Profile: Klabin FamilyBrazil Klabin SA 8 November 2017

The Klabin family controls pulp and paper manufacturer Klabin SA. The family has been in the pulp and paper industry for over a century, and SHAREHOLDER-RELATED RISK has long enjoyed strong government support.

Klabin has USD 500m 5.25% notes due 2024 and USD 500m Succession Family members hold 10 of 13 board seats, 4.875% notes due 2027 rated BB+. Risk and company by-laws call for a rotating Transfer of Low Governance is seen as having improved under non-family execu- wealth and chairmanship. There does not appear to be tives, but Klabin counts family members as independent directors control a history of intra-family disputes. and pays royalties to holding company Klabin Irmãos & Cia.

CONTENTS PAGE Klabin is not closely aligned with any Political Risk political party or impacted by political Timeline 2 Political controversy. Its chief political exposure Family Members 3 exposure and Low government stems from its relationship with BNDES, Corporate Structure 4 relations but recent scrutiny of BNDES’ lending practices has not implicated Klabin. Affiliations 5 Risk Factors 6 Legal & Debtwire Coverage 7 Regulatory Klabin SA is not currently involved in legal Risk Low cases or regulatory actions likely to Lawsuits and significantly impact the business. INTRODUCTION regulation The Klabin family controls Sao Paulo-listed Klabin SA, one of ’s Transparency largest pulp and paper manufacturers. The family’s controlling group Risk The family controls Klabin SA through holds a 22.9% stake worth BRL 4.4bn, and 58.6% of voting (ordinary) Structures of Low onshore holding companies whose shares. Some of the family’s members are surnamed Lafer. ownership ownership is publicly disclosed. and control The founding generation immigrated from Lithuania at the end of the 19th century, and by the 1930s the family was established The appointment of non-family executives, among Brazil’s economic and social elite, partnering with the aristo- in particular CEO Fabio Schvartsman cratic Sousa Aranha family’s Monteiro Aranha group and enjoying (2011-2017), is seen as having improved the patronage of President Getúlio Vargas (in office 1930-45 and Governance governance at Klabin SA. The listed 1951-1954) in the form of loans and a newsprint monopoly. Klabin Risk company still pays royalties to the family Moderate has received financing from state-owned development bank BNDES Corporate for use of trademarks. Two family since the 1960s, and has also had support from the Inter-American governance members are classified as independent Development Bank and IFC. BNDES has long been a holder of directors. Graziela Lafer Galvão was fined Klabin’s non-voting preferred shares, with its stake in the company by Brazil’s SEC this year for insider trading at times exceeding the family’s own, blurring the line between pri- of Klabin SA shares in 2013. vate and state ownership. Family members have held high-profile government positions: Horácio Lafer was finance minister (1951-53) The family does not own major companies and foreign minister (1959-61), and his nephew was for- eign minister (1992, 2001-02) and commerce minister (1999). Israel Expansion outside of Klabin SA, which remains Risk focused on its core pulp and paper Klabin was mayor of (1979-80) and head of Rio de Moderate Janeiro State Bank (1980-83). Growth and business. However, debt related to the diversification new Puma mill has resulted in high After expansion in the 1990s, Klabin ran into difficulty in the early leverage and a downgrade to BB+. 2000s, initially failing to pay a maturing international bond and only avoiding a restructuring thanks to a last-minute BNDES-led refi- Klabin missed a payment on international nancing. The company divested over USD 800m in assets to reduce bonds in 2002, and its restructuring debt, and instituted governance reforms including non-family execu- Credit History tives and a rotating family chairmanship, which has been held by Risk proposal was rejected by bondholders Daniel Miguel Klabin, Armando Klabin, Pedro Franco Piva, Israel Shareholder Low before a last-minute, BNDES-led history and Klabin, Miguel Lafer and Paulo Sérgio Coutinho Galvão Filho. refinancing. However, Klabin has been reputation willing to divest assets and has strong The Puma pulp mill, Klabin’s largest-ever investment, brought financial support from local banks. heightened risk as the company borrowed heavily to finance the project, sending leverage from 2.6x in December 2013 to 6.3x two Ratings indicate the probability of business disruption or loss of investment years later, and debt from BRL 7bn to BRL 18bn. The venture also value. High = over 50% or already occurring; Low = not of concern in the strained the family’s internal governance, with one family member foreseeable future fined by Brazil’s SEC for insider trading in Klabin shares immediately prior to the project’s announcement in 2013. Ilya Garger, Family Business Research Klabin returned to the international bond market in 2014 after a +1 212 686 5277, [email protected] hiatus of over 15 years, issuing USD 500m 5.25% notes due 2024. This September it issued USD 500m 4.875% green bonds due 2027. Luciana Leite, Family Business Research, Latin America Fitch downgraded Klabin to BB+ from BBB– in May, citing high lev- +1 212 390 7809, [email protected] erage from the Puma project, and slow deleveraging due to weak Ben Miller, Managing Editor, Latin America pulp prices and a stronger real. In 3Q17, net leverage improved to +1 212 686 5354, [email protected] 4.4x, compared to 4.9x the two previous quarters and 5.1x a year Lily Costa, Commercial Director, Emerging Markets ago. Adjusted EBITDA was BRL 750m, with gross debt of BRL 11.1bn +1 646 378 3107, [email protected] and BRL 7.7bn in cash. The 2024 notes last traded at 105, and the Page 1 2027 notes at 99.38. See Debtwire’s January 2017 credit report. Profile: Klabin FamilyBrazil Klabin SA 8 November 2017

