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Good morning, ladies and gentlemen, thank you for waiting. Welcome to the conference call of Suzano Pulp and Paper to discuss the results for the first quarter of 2018. Participants will be in a listen-only mode during the presentation of Mr. Walter Schalka, Chief Executive Office; Mr. Marcelo Bacci, Financial and Investor Relations Executive Officer; Carlos Anibal, Pulp Executive Officer; Leonardo Grimaldi, Paper Executive Officer; and Mr. Fabio Prado, Consumer Goods Executive Officer. Afterwards, we'll begin the questions-and-answer session and further instructions will be provided. [Operator Instructions] We inform that this communication contains certain statements that are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934 as amended. Some of these forward-looking statements are identified with words like belief, make, could, would, might, possible, will, should, expect, intend, plan, anticipate, estimate, potential, outlook or continue, the negative of these words or other terms of similar meaning or the use of future dates. Forward-looking statements in this communication include, without limitation, the statements regarding declaration of payment or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans.
The direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are example of forward-looking statements. Such statements reflect that the current views of management and are subject to a number of risks and uncertainties. Such statements are qualified by and -- by the inherited [sic] (inherent) risks and uncertainties surrounding future expectations generally, and the actual results could differ materially from those currently anticipated due to a number of risks and uncertainties. There is no guarantee that expected events, trends or results will actually occur. These statements are based on many assumptions and factors, including general economic and market conditions, industry conditions and operating factors. Any change in such assumptions or factors could cause actual results to differ materially from current expectations. Suzano does not undertake any obligation to update forward-looking statements as a result of new information, future developments or otherwise, except as expressly required by law. All forward-looking statements in this communication are qualified in their entirety by the cautionary statement. No offer or solicitation.
This communication is for informational purposes only and is neither an offer to sell nor a solicitation of an offer to subscribe for or buy shares, nor is it a substitute for any offer materials that Suzano will, if required, file with the U.S. Securities and Exchange Commission, the SEC. No offer of securities will be made in the United States except by means of a prospectus meeting the requirements of section 10 of the U.S. Securities Act of 1933, as amended, or pursuant to an exempt -- exemption therefrom.
Additional information and where to find it. In connection with the proposed business commission transaction with Fibria Celulose S.A., Fibria, Suzano may file with the SEC relevant materials, including the case of our registered offering in the U.S., as a registration statement on Form F-4, unless an exemption from registration is the available, containing a prospectus and other documents regarding the proposed transaction. Investors are urged to read the Form F-4 and other documents that may be filed with the SEC carefully and in their entirety when they become available because they will contain important information about Suzano, Fibria and the proposed business commission transaction and related matters. The Form F-4, if and when filed, and other documents filed with the SEC in connection with the proposed transaction, will be available when filed, free of charge, on the U.S. SEC's website at www.sec.gov. In addition to the Form F-4, if and when filed, all other documents filed by Suzano with the SEC in connection with the proposed business combination transaction, will be made available, free of charge, on Suzano's private site at www.suzano.com.br. I will now hand over the call to Mr. Bacci, who will begin.
Good morning, everyone. This is Marcelo Bacci speaking. I'd like to make a statement to begin with to inform you that we will be very restrictive during the presentation and during the Q&A session in regards to providing projections and other forward-looking statements. As you know, we are in the process of registering our shares and ADRs with the SEC in connection with the Fibria transaction, and therefore, we are subject to regulatory restriction. We apologize in advance for any frustration this may cause, but we are sure that you all will understand that we are focused on making sure the implementation of the announced deal with Fibria goes smoothly. I now invite Walter to tell us about the highlights of the quarter.
Good Morning, everyone. Thank you very much to participating in this event. We are very happy and pleased to announce the results of the first quarter 2018 of Suzano Pulp and Paper. I would like to start telling about the major and relevant events that we have in this first quarter. We had -- we closed 2 major M&A transactions this quarter, the small hydropower plant in [indiscernible]. The consumer goods assets of Facepa, and that is a very important milestone for us. We signed the acquisition of some land and forests from Duratex and that was a very positive move towards in the São Paulo states. We have the refinance of one syndicated loan that we have. We were upgraded by Standard and Poor's and -- to Investment Grade and there's -- now we have 2 different agencies, as we are Investment Grade. And we have -- and we announced on March 16, a major and relevant transaction with the controlling shareholders of Fibria to business combination assets of Suzano and Fibria after the precedent conditions.
