MATERIAL FACT PARANAPANEMA S.A.

Transcription

1 PARANAPANEMA S.A. Publicly-held Company with Authorized Capital ("A" Class) - CVM Code Via do Cobre no , Copec CEP , Dias d'ávila, BA CNPJ/MF no / NIRE MATERIAL FACT PARANAPANEMA S.A. ( Company, B3: PMAM3), pursuant to Law of December 15, 1976, as amended ( Brazilian Corporation Law ), in the regulations of the Brazilian Securities and Exchange Commission ( CVM ), in particular CVM Instruction 476 of January 16, 2009, as amended ( CVM Instruction 476 ) and CVM Instruction 358, of January 3, 2002, as amended, in continuity with the proceeding of financial reorganization of the Company, in accordance with the material facts made available on July 21, 2017, August 8, 2017 and August 28, 2017 ( Reorganization ), hereby informs its shareholders and the market in general that, on August 29, 2017, at a meeting of the Company s Board of Directors, a public offering of primary distribution was approved, initially up to 333,333,334 (three hundred and thirty and three million, three hundred and thirty-three thousand, three hundred and thirty-four) common shares, issued by the Company, without considering the eventual placement of a Supplementary Lot (as defined below), all registered, book-entry, without par value, free and clear of any liens or encumbrances ( Shares ), with restricted placement efforts exclusively in Brazil, pursuant to CVM Instruction 476 ( Restricted Offer ), with the possibility of Partial Distribution (as defined below). RESTRICTED OFFER The Restricted Offer will be carried out in the non-organized over-the-counter market, in accordance with the procedures of CVM Instruction 476, of the ANBIMA Code of Regulation and Best Practices for Public Offers for Distribution and Acquisition of Securities currently in force ( ANBIMA Code ) and other applicable legal provisions, including the B3 s New Market Listing Rules Brazil, Stock Exchange, Counter ( B3 and New Market Regulation, respectively), Official Circular Letter 072/2014-DP, issued by B3, on October 30, 2014 ( Official Letter 72/2014 ), and Official Circular Letter 087/2014-DP, issued by B3, on November 28, 2014 ( Official Letter 87/2014 ), under the coordination of BANCO MODAL S.A. ( Leading Coordinator or Modal ), pursuant to the Agreement for Coordination, Placement and Firm Guarantee of Settlement of Common Shares Issued by Paranapanema S.A., to be entered into between the Company and the Leading Coordinator ( Placement Agreement ). Pursuant to the decision rendered on June 28, 2016, pursuant to CVM Administrative Proceeding no. RJ2014/13261 and Article 24 of CVM Instruction 400, of December 29, 2003, as amended ( CVM Instruction 400 ), up to the date of completion of the Bookbuilding Procedure (as defined below), inclusive, the number

2 of Shares initially offered may, at the discretion of the Company in common agreement with the Leading Coordinator, be increased by up to 15% (fifteen percent) of the total number of Shares initially offered, that is, up to 50,000,001 (fifty million one) common shares issued by the Company, under the same conditions and at the same price as the Shares initially offered ( Supplementary Lot ), according to the Placement Agreement, which will be used to meet any excess demand that may be verified at the moment the Price per Share (as defined below) is established. RESTRICTED OFFER CONDITION Pursuant to article 22 of CVM Instruction 400, the effective implementation of the Restricted Offer is subject to the subscription of the minimum amount equivalent to R$ 360,000, (three hundred and sixty million Reais) of debentures convertible into shares of the Company by certain creditors of the Company, pursuant to the material fact disclosed by the Company on August 8, 2017, within the scope of the restricted offer of convertible debentures approved by the Company s shareholders general meeting held on August 28, 2017 ( Debenture Offer ). If said condition is not implemented in compliance with the terms of the Debenture Offer, this Restricted Offer will be canceled. EXCLUSION OF THE PREEMPTIVE RIGHT AND GRANT OF THE PRIORITY RIGHT The issuance of the new Shares by the Company as a result of the Restricted Offer will be carried out excluding the preemptive right of its shareholders, pursuant to article 172, item I, of the Brazilian Corporation Law and article 5, paragraph 5, of the bylaws of the Company ( Bylaws ), and such issuance will respect the authorized capital limit set forth in the Bylaws. In order to comply with the provisions of article 9-A of CVM Instruction 476 and to ensure the participation of the Company s shareholders in the Restricted Offer, priority will be given for the subscription of up to the total number of Shares (considering the Supplementary Lot) to be placed through the Restricted Offer ( Priority Right ) to the holders of common shares issued by the Company at the end of August 30, 2017 ( First Cut-Off Date and Shareholders ), in proportion to their respective shareholdings in the capital stock of the Company at the end of September 6, 2017 ( Second Cut-Off Date ), based on the ownership interest verified in the custody positions: (i) in the Central Depository of B3 Assets ( Central Depository ) and (ii) in Banco Bradesco S.A., institution responsible for the bookkeeping and custody of shares issued by the Company ( Bookkeeper ). Accordingly, those considered Shareholders on the First Cut-Off Date shall be entitled to the Priority Right, in the respective proportion of their shareholdings in the Company s total capital stock, calculated according to their respective share positions on the Second Cut-Off Date, subject to the provisions in the item Priority Offer Procedures of this Material Fact ( Priority Offer ). The negotiation or assignment, in whole or in part, of the Priority Rights of the Shareholders to any third parties, including among the Shareholders themselves, is prohibited. 2