1980s KIC establishes its seventh and largest paper factory, TIMELINE nearly doubling its production.

1889 Maurício (Moishe) Freeman Klabin immigrates to Brazil 1992 Celso Lafer is appointed foreign minister by president from Lithuania. He is followed by numerous family members Fernando Collor de Mello. over the next decade. 1994 KIC issues USD 110m in international bonds due in 1899 With brothers Salomão and Hessel and brother-in-law November and December 2002. Miguel, Maurício Klabin founds Klabin Irmãos & Cia (KIC), a printer and retailer of paper products. 1997 KIC establishes Klabin Kimberly, a 50-50 joint venture with Kimberly-Clark Corp. 1902 The company enters the paper manufacturing business after winning a contract to operate a paper plant in Itu, São 2000 Klabin and Norske Skog, a Norwegian newsprint company, Paulo state. form Norske Skog Klabin Comércio e Indústria, a 50-50 joint venture, to operate a plant in Monte Alegre. 1909 Along with other investors, KIC establishes paper manufacturer Companhia Fabricadora de Papel, which begins 2001 Klabin SA is created after a corporate restructuring that operations in 1914 and becomes the country’s third largest involves the merging of 11 companies and liquidation of two. paper producer by the 1920s. Celso Lafer is appointed foreign minister by president Fernando Henrique Cardoso, under whom he also served as minister of 1920 KIC opens its headquarters in Rio de Janeiro, then Brazil’s development, industry and commerce in 1999. capital. 2002 Klabin fails to repay international bonds maturing in 1923 Maurício dies and leadership is taken over by Wolff Klabin November. It proposes repayment of 15% at maturity and and Samuel and Horácio Lafer. extension of the remaining 85% for two years. The proposal is rejected by bondholders. After missing the November payment, 1929 KIC founds Sociedade Anônima do Jardim Europa, a São the company obtains BRL 575m in financing from BNDES and Paulo developer. other banks, and uses the proceeds to repay its international bonds and other debt. 1930s KIC buys porcelain factory Manufatura Nacional de Porcelanas SA (MNP) and the Fazenda Monte Alegre estate in 2003 Klabin SA undergoes a financial restructuring that includes Paraná state, where it establishes pulp and paper factory the sale of several assets, ending production of newsprint, Indústrias Klabin do Paraná de Celulose (IKPC) with Monteiro market pulp, soluble pulp and disposable paper. Divestments Aranha as a partner. include Klabin’s 50% stake in Norske Skog Klabin Comércio e Indústria to Norske Skog do Brasil Ltda for USD 28m, its 50% 1940s IKPC begins manufacturing newsprint, receiving support stake in Klabin Kimberly SA to Kimberly-Clark for USD 134m, a from the Getúlio Vargas government through loans and a 81.71% stake in soluble and special pulp producer Klabin Bacell guaranteed monopoly. The company begins production of kraft SA and 100% of its wood supplier Norcell SA to Singapore-based paper a few years later. It also begins development of the city of RGM International Pte Ltd for USD 91m, and pulp mill Riocell SA Telêmaco Borba in Paraná, the site of Klabin forestry and to Aracruz Celulose (now Celulose) for USD 610m. manufacturing operations and populated largely by its workers. 2008 Klabin’s Monte Alegre plant is expanded to produce 1.1m 1950s The company begins producing corrugated cardboard at tons per year, becoming the world’s tenth largest paper factory. Companhia Fabricadora de Papel in São Paulo and Unidade Del Castilho in Rio de Janeiro. KIC also establishes power plant 2011 With Arauco Forest Brasil SA, a subsidiary of Chilean Usina Hidrelétrica Presidente Getúlio Vargas to supply IKPC. group Celulosa Arauco y Constitución SA, Klabin SA buys Horácio Lafer is appointed finance minister in 1951 under Florestal Vale do Corisco Ltda, a 107,000 hectare plantation in president Getúlio Vargas, and foreign minister in 1959 under Paraná state, for USD 473.5m. Klabin holds a 51% stake, and president . Arauco 49%.