And before we start this financing highlights, I think it's quite important that -- very important quarter for us on several different activities on different areas of company. The major KPIs that we have that we would like to highlight to you during this quarter, the first one is our operational cash flow, there is adjusted EBITDA, less sustaining CapEx that was a record this year -- this quarter, there is BRL 1.8265 million (sic) [ 1.8265 billion ]. That is more than 100% from the same quarter last year. Our EBITDA was a record EBITDA of BRL 1.5 billion that is 7% higher than the previous quarter and 80% higher than the first quarter of last year. We had extremely good EBITDA per ton on our pulp business, there is BRL 1,467 per ton and that related to our -- to improvement on pulp prices and Carlos will detail more about that.
We had extremely good result on paper -- major development on the paper side as well. We've higher productions and better return in capital employed and higher EBITDA per ton, that is BRL 855 per ton. If you analyze our return on capital invested of the first quarter, it's going to be close to 21%, 20.8%. And top of that, we have been deleveraging the company now to a level that we are even more comfortable to advance on the Fibria transaction with 1.7x net debt over EBITDA. I think this is the major KPI is addressed in the result of the efforts that 8,000 people in the organization is doing to improve our organization every single day, and we are very pleased with that. And I'm going to pass to Leonardo that is going to show a little bit some numbers on the paper side.
Thanks, Walter, and good morning, everyone. This is Leonardo, and I'm going to present the paper business unit's results for the first quarter of 2018. The figures presented on the next 2 slides are specific to the paper business unit, therefore, excluding Suzano's consumables, our tissue business results for the quarter. We have produced 289,000 tons of paper and paperboard in the first Q '18. This is a 5.5% production increase compared to the same quarter last year. We have sold 279,000 tons in the first Q '18, which is a 5.3% growth when compared to the first Q '17. In Brazil, EBA has just presented the figures for the first Q '18, in which they report that the domestic sales of printing and writing grades and paperboard have grown 2.4% compared to the first Q '17.
In line with the domestic market scenario, we have sold 184,000 tons in the first Q '18. However, as we have stated previously, our priority has been the effective implementation of price increases across all of Suzano's paper and paperboard grades. Our international sales have totaled 95,000 tons achieving a 13% growth compared to the first Q '17. We have sold our products and brands in more than 60 countries worldwide. As a consequence of stability in production, positive sales volumes sell ongoing price increases, our EBITDA margin for the quarter was BRL 888 per ton. This is a 27% increase in our margin when compared to the first Q '17, and a 14% increase compared to the fourth Q '17. The paper business unit's ROIC has also increased significantly, reaching 14.4%.
Now on the next slide, we present the price increases we have seen so far. The green line represents our average price in Brazil. Up to now, they have increased 4.1% compared to the fourth Q '17 and 4.4% compared to the same quarter last year. The blue line shows our average export prices in US dollars. They have increased 4.2% compared to the fourth Q '17, and almost 11% compared to the same quarter last year. As per recent publications during the same period, prices have been quoted printing and writing papers have risen in most countries in the world. These international price movements, due mostly to the increase in production cost support our pricing strategy, both in the international markets and also in Brazil. I would now like to invite Carlos Anibal to present the results for the pulp business unit.
So thanks Leo, and good morning, everyone. So turning to the pulp business results with Slide #6. The pulp business delivered a solid Q1 results and performance, and we continue to see healthy demand and solid fundamentals across our major markets. Operationally, we executed very well. Production amounted 918,000 tons, which is up 4% Q1 quarter-on-quarter and 5% year-on-year.
Before talking about sales, I would like to remind you what we said on our last conference call in February. At that time, we said that we would need to build up stocks once we have closed December '17 with extremely low inventory. Our sales reached 876,000 tons, what means our stock went up roughly 40,000 tons. Despite this minor increase, we are still running below 30 days of production and that brings some operational challenge for us. We will continue to build stocks in the coming quarter in order to normalize our product level.
Cash cost, as we can see, we can realize a [ valuable ] strength, Q1 is near what, 587 and the major churn that we have right now are related to chemicals, field -- mainly and also, a lower energy sales price. Higher pulp price allowed us to increase EBITDA per tons. Our net price averaged $731 per ton, what is up $52 quarter-on-quarter and $226 year-on-year. Our EBITDA per ton amounted BRL 1,467, a bit over $450 and that was driven mainly by higher pulp price and good operations execution. Total EBITDA for the pulp business was about $1.38 billion. We are very pleased with our operating performance and our ROIC reached 18.8% in the last 12 months. Having said that, now I turn it over to Fabio, who will cover our consumer goods business results.