3 CORPORATE APPROVALS The implementation of the Restricted Offer, excluding the shareholders preemptive rights, pursuant to article 172, item I of the Brazilian Corporation Law and article 5, paragraph 5, of the Company s Bylaws, and the granting of Priority Right to the Shareholders and their terms and conditions were approved at a meeting of the Company s Board of Directors held on August 29, 2017, whose minutes shall be duly registered with the Board of Trade of the State of Bahia ( JUCEB ) and published in the newspaper Folha de São Paulo and in the Official Gazette of the State of Bahia ( DOEBA ). The Price per Share (as defined below) and the actual capital increase of the Company, within the limit of the authorized capital provided for in article 13, item (j) of the Company s Bylaws, as well as the validation of the capital increase will be approved by the Board of Directors of the Company after the fulfilment of the Bookbuilding Procedure, whose minutes shall be duly registered with JUCEB and published in the newspaper Folha de São Paulo and in DOEBA. PRICE PER SHARE The price per Share will be set by the Company s Board of Directors after the fulfillment of the procedure for collection of investment intentions from professional investors, as defined in article 9-A of CVM Instruction 539, dated November 13, 2013, as amended ( Professional Investors ), to be held exclusively in Brazil, by the Leading Coordinator, pursuant to the Placement Agreement ( Bookbuilding Procedure and Price per Share, respectively). The Price per Share will be calculated based on the indications of interest as per the quality and quantity of the demand (by volume and price) for Shares collected with Professional Investors through the Bookbuilding Procedure, considering the quotation of shares issued by the Company in B3. The Price per Share will not be indicative of prices that will prevail in the market after the Restricted Offer. The selection of the criterion for determining the Price per Share is justified insofar as the price of the Shares to be subscribed will be measured according to the performance of the Bookbuilding Procedure, which reflects the value by which the Professional Investors will present their intentions of investment within the scope of the Restricted Offer. Therefore, the issuance of the Shares based on this pricing criterion will not promote unjustified dilution of the Shareholders, pursuant to article 170, paragraph 1, item III, of the Brazilian Corporate Law. Indications of interest based on the quality and quantity of the demand (by volume and price) for Shares collected with Professional Investors that, in the best judgment of the Company and the Leading Coordinator, are in accordance with the strategic objectives of the Company in the realization of the Restricted Offer will be considered in the Bookbuilding Procedure, including those related to the implementation of the Reorganization, under the terms previously agreed in the Placement Agreement and supported by the applicable legislation ( Effective Demand ). If, for any reason, effective demand in the Bookbuilding Procedure is not verified, the Price per Share will be set by the Company s Board of Directors, without unjustified dilution of the Company s shareholders and in the best interest of the Company and its shareholders, aiming, mainly, at the implementation of the Reorganization, pursuant to article 170, paragraph 1, item III and paragraph 7, of the Brazilian Corporate 3