1957 Wolff Klabin dies and his son Israel takes over leadership. 2014 Klabin SA issues USD 500m 5.25% senior unsecured notes due 2024 through subsidiary Klabin Finance. It is the first 1960s KIC expands its corrugated cardboard business with the international bond issued by the company since the 1990s. Unidade Vila Anastácio plant in São Paulo, and builds its sixth paper factory, which eventually supplies 80% of the country’s 2016 Klabin SA opens the BRL 8.5bn Puma pulp mill in Paraná newsprint. The group expands its kraft paper and long-fiber pulp state, with roughly half of the financing coming from BNDES. business with a new factory in state. The company acquires cardboard manufacturers Embalplan Indústria e Comércio de Embalagens SA in Paraná state and 1970s KIC establishes Papelão Ondulado do Nordeste, a plant in Hevi Embalagens da Amazônia Ltda in Amazonas state for a state that produces pulp from sugar cane bagasse, total of BRL 187m. and Celucat Artes Gráficas, which produces bags and envelopes in Santa Catarina. 2017 Klabin SA issues USD 500m 4.875% senior unsecured notes due 2027 through Klabin Finance. 1979 The group lists in São Paulo. Israel Klabin is appointed mayor of Rio and soon afterwards steps down as head of the Source: Corporate filings, company website, press reports group. Page 2 Profile: Klabin FamilyBrazil Klabin SA 8 November 2017

FAMILY MEMBERS

Nessel Klabin Lafer Maurício Freeman Klabin Salomão Klabin Wolff Klabin 1860-1923 1876-1955 1891-1957 Wife: Luba Segall Wife: Bertha Osband Husband: Miguel Lafer Wife: Rose Haas

Immigrated in 1889, co-founded Klabin Irmãos & Cia in 1899 with brothers Cousin of Maurício, Salomão and Nessel; Salomão and Hessel and brother-in-law Co-founded Klabin Irmãos & Cia in 1899 Co-founded Klabin Irmãos & Cia in 1899 immigrated in 1902 Miguel; four children; descendants not involved in Klabin SA

Esther Klabin Horácio Lafer Israel Klabin 1907-2002 1900-1965 b.1926 Husband: Harry Jack Levine Wife: Maria Luiza Salles Wife: Lina Caldas Paranhos, Léa Manela Daughter Lilia Klabin Levine (b.1939) is Was a shareholder, foreign minister and finance minister; daughters Sylvia Lafer a board member and shareholder; Lilia's Board member and former chairman; Piva and Graziela Lafer Galvão (b. 1939) children are shareholders Cristina sons Alberto Klabin (b.1952), Leonardo are shareholders; Sylvia's husband Levine Martins Xavier; Regina Klabin Klabin, Dan Klabin and Gabriel Pedro Franco Piva (1934-2017)was a Xavier and Roberto Klabin Martins Klabin and daughters Stela Klabin and Xavier (b. 1969); who is also a board senator, chairman and shareholder; Maria Klabin are shareholders; Israel member Sylvia's son Horácio Lafer Piva (b. 1957) and Leonardo are shareholders of is a board member and shareholder; son Eduardo Lafer Piva (b.1957) and seedling supplies producer Mecplant daughter Regina Piva Coelho de Agrícola Ltda Samuel Klabin Magalhães are shareholders; Graziela's 1910-1979 son Paulo Sérgio Coutinho Galvão Filho (b. 1961) was chairman, is a board Wife: Aracy Augusta Leme Klabin, member, and is a board member and Daniel Miguel Klabin Trudy Klabin shareholder of drug store chain Raia b.1931 Drogasil SA Wife: Bebel Klabin Son Roberto Luiz Leme Klabin (b. 1956) is an independent board member Chairman and shareholder; son David Jacob Klabin Lafer Klabin and daughters Amanda Klabin 1902-1985 Tkacz (b.1979) and Rose Klabin are Wife: Mildred Klabin Lafer shareholders