Good morning to you all. In the consumer business, we are working on 2 fronts. Consolidating our brands, Max Pure and Mimmo and integrating Facepa brands into our stable. What -- we launched them in Max Pure in the first quarter, and with -- are launching our Mimmo in the second quarter. In both cases, we are building distribution with greater focus on north and northeast regions of Brazil. Next steps, the integration of operation with Facepa and finalizing the commissioning of the last few lines in Bahia and Maranhão. Segmented results from consumer business will be presented from the second half onwards. Now, I will hand it over to Marcelo Bacci.
Alright. Let's talk about CapEx. Our CapEx during the quarter was BRL 700 million, pretty much in line with the projections that we had. The maintenance CapEx was BRL 300 million, which is in the right pace to reach BRL 1.2 billion in the year. The other projects of structural competitiveness and additional business are running according to schedule, BRL 200 million. And we made the payment for the acquisition of Facepa during the -- during this first quarter, totaling BRL 700 million. Our expectation for the year remains the same, BRL 2.4 billion that will include the payment for the forest that we acquired from Duratex.
On the next slide, we discussed our financial situation. We ended the quarter with a net debt of BRL 2.8 billion with an average debt maturity of 85 months, and an average cost of debt swapped into dollars of 4.6% a year. This is a very positive and competitive situation in terms of our debt that allows the company to go to the transformational moves that we are going through.
During this process, we achieved Investment Grade from Standard and Poor's, and now as Walter mentioned in the beginning, we have 2 rating agencies giving us Investment Grade, which is very positive for the company and for our future. Our leverage is now at 1.7x coming from 2x measured in dollar terms, also according to our expectations. And we have a very comfortable amortization schedule in our debt and a very sizable cash position of BRL 3.4 billion. So we are showing continuous improvement in our financial metrics.
We will talk in the sequence about the timelines of the Fibria transaction. So as you all know, we announced the deal on March 16. The agreement between Suzano and Fibria, and since then, we have been able to achieve some of the milestones that we have for the transaction as a whole. First, there was the approval by the Fibria board for Fibria to join the agreement, that's already done. A second important step was the syndication of the debt, as you remember, we took $9.2 billion of debt with 4 banks to finance this transaction, and in the sequence, these 4 banks distributed this deal to another 8 -- to other 8 banks, so we now have 12 and this was made in a record period of 5 days only. So we now are in the situation that was planned from the beginning, in terms of the syndication of the debt.
In addition, on the Imperatriz side, we have hired all the lawyers and other advisors that we need in the different regions that we need to file, and we have initiated the proceedings to file in those regions. And we are working together with our auditors and some other advisors to prepare the company to file for a registration with the SEC to list our ADRs in the New York Stock Exchange. We expect to file in the May -- in the month of May.
So after the final, just to remember what the sequence of events, after we have this filing and after we have the approval by the SEC, we're going to be able to call the shareholder meetings of Suzano and Fibria to finally approve the transaction from this statutory point of view, and then there will be still pending the regulatory approval by the Imperatriz authorities to get us to the closing of this transaction. So everything is going according to schedule in the front of the transaction timeline. With that, we finish the presentation, and we are open to Q&A session.
[Operator Instructions] Our first question comes from Lucas Ferreira, JPMorgan .
My first question to Carlos Anibal. Carlos, you mentioned about some inventory building, do you think that will continue in the second quarter? Have you already reached a comfortable inventory level? Or you think you should be building more inventories in the second quarter? And if you could -- can comment on what you're seeing is, especially, China? If prices have been stable or your competitors have been increasing prices in your perspectives for the coming months? And my second question is regarding the merger. If you can comment also, if there is a timeline or an expectation on whether when you should submit your application to the antitrust authorities, if you can give us an update on that front?
