From 1 to 5 years |  | 12,617 |  | 15,054
Total present value of mandatory installments (financing) |  | 18,225 |  | 19,686
Financial charges to be recognized in the future |  | 2,115 |  | 2,770
Total mandatory installments at the expiration of agreements |  | 20,340 |  | 22,456
ii) Operating lease agreements The Company has operating lease agreements related to the leasing of areas, offices, real estate, telephone exchanges and installation services, which are denominated in Reais. The Management does not intend to purchase the assets at the end of the contract and the term of the contracts are not equivalent to the substantial part of the useful life of the assets. Land lease agreements, used for the formation of eucalyptus forests, have maturities of up to 21 years (3 cycles of forest formation). The cost incurred with the payment of these contracts is recognized as cost of training of Biological Assets. Operating lease payments are recognized as operating expenses in the Company’s income statement.
|  | Monthly |  |  |  |
|  | installment |  |  |  |
Description |  | amount |  | Index |  | Maturity
Administrative offices and deposits |  | 1 to 1,163 |  | IGP-M(a) and IPCA(b)/IBGE(c) |  | 01/2019 to 01/2024
Call center and licenses |  | 1 to 120 |  | IGP-DI(d) |  | 01/2029
Land |  | 182 to 2,047 |  | IGP-M, IPCA/IBGE and others |  | 01/2019 to 06/2046
| (a) |  | General market price index calculated by the Getúlio Vargas Foundation (IGP-M)
| (b) |  | Broad Consumer Price Index (IPCA)
| (c) |  | Brazilian Institute of Geography and Statistics (IBGE)
| (d) |  | General prices Index - Internal Availability (IGP-DI)
The minimum payments of maturing operating will be as follows:
|  | 12/31/2018
Less than 1 year |  | 181,903
From 1 year to 3 years |  | 484,200
From 3 years to 5 years |  | 258,018
More than 5 years |  | 524,120
Total installments due |  | 1,448,241

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