Son Miguel Lafer (1938-2015)was chairman and shareholder; daughter Armando Klabin Vera Lafer (b. 1937) is a shareholder b.1934 and board member; Vera's son Francisco Lafer Pati (b. 1974) and Wife: Rosa Klabin daughter Vera Lafer Lorch Cury are shareholders, Fernando is also a board Board member and former chairman, member shareholder of shrimp producer Aquinor Aquicultura do Nordeste Ltda; sons Wolff Klabin, Bernardo Klabin, José Klabin (b. 1978) and daughter Daniela Abrahão Jacob Lafer Klabin are shareholders; children 1907-1980 manage investment fund 4K Wife: Betty Lafer Investimentos Ltda

Son Celso Lafer (b. 1942) is a shareholder, independent board member and was Foreign Minister

Note: This chart is based on public information and is not intended to be comprehensive. It includes only individuals relevant to the family business. Page 3 Profile: Klabin FamilyBrazil Klabin SA 8 November 2017

CORPORATE STRUCTURE

Daro Participações SA– Amanda Klabin Tkacz 15.65%; Daniel Miguel Klabin 53.05%; David Klabin 15.65%; Rose Klabin 15.65% Klabin Irmãos e Cia Dawojobe Participações SA– Armando Klabin 0.20%; Bernardo Klabin 24.95%; Daniela Klabin Niblak Participações SA 24.95%; José Klabin 24.95%; Wolff Klabin 24.95% Esli Participações SA– Cristina Levine Martins Xavier 33.33%; Regina Klabin Xavier 33.33%; Jacob Klabin Lafer Administração em Roberto Klabin Martins Xavier 33.34% Participações SA 12.52% GL Holdings SA– GrazielaLafer Galvão 99.99% Miguel Lafer Participações SA 12.52% Miguel Lafer Participações SA 6.26% Glimdas Participações – Alberto Klabin 10.30%; Dan Klabin 10.30%; Estate of Maurício Klabin VFV Participações SA 12.52% VFV Participações SA 6.26% 0.002%; Gabriel Klabin 10.30%; Israel Klabin 38.198%; Leonardo Klabin 10.30%; Maria Klabin GL Holdings SA 12.52% PRESH SA 12.52% 10.30%; Stela Klabin 10.30%; Glimdas Participações SA 11.07% GL Holdings SA 12.52% Jacob Klabin Lafer Administração e Participações SA – Miguel Lafer 50.00%; Vera Lafer 50.00% Daro Participações SA 11.07% LKL Participações – Cristina Levine Martins Xavier 33.33%; Regina Klabin Xavier 33.33%; Roberto GLIMDAS Participações SA 11.07% Dawojobe Participações SA 10.5% Klabin Martins Xavier 33.34%; DARO Participações SA 11.07% Armando Klabin 0.51% Miguel Lafer Participações SA – Miguel Lafer 99.99% DAWOJOBE Participações SA 11.07% Presh SA – Eduardo Lafer Piva 11.11%; Horácio Lafer Piva 11.11%; Pedro Franco Piva 0.01%; Esli Participações 16.71% ESLI Participações SA 8.36% Regina Piva Coelho de Magalhães 11.10%; Sylvia Lafer Piva 66.67% Pedro Franco Piva 12.52% LKL Participações SA 8.35% VFV Participações SA – Vera Lafer 99.99%

Mkt Cap BRL 19.1bn Klabin SA Chairman: Daniel Miguel Klabin Directors: Horácio Lafer Piva, Armando Klabin, Celso Lafer, Israel Klabin, Roberto Klabin Martins Xavier, Francisco Lafer Pati, Paulo Sérgio Coutinho Galvão Filho, Roberto Luiz Leme Klabin, Vera Lafer