Sorry, we were in mute. So Lucas, thank you for the question, this is Carlos speaking. So regarding your first question related to the inventory, it is true that we're going to increase the inventories again in Q2 and that has to do with the fact that we are running, right now, below 30 days of production. We cannot give our customers a reasonable service level with that level of inventory. So we're going to see again some start to be built up during Q2. Regarding supply and demand, the market fundamentals, we see the demand as solid and healthy across the major regions. The Chinese customers are back to the market after Chinese New Year, and the volumes there in China are currently according to our expectations. On the supply side of the equation, a combination of planned maintenance shutdown and several unexpected events across the major production regions and adapt, limiting the pulp supply in Q1. Also -- and very important to mention, the impact of the soft wood situation in Europe, weather-related events limited the wood supply in the Nordic countries creating fiber shortage, and subsequently, a huge pressure on the long fiber market that is been reflected by new price announcements. Some -- long fiber producers just announced $1,200 for May in Europe open up a gap of around $150 between long fiber and BKP. Regarding prices, I'm going to share with you our view on Q1, so the names that I described before supported 2 price announcements for the BKPs. One there was in Feb, $30 more, and then other one that was expected April 1, taking the list price in Europe to $1,050.
On the merger side, Lucas, your question, it's Walter answering. We expected to have to -- to prefile in all jurisdiction till the end of May, is what we are working on this track, I think we are on the right track to do it. We checked with other jurisdictions, and we need to file in 3 other jurisdictions that is going to be Mexico, Turkey and Argentina. Argentina is the only one that we need to do it post-closing, and then all the remaining, we need to do it immediately pre-closing, and the idea is to file that till the end of May.
The next question comes from Mr. Carlos De Alba with Morgan Stanley.
So there is this trend in the market going on where paper producers are trying to increase prices and successfully, in many cases, you seen the argument that raw material cost for prices have been increasing and therefore, they need to increase price to customers. This is a little bit of a curious situation where -- that creates a -- an incentive for paper prices, perhaps, not to push back on higher pulp prices as strongly as they would otherwise do. Otherwise, they would basically kill the argument that they need to increase prices. So could you explain given that you are in the position of seeing what is happening in paper, and also in pulp, could you explain how sustainable this strategy is given that, say at least, if this will be far what is going on right now?
Okay, Carlos, this is Carlos Anibal speaking. We have learned about paper price announcement across the major markets. As a trend, we can say paper prices are going up at different pace for different grades and regions. In China, I would like to draw the attention to the very healthy paper margins for printer and writing. We have seen some improvements for packaging, and we believe that tissue will follow that as well. So it is true that we see some support from our customers all over the places. They need -- they have to be needing some stability, so they can try to increase their price as well.
The next question comes from Leonardo Correa, BTG Pactual.
Yes, my first question, maybe, to Walter and to Bacci, going back still to the initial points on the transaction and on the -- your credit parts. The market has obviously been speculating a lot on, how antitrust regulators would be viewing this merger. A lot of people have been looking at past transactions, the VCP and Aracruz merger. So guys, in that context of what could potentially come from the antitrust regulators, I just wanted to hear your thoughts on how the conversations with the lawyers and how all of the analysis that you have been doing, how those -- how that process has been evolving and your expectations on how antitrust regulators will perceive the merger?
My second point to Anibal, just some tidbits on the pulp markets. First of all, Anibal, I wanted to hear your thoughts on how likely you see potential price increases from here. We've been seeing a trend of relative stability over the past weeks. As you mentioned, supply/demand continues very tight, inventory is low. In some regions, paper margins are high. So I just wanted to see with you on the probability, you see, more price increases in May and June for hardwood, especially, in the context of rising softwood prices that we've been seeing lately. Also, recently, we've been hearing a lot on Chenming, a potential new capacity addition in China, which came a bit surprising to many market observers. I wanted to hear your thoughts on that. So those are the points.
Leonardo, it's Walter. Thank you very much for your question. Related with the antitrust, currently that we're going to have in several jurisdictions. We are in the early the stages to discuss about this. This is very -- not very clear to us what is going to be the reaction of the authorities on the different jurisdictions. The perception of our lawyers are very positive but should be tested with the authorities on the different areas. Then we are not ready to make any specific comment how we are going to perform on every single area, seeing as we are in the early stages.
So Leonardo, this is Carlos. As Marcelo said in the beginning, we will not give at this time any guidance, any view on future prices. So I have to apologize for that. Regards Chenming, the information that we have is that they're going to have by the end of this year, about 600,000 tons of pulp capacity. We've several questions about wood availability and environment permits in order to run those 2 new machines. Also important to say that they are planning to add more uncoated per ship paper capacity, and therefore, that new pulp capacity would be fully integrated. This is all we know about this case.
