Binder Grösswang advises Lenzing upon Forming a Joint Venture with Duratex

Austrian Lenzing Group, world market leader in specialty cellulosic fibers and Brazilian Duratex, the largest producer of industrialized wood panels of the Southern Hemisphere, have agreed on the terms and conditions to form a joint venture for the investigation to build in Brazil the world’s largest single line dissolving wood pulp (DWP) plant. This decision supports the backward integration and the growth in specialty fibers, defined in Lenzing’s corporate strategy sCore TEN.

 The joint venture envisages the construction of a 450.000 t DWP plant, which is expected to become the largest and most competitive single line DWP plant in the world. Dissolving wood pulp is the key raw material for the production of Lenzing’s bio-based fibers. For the future operation, the two companies have secured 43.000 hectares of eucalyptus plantation that will provide the FSC® certified biomass. The plantation meets Lenzing’s wood and pulp sourcing policy. The basic engineering and the application for required permits and clearances will now be started.

Florian Khol/Michael Kutschera (both Partner M&A Corporate): “We are happy that agreement could be found on the contracts for this challenging project in Brazil and by the trust of Lenzing in our legal services. We will be happy to continue our outbound work for Lenzing upon its continued global expansion.”

Lenzing will hold 51 percent of the joint venture which will operate the mill, while Duratex’s share will be 49 percent. The estimated cash investment by the joint venture for the construction of the DWP mill is expected to be somewhat above USD 1 bn (based on current FX rates and net of generic tax refunds), and the outcome of the basic engineering study. The joint venture is supposed to supply the entire volume of dissolving wood pulp to Lenzing. This will support the group’s ambitions to grow its specialty fibers business.

Lenzing group is a global market leader in the production of wood based fibers with production facilities in all important markets and a worldwide network of sales and marketing offices. Duratex group, among others, produces, utilizes and trades wood in Brazil through its subsidiaries and owns an extensive forestry operation.

The transaction documents were executed on 21 June 2018. The Closing is subject to certain conditions. The final approval to build the dissolving wood pulp plant is subject to the outcome of the basic engineering studies and will be given by the respective supervisory boards. Start of production can be expected for 2022.

 Binder Grösswang Rechtsanwälte GmbH acted as legal lead counsel to Lenzing AG in this outbound project in Brazil to form a Joint Venture with Duratex SA and the plans to build a 450.000 t Dissolving Wood Pulp Plant. Binder Grösswang regularly advises Lenzing in a broad range of legal services including M&A corporate work. Veirano Advogados acted as Brazilian legal counsel for Lenzing AG. It was the first time, that Veirano acted for Lenzing.

Legal counsels for Lenzing AG: Legal Inhouse:

Mag. Florian Wirth, Juris Doctor, LL.M (UPenn) (General Counsel, Group Compliance Officer), Dr. Pia Muhrer (Senior Legal Counsel, Legal Management & Compliance)

Legal Lead Counsel: Binder Grösswang Rechtsanwälte GmbH:

Dr. Florian Khol, Dr. Michael Kutschera, Dr. Hemma Parsché, (Transaction Lead/ Corporate, M&A) Mag. Lukas Sebastian Swoboda, Mag. Christoph Schober (Corporate, M&A) Dr. Raoul Hoffer, Mag. Christine Dietz, (Competition) Dr. Christian Wimpissinger (Tax).

 Brazilian Legal Counsel: Veirano Advogados:

Augusto Cesar Barbosa de Souza (Partner), Till Alexander Backsmann (Partner).