Klabin Irmãos e Cia 19.9% (50.94% voting rights) Niblak Participações SA 3% (7.68% voting rights) Capital World Investors 6.75% (3.46% voting rights) The Bank of New York ADR Department 5.89% (3.01% voting rights) Monteiro Aranha 5.48% (2.80% voting rights) BNDES Participações SA 4.50% (2.30% voting rights) Blackrock 3.82% (1.96% voting rights) Free float 59.54%

Foreign sales Herbal medicine

Klabin Paraná Produtos Klabin Austria GmbH Riohold Holdings SA Florestais Ltda (KPPF)

Klabin SA 99.99% Klabin SA 100% Klabin SA 100% Riohold Holdings SA 0.01%

Klabin Forest Reforestation Klabin Fitoprodutos Ltda Products Co (Florida) Sociedades em Conta de Klabin SA 99% KPPF 1% Klabin SA 100% Participação (secret partnerships) Correia Pinto, CG Forest, Monte Alegre, Harmonia Investment Debt issuance Klabin SA 78% average Monterla Holdings SA Klabin Finance SA (Luxembourg) Florestal Vale do Corisco Ltda Klabin SA 99% KPPF 1% Klabin SA 100% Klabin SA 51% Arauco Forest Brasil SA 49% Industrial sacks USD 500m 4.95% seniorunsecured notes due 2027 USD 500m 5.25% seniorunsecured Klabin Argentina SA notes due 2024 Klabin SA 97.98% KPPF 2.02% Klabin Overseas Ltd Klabin Ltd (Cayman Islands) (United Kingdom) Forestry

Klabin SA 100% Klabin SA 100% Klabin Florestal Ltda

Klabin SA 99.8% KPPF 0.2% Foreign sales

Klabin Trade LLP Hotel (United Kingdom) IKAPÊ Empreendimentos Ltda Klabin Ltd 99.5% Klabin Overseas Ltd 0.5% Klabin SA 99.99% KPPF 0.01%

Note: This chart is based on public information. It contains key companies but is not intended to be comprehensive. USD bonds and market capitalization are included where relevant. Family shareholdings are italicized. Companies are domiciled in Brazil unless otherwise noted.

Page 4 Profile: Klabin FamilyBrazil Klabin SA 8 November 2017

AFFILIATIONS Relationships with individuals and institutions

BNDES has provided financing for Klabin since the 1960s and been a shareholder through BNDES Participações SA (BNDESPar) since at least the 1990s. In 1998, the development bank held a Brazilian 29.44% stake in Klabin SA. In 2002, Klabin received BRL 575m in financing, 250m of which came Development Bank from BNDES, to repay its international bonds due that year as well as other debt. In 2016, Klabin (BNDES) received BRL 4.2bn in financing from BNDES for its Puma plant. BNDESPar currently holds a 4.5% stake in Klabin SA. BNDES also provides financing for customers of Klabin.

Through its subsidiary Arauco Forest Brasil SA, Chile’s Celulosa Arauco y Constitución SA owns a Celulosa Arauco y Constitución SA 49% stake in Florestal Vale do Corisco Ltda, a 107,000-hectare plantation in Paraná state acquired with Klabin SA in 2011 for USD 473.5m.

US-based fund Capital World Investors, a subsidiary of Capital Group, holds a 6.75% stake in Klabin SA (3.46% of ordinary shares, 8.86% of preferred shares). The fund is also a large sharehold- er of Vale SA, whose CEO, Fabio Schvartsman, was CEO of Klabin from 2011 until this year. In 2013, as part of the funding for the Puma project, Klabin issued BRL 1.7bn in mandatorily converti- Minority shareholders ble bonds, of which BRL 1.3bn are held by Singapore government-owned fund Temasek and HS Investimentos of Brazil’s Grupo Ligna. Helio Seibel, managing partner at Ligna, and Matheus Mor- gan Villares, head of Temasek in Brazil, have been board members of Klabin SA since 2013. Blackrock Inc holds a 3.82% stake in Klabin SA (1.96% of ordinary shares, 5.02% of preferred shares).