Just a final question, just to check. So if we look at the entire transaction, on the best estimate guys, at this point, when you think the transaction would be closed if everything works out? I mean, has anything on the dates and the final dates changed? Is there any update on that front?
No, no, no. This is Walter answering, we do not see any major changes from what we mentioned during the presentation of this transaction. At that time, we thought that would be between 8 months to 10 months -- we think it's continue to be the same but it's just a matter of checking with other transactions to see that the -- how did the other transactions were structured was roughly this period of time, then we understand it could be the same. We do not have any major change on that.
Our next question comes from Marcos Assumpção with Itau BBA.
Okay, first question on the tissue business. We saw some volumes coming from this business in the past 2 quarters. If you could comment a bit more, if you give us a little bit more of color in terms of volumes, prices. Also on the cost side, I know that in the beginning of the operation, probably, cost a little bit higher. And the margins that you are expected -- expecting for the business in 2018? Also, if you could differentiate how much of this volumes are coming from Suzano, and how much are coming from Facepa would be useful. And the second question to Walter, a bit more broad and strategic. I know you were 100% focused on the closing of the Fibria deal right now, but like, how do you want to see Suzano position, let's say, in 5 years' time? In terms of integrating more pulp into paper or in terms of being a bit more diversified in terms of businesses? How do you want to see the company in the future?
Its Fabio here, thanks for your question. From Facepa, I mean so far, nothing, because the closing was at the end of the first quarter. And from the Suzano side, what we're seeing here is a good progress in terms of getting the right distribution. But of course, and I think you understand, I cannot comment on volumes and margins now due to competitive reasons.
Marcos, thank you very much for your question. It's Walter. I think it's -- we have 3 pillars on our strategy. The first pillar of our strategy is competitiveness -- structural competitiveness, and we have been working on this direction in the last many years. We are very pleased with the developments that we have. Even last year, we had 5.3% positivity gain every -- on a CAGR basis from the last 5 years, and we are very pleased with that. Of course, on this pillar specific, it's very difficult to comment right now. We do not have any granular information related with Fibria to discuss about the synergies and how we are going to implement that. And when we have the combination of that, it's after that we are going to announce the -- to the market what is the next step and the next opportunities, and we're going to set new targets in terms of cash cost for the new entity. Then we'll be extremely pleased to share with the market after the closing of this combination of that. The second part of our -- pillar of our strategy is what we call adjacent business. We have been working on Tissue, we have been working on Lignin, on fluff, [ on set ], [ on GMOs ] [indiscernible] gene [indiscernible] and we will continue to follow and supplying new alternatives and new roads for the future. We understand that we need to maximize our asset base, and we will look for opportunities to use the quality of assets that we have to enter on your business that could create value for our shareholders. The third part of our strategy, I think you'll remember, is to reshape this industry and to reshape -- and the combination of that, of Suzano and Fibria is part of that. We understand that we are going to play an important role on the pulp market worldwide, and we will -- at the first moment, Marcos, try to deleverage the company as fast as possible using this window of opportunity of higher pulp prices and FX that is helping us as well, not in the first quarter but it is going to help for sure in the second quarter and the next coming quarters, as I understand. And this could lead us to deleverage the company then we're going to come back to you later on to discuss -- after closing to discuss what would be the further strategic alternatives to the company for the future.
Perfect. Just a follow-up on the potential growth in the future. Regarding Duratex forces, is there a possibility of expanding the call option that you have for the additional -- the second tranche in terms of land and forest acquisition?
We didn't discuss with Duratex about extending the call option. This call option at this point of time finished at July 2, if I'm not wrong. And we are considering what we are going to do if we are going to exercise or not this option. And we are going to announce just close to the option date.
Our next question comes from Jon Brandt, HSBC.
Two questions for me. First, just coming back to the merger, Baccia, I don't know if there's any update you can give us on the tax benefits, if you've looked into that in more detail. Also, I was wondering what the feedback has been from clients. I'm sure you've discussed this and there's been some discussion around the merger with clients, I wonder what their feedback is. And then I guess my second question is for Carlos. It seems that a lot of market observers are pretty bullish on pulp prices, certainly the investors that I speak to are very bullish. And I know a lot of the sell-side analysts have [indiscernible] on Suzano. I'm wondering what is the risk as you see it to the pulp side of things. Where could the market be missing things? I think we have a pretty good idea on the larger supply coming in. Is there a risk that we see increasing supply from debottlenecking of smaller producers? Do you see a risk that some of the integrated producers start selling market pulp? I guess what could the market be missing?
