Official note on facts involving Eldorado Brasil’s Arbitration

To restore the truth

We regret having to use this space to clarify the lies and misleading statements published by Paper Excellence through its CA Investment arm about J&F Investments and its subsidiary Eldorado Brasil Celulose.

Yes. Paper Excellence lied to the market, just like it did to the arbitration court.

On June 6, 2019, the arbitration court ordered Paper Excellence to deposit BRL 11.2 billion in a linked account, as the company had offered to do. Paper Excellence claimed to have the necessary funds in its bank accounts for the completion of its acquisition of Eldorado since July 2018. But once Paper Excellence saw that the court accepted the claim, Paper Excellence turned back around.

Instead of immediately making the deposit, the Indonesian company started to ask the arbitration court to reduce the deposit amount – first to approximately BRL 6 billion and then to BRL 9.5 billion. The court reinforced the understanding that the amount to be deposited should be BRL 11.2 billion.

To comply with the decision, Paper Excellence sought financing up to BRL 1.9 million. Once again, Paper Excellence’s prerogative could not be more clear, and the Indonesian company was forced to modify the financing under negotiation, as the initial proposal violated Eldorado’s shareholders’ agreement as well as others already made.

After nearly six months of the court ruling, Paper Excellence deposited BRL 1 billion obtained through funding and linked assets valued at BRL 10.2 billion. This was more than a year after the deadline to raise such funds (September 3, 2018) and to release J&F guarantees linked to Eldorado financing.

More importantly, even before making the deposit, Paper Excellence has already requested the recovery of part of the value.

Therefore, CA’s recent behavior attests to its inability to comply with the contract on time, confirming what J&F has always stated.

With regards to the Coordinating Body, this is a court measure to protect Eldorado from possible harmful actions by CA, which has sought to block several initiatives by Eldorado management. This body should contribute to overcoming deadlocks in a specific list of matters, outside of the daily management of the company, without replacing other governing bodies of Eldorado, such as its board of directors.

Hence, it is unsurprising that Paper Excellence omitted the “material fact” that members of the Coordinating Body shall act solely on the interests of Eldorado, not the shareholders. After all, defending the good of the company is not on the list of concerns of the minority owner. Still, in line with the conduct adopted by Paper Excellence, the company also ignores the relevance of the arbitration court by omitting that the court will be the final decision-making body in case of disagreements with the coordinating body.

Paper Excellence also disregarded the arbitration court’s decision that Eldorado, a publicly-held company, would define the content of any communication to the market about the arbitration.

In short, Paper Excellence has repeated its arbitration strategy of delaying and spreading lies that it adopted before the case began. None of this changes the fact: Paper Excellence did not honor the contract by not releasing J&F guarantees within the year-long contractual term. And that is what being dealt in the arbitral court.

J&F remains absolutely confident in the outcome of the arbitration and will continue to act in Eldorado’s best interest, particularly in the face of Paper Excellence’s abusive and hostile conduct.