4 Law. In its resolution, the Company s Board of Directors will base its assessment on, not excluding other criterion deemed to be most appropriate in view of the market conditions at the time: (a) the volumeweighted average of the closing price of the Company s shares verified in B3 in the 60 (sixty) trading sessions immediately prior to the disclosure of this Material Fact; or (b) the closing price of the Company s shares ascertained at B3 on the date of determination of the Price per Share. In both cases (a) and (b) above, to establish the Price per Share, the Board of Directors shall apply a 10% (ten percent) discount on the corresponding price, in accordance with the market conditions, in line with the discounts recorded in subsequent recent public offers of shares and private capital increases, as well as better meeting the purpose of promoting the exercise of priority by the Company s shareholders, and at the same time, ensuring the subscription of the Restricted Offer Minimum Volume (as defined below), according to the investment intentions and/or commitments assumed by investors, according to the item Investment Intentions and/or Commitments of this Material Fact, even in a context of greater volatility in the capital markets, as currently observed. In this case, the issuance of the Shares based on this alternative pricing criterion will not promote unjustified dilution of the Shareholders, pursuant to article 170, paragraph 1, item III, of the Brazilian Corporate Law. Only orders submitted by investors (shareholders or not) that participate in the Institutional Offer (as defined below) will be considered in the Bookbuilding Procedure and therefore will participate in the process of determining the Price per Share. The participation of Professional Investors may be accepted, pursuant to article 1, item VI, of CVM Instruction 505, of September 27, 2011, as amended, which are: (i) Company s controlling shareholders or managers or other related parties to the Restricted Offer, as well as their spouses or companions, their ascendants, descendants and collateral until the second degree; (ii) controllers or administrators of the Leading Coordinator; (iii) employees, operators and other representatives of the Leading Coordinator directly involved in structuring the Restricted Offer; (iv) autonomous agents who provide services to the Leading Coordinator, provided that they are directly involved in the Restricted Offer; (v) other professionals who maintain, with the Leading Coordinator, a service agreement directly related to the activity of brokerage or operational support under the Restricted Offer; (vi) companies directly or indirectly controlled by the Leading Coordinator, provided that they are directly involved in the Restricted Offer; (vii) companies directly or indirectly controlled by persons related to the Leading Coordinator, as long as they are directly involved in the Restricted Offer; (viii) spouse or companion and minor children of the persons mentioned in items (i) to (v) above; and (ix) investment clubs and funds whose majority of shares belong to persons related to the Restricted Offer, unless managed on a discretionary basis by third parties ( Related Persons ) in the Bookbuilding Procedure, and no maximum limit has been established for the participation of Related Persons in the Bookbuilding Procedure, including in case of any excess demand as per the number of Shares offered. The participation of Professional Investors who are Related Persons in the Bookbuilding Procedure may adversely impact the formation of the Price per Share. Investing in the Shares by Professional Investors that are Related Persons may reduce the liquidity of the shares issued by the Company in the secondary market, particularly if the priority placement of the Shares to the Shareholders is considered. 4

5 STABILIZATION OF THE SHARE PRICE There will be no procedure to stabilize the price of the Shares in or after the Restricted Offer and consequently the price of the Shares in the secondary market of B3 may fluctuate significantly after the Shares have been placed. DISTRIBUTION PLAN The Leading Coordinator and, in the case of the Priority Offer, the Escrow Agents (as defined below), will make the placement of the Shares (considering the Supplementary Lot) exclusively in Brazil, in compliance with CVM Instruction 476, in Official Letter 72/2014 and in Official Letter 87/2014, to the Shareholders, through the Priority Offer, and to the Professional Investors, through the Institutional Offer. Following the Priority Right, within the scope of the Priority Offer, the Restricted Offer will be exclusively intended for a target audience composed exclusively of Professional Investors ( Institutional Offer ). Pursuant to article 3 of CVM Instruction 476, the demand for Professional Investors, within the scope of the Institutional Offer, is limited to a maximum of 75 (seventy-five) Professional Investors and the subscription of Shares limited to a maximum of 50 (fifty) Professional Investors. These limits do not apply to subscriptions by Shareholders under the Priority Offer. The investment funds and managed portfolios of securities whose investment decisions are made by the same manager will be considered as a single Professional Investor, pursuant to article 3, paragraph 1, of CVM Instruction 476. Within the scope of the Institutional Offer, if the number of Shares (considering the Supplementary Lot) subject to investment intentions received from Professional Investors during the Bookbuilding Procedure exceeds the total of remaining Shares after the Priority Offer, under the terms and conditions described below, priority will be given to the fulfillment of investment intentions of Professional Investors which, at the sole discretion of the Company and the Leading Coordinator, best meet, among other criteria, their relations with customers and the issues of a commercial or strategic nature of the Company and the Leading Coordinator. DISTRIBUTION SCHEME The Leading Coordinator will distribute the Shares, under a firm settlement guarantee, in compliance with the other provisions set forth in the Placement Agreement. The firm settlement guarantee consists of the obligation of the Leading Coordinator to pay the Shares (considering the Supplementary Lot) that have been subscribed but not paid in Brazil by their respective investors until the 4 th Business Day from the date of disclosure of the material fact communicating the determination of the Price per Share ( Price per Share Notice and Settlement Date, respectively), pursuant to the Placement Agreement. The firm settlement guarantee is enforceable from the moment the Bookbuilding Procedure is fulfilled, the Price per Share is established and the Placement Agreement is executed. In the event of the exercise of the firm settlement guarantee, the Leading Coordinator, by itself or its affiliates, in accordance with the Placement Agreement, may, if it has an interest, sell such Shares before: (i) the period of 6 (six) months from the beginning of the Bookbuilding Procedure; or (ii) the date of the 5