Jon, this is Marcelo speaking. Thank you for your questions. On the tax said, I think the most important benefit that we're going to have is related to the goodwill creation in the deal. This -- we have not advanced in terms of having a better understanding of this because this will basically depend on the purchase price allocation, which is a very complex work that has to be done that hasn't started yet. So as soon as we have more details, we're going to get back to you, but it's not going to be so soon.
Related to customers, Jon, thank you very much for the questions, we have been talking to customers. Until now we had positive reactions from them. I think they understand the benefits of this transaction in terms of -- have -- could improve products, could improve service to the customers and could, through a combination of the R&D team, create more competitiveness for them in the future. Then we have been talking to some of them and they have extremely positive reactions from the market tune-up.
So Jon, this is Carlos. As Marcelo Bacci said at the beginning our conference call, we have some restrictions on commenting about future market developments. So I'll ask you again to apologize me for not taking your question. The risk that we -- that I can say that I can show you at this point in time, I would say, are related to macroeconomics and geopolitical risks. Those are the ones that we believe that could affect the pulp price in the future.
The next question comes from Thiago Lofiego with Bradesco.
I have one question for Leonardo Grimaldi. Leonardo, do you see room for further paper price hike initiative in Brazil? Actually considering the currency has been on a depreciating trend while demand has been improving as well? And actually, I have a second question to Carlos Anibal. Carlos, how have been the discounts negotiations with -- renegotiations with clients? We noticed you're realized pulp prices were quite solid in the quarter, talking about the discounts here. So how were the negotiations, if you could give us some color?
Thiago, thank you for your questions. We have seen an upward trend in paper and paperboard prices in most markets in the world. And as we all know do may need to increase in production cost. We have managed to increase our prices in Brazil more than 4% this quarter and similarly in international markets. But at this time, as per Marcelo's opening statements, we are not giving guidance on our expectations for the next quarters. I'm sorry.
So Lofiego, this is Carlos. At this time, we will not make any comments about our commercial policy.
The next question comes from Renato Maruichi with Santander.
I have two questions. First, I would like you to discuss the forest productivity in Maranhão state. I understand that in [indiscernible] is a new frontier and that there's room for improvement in terms of food productivity when compared to the metros in São Paulo and Bahia states, for example. And also if you could share with us how much of your guidance of cash cost comes from [indiscernible]? And secondly, my second question is regarding some priority lines that could be breached either by changing control of Fibria or by downgrading Suzano investment grade. So how is this strategy to avoid an anticipation of that amortization? And if you already talked to some of those creditors, how was the feedback? So these will be my two questions.
Renato, thanks very much for your questions. It's Walter answering. I'm going to start with your question related the forest productivity in Maranhão. Right now we are facing lower productivity in Maranhão compared with Bahia and São Paulo. We have been working on the clones, and we have been working on [indiscernible] culture as well to improve the productivity and the yield in Maranhão. We have been improving, but it's something that we are not going to have the benefits on short term. We are going to see the benefits long term. We are very pleased with these developments that we are doing, but we are not going to see any major impact on the coming quarters. In the other hand, it's very unfortunate that the drought that we had in Maranhão last year affected our -- and this was reflected on our biological assets of last year, and affected [ROU], and we are working over there to have clones much better prepared for the drought, if happens for the future. Related with the cash cost guidance, we are not giving any guidance to the market right now. As I mentioned during the call, our idea is that after closing of this transaction, we will discuss in the light of the synergies that we are going to create with the combination of assets, the possibility to have a lower cash cost. And after a deep analysis on that, after closing, we will come back to the market with a new cash cost target for the next coming years.