The Monteiro Aranha group, founded by the Sousa Aranha family, has partnered with the Klabin family since at least the 1930s, when they co-founded the Indústrias Klabin do Paraná de Celulose (IKPC) mill. Most members of Monteiro Aranha’s controlling family now have the surname Mon- teiro de Carvalho. The families have been allies in both business and politics, with the Sousa Aranha family playing a key role in Klabin’s relationship with its initial political benefactor, Presi- dent Getúlio Vargas. Oswaldo Aranha succeeded Horácio Lafer as finance minister in 1953, and as Monteiro Aranha SA foreign minister (1938-1944) lobbied for the creation of the state of Israel, a cause championed by (Sousa Aranha family) the Klabin family. Monteiro Aranha SA currently holds a 5.48% stake in Klabin SA, as is listed as a related party to which Klabin pays trademark royalties. Klabin and Monteiro Aranha share two board members. Olavo Egydio Monteiro de Carvalho, the chairman of Monteiro Aranha and grandson of its founder, is an alternate board member of Klabin. He is also on the board of fuel dis- tribution company , in which Monteiro Aranha holds a 4.38% stake. Joaquim Pedro Mon- teiro de Carvalho Collor de Mello, the son of ex-president Fernando Collor de Mello, is an alter- nate board member at both Klabin and Monteiro Aranha.

Klabin SA board member Paulo Sérgio Coutinho Galvão Filho, a member of the Klabin family, is also a board member and shareholder of Raia Drogasil SA, Brazil’s largest drug store chain. His im- mediate family holds a 6.1% a stake in Raia Drogasil through holding companies GL Investimentos Raia Drogasil SA e Participações Ltda, TransTrand SA, and Paulo’s direct stake. The Galvão branch of the Klabin family is part of Raia Drogasil’s controlling group, which also includes the Pires de Oliveira Dias and Pipponzi families.

Fabio Schvartsman was the CEO of Klabin SA from 2011 to 2017, when he became the CEO of miner Vale SA. Under his management, Klabin’s revenue nearly doubled, and he is credited with Fabio Schvartsman improving corporate governance. Prior to Klabin, he worked for 22 years at fuel-distribution group Ultra, where he was CFO of Ultrapar. Cristiano Cardoso Teixeira, the newly appointed CEO of Klabin, was brought to the company in 2011 by Schvartsman, according to Valor.

Page 5 Profile: Klabin FamilyBrazil Klabin SA 8 November 2017

RISK FACTORS Legal issues, conflicts and controversies

In June 2017, shareholder and alternate board member Graziela Lafer Galvão reached a BRL 150,000 settlement with Brazil’s Securities and Exchange Commission (CVM) for insider trading Graziela Lafer Galvão that ocurred in the days before Klabin SA’s 28 November 2013 disclosure of the Puma project, the insider trading company’s largest project to date, according to a CVM announcement. She personally sold settlement 386,000 preferred shares on November 21, and 62,700 in November 22, with a total value of BRL (2017) 5.1m. She also made smaller transactions through GL Asset Gestão de Ativos Ltda, a company she controls with son Paulo Sérgio Coutinho Galvão Filho and daughter Maria Eugênia Lafer Galvão. She continues to be a shareholder and alternate board member.

In November and December 2002, Klabin SA faced principal payments on USD 110m internation- al bonds issued in 1994. After missing the November payment, the company made a restructuring proposal to bondholders, offering 15% at maturity while extending the remaining 85% for two Debt restructuring years. After bondholders rejected the proposal, Klabin obtained a BRL 575m loan, BRL 250m of (2002) which came from BNDES and the remainder from Unibanco, Bradesco, Itaú BBA, JPMorgan and ABN Amro. Klabin used the proceeds to repay its international bonds and other debt. The refi- nancing came amid a broader restructuring in which Klabin divested over USD 800m in assets in order to reduce debt.

A report on related-party transactions by the Brazilian Association of Capital Market Investors from around 2012 notes that “Klabin was known by market participants for mixing private and public agendas” and “family members taxe[d] the company with significant costs”, but the situation improved after the appointment of a respected non-family CEO “who the market viewed as being able to curb these abuses”. Klabin SA continues to report significant transactions with its privately- Related-party held parent company, Klabin Irmãos & Cia, which guarantees Klabin SA’s loans to BNDES for a transactions semi-annual 1% fee, and licenses brands to the listed company. In 2016, Klabin paid BRL 30.2m in guarantee fees and BRL 36.1m in trademark royalties to Klabin Irmãos & Cia. Royalties paid to Klabin Irmãos & Cia over the five years from 2012 to 2016 total over BRL 150m. Klabin SA also pays substantial salaries to its board of directors, which has 13 members, including 10 members of the Klabin family, none of whom hold executive positions. The board of directors and statutory audit board were paid a total of BRL 37.8m in 2016.

