[Cancelled] CDB provides loan to Paper Excellence for its acquisition of Eldorado pulp and paper mill in Brazil

On September 2, 2017, Paper Excellence B.V. (PEBV) — a special purpose vehicle that was legally incorporated in the Netherlands in 2008 and that is wholly owned by Jackson Wijaya Limantara, the grandson of Sinar Mas founder Eka Tjipta Widjaja — and its wholly-owned subsidiary CA Investment (Brazil) SA signed a share purchase agreement with J&F Investimentos. The purpose of the agreement was to enable PEBV to purchase a 100% equity stake in Eldorado Brasil Celulose SA (Eldorado) — a Brazilian pulp and paper producer — from J&F Investimentos for BRL 15 billion. China Development Bank (CDB) provided a loan to PEBV to facilitate the acquisition. On September 25, 2017, PEBV successfully acquired a 13% ownership stake in Eldorado from J&F Investimentos. Several months later, in December 2017, PEBV increased its stake in Eldorado to 49.41%. According to the terms of the share purchase agreement, PEBV had one year (until September 2, 2018) to raise the necessary bank financing to buy the remaining 50.59% equity stake in Eldorado. However, in 2018, J&F Investimentos chose not to accept additional funds from PEBV to complete the ‘third and final’ stage of the acquisition (due to concerns about guarantees that it had issued) and CDB reportedly cancelled its loan agreement with PEBV. Then, in August 2018, J&F Investimentos — the holding company that controls the Batista family's businesses — filed a lawsuit against PEBV asking for an injunction to prevent the transfer of 100% of Eldorado shares to PEBV. Then, in 2021, PEBV announced that the ICC (International Chamber of Commerce) arbitration court had ruled in favor of PEBV, enabling it to proceed with the full (100%) acquisition of Eldorado. The acquisition was to be completed under the terms of the share purchase agreement between PEBV and J&F Investimentos that was entered into in 2017. At the time of the 2021 announcement, PEBV owned 49.41% of Eldorado. Then, in October 2022, Paper Excellence obtained a São Paulo court decision allowing for the completion of its deal to acquire Eldorado Brasil Celulose from J&F Investimentos. The court overturned a 2018 injunction suspending the transfer of control from Eldorado to PEBV. Thus, the minority partner (PEBV) was released to complete the purchase a 100% ownership stake in Eldorado.

Additional details

1. Eldorado Brasil is one of the most modern and competitive pulp companies in the world. In 2019, it reached the production mark of 1.8 million tons, establishing a new level for the industry located in Três Lagoas (MS). 2. Asia Pulp and Paper (APP) is controlled by the Widjaja family, which also controls PEBV, a shell company that is used to hold pulp mills abroad. 3. The Batista family founded and controls meatpacker JBS, which expanded globally via acquisitions with strong financial support from BNDES and other government entities. J&F Investimentos, through which the family holds JBS, also owns Banco Original, cosmetics and cleaning products maker Flora and TV channel Canal Rural. After admitting to bribing officials in exchange for financing and other benefits, J&F executives including Wesley and Joesley Batista signed plea bargains and the company obtained a leniency agreement in 2017. However, the deals may be revoked due to revelations of additional offenses. J&F executives’ testimony implicated politicians including Brazil’s president, as well as government bank officials. Wesley and Joesley were jailed from September 2017 until February and March 2018, respectively. They are barred from positions at group companies and may face prison terms. Second-largest shareholder BNDES has pushed to remove the family from management

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3

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24