February 6, 2019 / 9:33 PM / 3 months ago

UPDATE 1-Brazil's Eldorado says prospectus is accurate after holder allegation

(Adds shareholder meeting)

By Tatiana Bautzer

SAO PAULO, Feb 6 (Reuters) - Eldorado Brasil Celulose SA said on Wednesday that financial information in a bond prospectus is accurate, responding to a shareholder that alleged in letters to the U.S. Securities and Exchange Commission that it contained “material inaccuracies.”

Eldorado said in a statement that the financial information in the bond prospectus is “consistent and correct” and the sale complies with all relevant regulation.

“The company is sorry that one of its shareholders is uncomfortable with the transaction, but is sure the bond sale is important to the company”, Eldorado added. People close to the company said the transaction would proceed with no changes.

The shareholder, CA Investment, a vehicle owned by pulpmaker Paper Excellence, sent letters to the SEC stating that bond investors had received inaccurate information ahead of a planned bond issue by the Brazilian pulpmaker.

According to documents seen by Reuters, law firm Mehigan wrote to the SEC on behalf of CA Investment.

The documents alleged there were “fundamentally material inaccuracies” with respect to Eldorado’s earnings before interest, tax, depreciation and amortization (EBITDA) in the bond offer memorandum. It said the EBITDA “has been materially overstated.”

Eldorado plans to sell $500 million in 2026 bonds and is expected to price the issue on Wednesday.

Paper Excellence confirmed the documents had been filed with the SEC.

Netherlands-based Paper Excellence owns 49.4 percent in Eldorado and is involved in a dispute with the current controlling shareholder, J&F Investimentos SA, over completion of a deal to acquire control of the company. J&F is controlled by Joesley and Wesley Batista, also shareholders in meatpacker JBS SA.

In a statement, Eldorado said a shareholder meeting on Wednesday approved the $500 million issue with the 50.6 percent of votes by controlling shareholder J&F. Paper Excellence voted against the bond sale, saying it violates a previous agreement between the two parties. (Reporting by Tatiana Bautzer; Additional reporting by Aluisio Alves; Editing by Rosalba O’Brien, Jeffrey Benkoe and Diane Craft)

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