6 sending of the notice of the Restricted Offer closing, whichever occurs first ( Distribution Period ), the selling price of such Shares being the respective market price of the shares issued by the Company, limited to the Price per Share. PARTIAL DISTRIBUTION Within the scope of the Restricted Offer, partial distribution will be allowed, pursuant to Article 5-A of CVM Instruction 476 and Articles 30 and 31 of CVM Instruction 400, provided the minimum amount of Shares equivalent to R$ 350,000,000,00 (three hundred and fifty million Reais) ( Restricted Offer Minimum Volume ) is reached, subject to the provisions of this Material Fact ( Partial Distribution ). In the event of a Partial Distribution, there will be no extension of the deadline for withdrawal or modification of the Priority Subscription Reservation Requests (as defined below) and the investment intentions of the Professional Investors (as defined below). If there is no demand for the subscription of Shares equivalent to the Restricted Offer Minimum Volume until the fulfillment of the Bookbuilding Procedure, pursuant to the Placement Agreement, the Restricted Offer will be canceled, with all Priority Subscription Reservation Requests and all intentions Investors automatically canceled. In this case, any amounts deposited by the Shareholders and/or Professional Investors will be returned without interest or monetary restatement, without reimbursement of costs and with deduction, if applicable, of any applicable taxes on the amounts paid, including, due to IOF/Exchange and any other taxes that may be created, including those with a current rate equivalent to zero that have an increased rate, within a maximum period of 3 (three) Business Days (as defined below) as of the date of the notice of cancellation of the Restricted Offer. PRIORITY OFFER PROCEDURE Within the scope of the Priority Offer, all Shares (considering the Supplementary Lot) will be allocated primarily to the placement with the Shareholders who perform a subscription request by completing a specific form, together with an Escrow Agent ( Priority Subscription Reservation Request ), for the period from September 1, 2017, inclusive, and September 8, 2017, inclusive ( Priority Subscription Reservation Period ). Each Shareholder, as evidenced on the First Cut-Off Date, who makes a Priority Subscription Reservation Request during the Priority Subscription Reservation Period, shall be entitled to subscribe for Shares (considering the Supplementary Lot), within the scope of the Priority Offer, up to the proportional limit of such Shareholder s interest in the Company s total capital stock, as evidenced in the Second Cut-Off Date, disregarding the Company s shares held in treasury ( Proportional Subscription Limit ). Accordingly, each common share issued by the Company held by the Shareholder on the Second Cut-Off Date will ensure the Shareholder the right to subscribe between: (a) a minimum of Shares, if there is a Partial Distribution with the placement of the Restricted Offer Minimum Volume (considering, exclusively for this purpose, the quotation price of the shares issued by the Company at B3 on August 25, 2017, in the amount of R$ 1.61 per common share); (b) Share, if Partial Distribution does not occur and if the 6