Klabin SA uses a type of unincorporated joint-venture known as “Sociedade em Conta de Partici- pação” (often translated as “secret partnership”) “for the purpose of raising funds for reforestation projects”, according to company filings. The SCP partners’ identities are not disclosed. Klabin Secret partnerships “contribute[s] forest assets, basically forests and land… while the other investing partners make (Sociedade em Conta cash contributions”, and these partnerships “entitle Klabin SA to preference in the acquisition of de Participação) forest products at market prices”, according to the filings. Klabin paid BRL 229m to SCP partners in 2016, and BRL 699m in the five years from 2012 to 2016, according to its annual reports. As of end-2016, Klabin had four SCPs, in which it held an average stake of 78%. In its English-language disclosures, Klabin translates SCP as “silent partnership”.

Page 6 Profile: Klabin FamilyBrazil Klabin SA 8 November 2017

DEBTWIRE COVERAGE

26 Oct 2017 Klabin to issue domestic notes for BRL 810m due 2023 (Company Press Release (Translated))

12 Sep 2017 Klabin prices USD 500m 2027 bond at 4.95% yield (DW)

12 Sep 2017 Klabin USD 500m 2027 notes rated BB+ by Fitch (Ratings Agency Press Release)

12 Sep 2017 Klabin sets 5.375% IPT for USD 500m green bond (DW)

05 Sep 2017 Klabin to roadshow this week (DW)

11 Jul 2017 Klabin preps new investments of up to USD 2.1bn - report (translated)

16 May 2017 Klabin downgraded to BB+ by Fitch, outlook revised to stable (Ratings Agency Press Release)

28 Apr 2017 Klabin expects sharp EBITDA growth in at least next five quarters (translated)

26 Apr 2017 Klabin names Cristiano Cardoso Teixeira as CEO

30 Mar 2017 Klabin controlling shareholder recommends Cristiano Teixeira for CEO post

29 Mar 2017 Klabin CFO favorite for CEO appointment - report (translated)

27 Mar 2017 Klabin CEO Fabio Schvartsman to resign to take CEO post at Vale (Company Press Release (Translated))

03 Feb 2017 Klabin to issue up to BRL 945m in local bonds maturing 2022 (Company Press Release (Translated))

01 Feb 2017 Klabin appoints Eduardo de Toledo as new CFO (Company Press Release)

18 Jan 2017 RESEARCH: Klabin - Credit measures expected to improve with Puma project completion (DW)

08 Dec 2016 Klabin CEO says Puma plant can increase production at little cost - report

25 Oct 2016 Klabin to buy Embalplan and assets from Hevi Embalagens for USD 59.5m

27 Jul 2016 Klabin targets leverage reduction in 2016 and 2017 – CFO

29 Jun 2016 Klabin downgraded to 'BB+' from 'BBB-' on slower debt reduction - S&P

31 May 2016 Masisa reaches agreement to sell 9,049 hectares of woods to Klabin for USD 20.2m

19 May 2016 Klabin outlook revised to negative from stable - Fitch

7 Mar 2016 Klabin obtains USD 300m loan from IDB for Puma project

7 Mar 2016 Klabin's Puma unit starts production

5 Feb 2016 Klabin plans USD 800m investment in new machinery (translated)

1 Dec 2015 Klabin expects to invest BRL 2.5bn in 2016 (translated)

Disclaimer: We have obtained the information provided in this report in good faith from sources that we consider to be reliable, but we do not inde- pendently verify the information. The information is not intended to provide tax, legal or investment advice. We shall not be liable for any mistakes, errors, inaccuracies or omissions in, or incompleteness of, any information contained in this report. All such liability is excluded to the fullest extent permitted by law. Data has been derived from corporate disclosures, regulatory announcements, government publications, media reports, press releases, presentations and Debtwire intelligence.

Page 7