Renato, this is Marcelo speaking. In terms of debt acceleration, we have 2 separate situations here. In the case of this existing debt of Suzano, the risk is very small. Most of our debt is not under any clause of change of control. It is -- some of the transactions that have change of control, we have talked to the creditors and we see no risk of acceleration. Most of the banks involved in those deals are the same banks that are supporting us on the Fibria acquisition, so it wouldn't make sense to accelerate. On the capital market side, our bonds are not subject to early redemption because of change of control. On the Fibria side, we have 3 different situations, and this is all public information that I'm mentioning. On the bond side, the Fibria bonds would be accelerated only if there is a downgrade following the M&A. There was no downgrade following the M&A announcement, so no risk on that. And there are the Brazilian capital markets transaction, the CRA, that have an acceleration clause that has some way out and this will be up to Fibria to work on the coming months to see how -- what's the protective action they are going to take. But this is not a major number and will not materially affect the financial situation of the combined entity.
The next question comes from Ivano Westin with Credit Suisse.
First question on ADR Level III. In New York, Bacci, you mentioned the filing at SEC. You received the green light or after you received a green light, you called general shareholders meeting to approve it. You get it approval. But even after all approvals, I understand have the option that you list it immediately or to wait until the completion of the deal? So I just wonder if you have made a decision on it. Second question, funding of -- you have this, just over $9 billion guaranteed, but I believe you issue new bonds maturity in 7, 10 years. So can you please comment on your [ ability ] plans on the new bond issuance if you expect for second half of the year?
All right, Ivano. Thank you for the questions, and they are linked somewhat. In the process of ADR, we need to file and we need to get the approval first. Once we get the approval, we need to make this decision whether or not we're going to list Suzano immediately or only after the closing of the Fibria deal. In principle, we understand that we only list Suzano after the closing, but it's not a decision that we have made.
At the closing.
At the closing. But we haven't made that decision and we'll discuss this further. On the funding side, this is linked also through the registry process because we cannot issue any bonds before we finish working on our pro forma financial statements of the combined entity, which is more or less the same kind of document that we have to present to the SEC. And given the size of the transaction that we need to do in the future for refinancing the loan, it is important to be able to issue registered bonds in the U.S. market, which also depends on the SEC registration. So our strategy at this point is to get ready as soon as possible on the formalities to be able to issue bonds in the market or to be able to have the flexibility to go to the market whenever there is a good window. It's difficult to, at this point, say exactly when we're going to go, but we will consider the possibility of taking out the bridge loan even before closing.
The next question comes from Juan Tavarez with Citi.
So my first question, I may have missed it, but Carlos Anibal, if you could just remind us how the April pulp price hike is going. Is there any specific region that has been easier to implement, if you could just give us an update there? And second, just sort of talking about your paper profitability, I know you mentioned in your press release that your margins were affected by cost and expenses generated by the consumer goods business. I'm curious, when do you expect that consumer goods business to be fully ramped up in order not to see this type of drag on expenses.
So Juan, this is Carlos. Thanks for your question. At this time, as Marcelo said in the beginning of our conference call, I'm going to limit my comments on Q1. So apologize me for that.
And Juan, this is Leonardo. Regarding our consumer goods business unit, as per Fabio's presentation, we will start giving full disclosure on that on the second half of this year, separating it from the paper business unit.
But do you have a sense of -- because I guess the point in press release that you mentioned is that the reason why you're seeing paper margins under pressure is because it's not fully ramped up or it's still in the ramp-up phase. Is there, kind of, a time line when you expect that to be fully ramped up or...
It's Marcelo speaking. We -- there are 2 parts of business. The first, there is -- there's going to be an integration of the Facepa numbers into our numbers that we'll start in the second quarter. But still, under the paper division, as soon as we have higher volumes and a higher occupation of how much these -- the new machines, the green fields that we build in Mucuri and [indiscernible], which we expect to be in the second half of this year, we're going to segregate completely the business unit, the consumer goods business unit including Facepa, from the Tissue operations -- from the paper operations. So this is for the second half.
We're now closing the question-and-answer session. I will pass the call back over to Mr. Walter Schalka for the closing remarks. Please go ahead, sir.
Ladies and gentlemen, I would like to apologize individually the frustration that we have been caused to you because we are not able to answer some of your questions. I think you understand the reason behind that. But being very transparent and honest with you, we are very pleased with the development that we have been doing in our operational bases. In Suzano, we have been improving and delivering extremely good results. In the other hand, we are very pleased with the development that we have been in our Fibria combination assets. All of the key steps are on track and on time at this point of time, and we will continue to work on this direction. I would like to thank you very much for that, and hope you have a very nice and good day. Thank you very much.
That concludes the conference call of Suzano Pulp and Paper. Thank you very much for participating. Have a good day.