7 Supplementary Lot is not placed; and (c) a maximum of Shares, if the Partial Distribution does not occur and if the entirety of the Supplementary Lot is placed. It should be noted that the Proportional Subscription Limit may vary, in such a way that the subscription factor effectively applicable in the Restricted Offer may vary up to the maximum factor provided above, depending on the number of Shares effectively placed in the Restricted Offer. Therefore, if the Shareholder intends to ensure that its respective shareholding is not reduced, regardless of the number of Shares effectively placed in the Restricted Offer, it shall consider the maximum factor indicated above when calculating the number of Shares for which it intends to make its Priority Subscription Reservation Request. Additionally, if the ratio results in a fraction of the share, the subscription value will be limited to the integer value calculated, disregarding any fractional shares, and no apportionment under the Priority Offer will be made. Shareholders submitting Priority Subscription Reservation Requests shall, subject to the Proportional Subscription Limit, set a limit for the number of Shares (considering the Supplementary Lot) to be subscribed under the Priority Offer and may establish the maximum price per Share as a condition for its participation in the Restricted Offer, with no need for further confirmation, and in case the Price per Share is set higher than the amount established by the Shareholder, the respective Priority Subscription Reservation Request will be automatically canceled. Shareholders wishing to subscribe Debentures within the scope of the Priority Offer in an amount greater than their respective Proportional Subscription Limits may participate in the Institutional Offer if they are Professional Investors and provided they observe the limits of the applicable regulations and comply with the conditions applicable to the Institutional Offer. The Shareholder wishing to participate in the Priority Offer shall register or, if already registered, shall certify that its registration is up to date with an escrow agent holding access authorization for the custody of assets in the B3 environment, duly authorized to act in the exercise of the priority right within the scope of public offers with restricted efforts, pursuant to Official Letter 087/2014 ( Escrow Agent ), by it the shareholder wishes to make its respective Priority Subscription Reservation Requests. Such Shareholders will be subject to the internal rules and procedures of the respective Escrow Agents, custodians, representatives of nonresident investors and B3, in particular the rules and standards applicable to the Central Depository, and neither the Company, the Leading Coordinator nor B3 shall be responsible for any losses, claims, damages or obligations arising from the failure by the Shareholders to comply with the requirements for exercise of the Priority Right and consequent participation in the Priority Offer, established in this Material Fact. Each Shareholder shall be responsible for taking the appropriate measures to carry out the registration or update its register, as the case may be, with its Escrow Agent in a timely manner to allow the execution of the Priority Subscription Reservation Request during the Priority Subscription Reservation Period, subject to the procedures of each Escrow Agent, as well as the procedures provided for in this Material Fact. The Escrow Agents will act with the strict purpose of serving the Shareholders in the Priority Offer, and in no case they shall make any kind of effort to sell or place the Shares (considering the Supplementary Lot), since the Restricted Offer is intended exclusively for Professional Investors, being ensured to the Shareholders only the priority in the subscription of the Shares, pursuant to CVM Instruction

8 It is recommended that Shareholders wishing to participate in the Priority Offer contact the Escrow Agent of their choice, prior to making their respective Priority Subscription Reservation Requests, in order to: (i) verify the need to maintain resources in an account open and/or maintained therein, for the purposes of ensuring their respective Priority Subscription Reservation Requests; (ii) verify the possibility of an early debit of the account by the Escrow Agent; (iii) obtain more detailed information about the deadlines established for the execution of the Priority Subscription Reservation Request, observing the operational procedures adopted by each Escrow Agent, as well as the procedures provided for in the Official Letter 87/2014 and in this Material Fact; and, if applicable, (iv) update and/or register with that Escrow Agent. In the event that shares issued by the Company and held by the Shareholder are held in custody by the Bookkeeper, it is recommended to such Shareholders who wish to participate in the Priority Offer that they ensure that their respective registrations are updated at the Bookkeeper, observing the procedures for the Priority Offer described in this Material Fact. Additionally, Shareholders shall not subscribe Shares subject to the Priority Offer if such subscription violates the legislation of the jurisdiction where the Shareholder is domiciled or requires the registration of the Shareholder under any legislation other than the Brazilian law, including the Securities Act (as defined below) also subject to the investment rules and mechanisms regulated by the applicable Brazilian legislation, including Law no , of September 3, 1962, as amended, CMN Resolution no , of September 29, 2014, as amended, and CVM Instruction 560, of March 27, 2015, as amended. Each Shareholder is responsible for determining its eligibility to participate in the Priority Offer under the law of its jurisdiction. The Priority Subscription Requests are irrevocable and irreversible, subject to the conditions of the Priority Subscription Reservation Request instrument itself and in accordance with the following conditions: (i) subject to the Proportional Subscription Limit, each Shareholder interested in participating in the Priority Offer shall make the respective Priority Subscription Reservation Request with a single Escrow Agent, upon its completion during the Priority Subscription Reservation Period, indicating the number of Shares (considering the Supplementary Lot) that it intends to subscribe for, and the Shareholder may indicate, in the Priority Subscription Reservation Request, a maximum price per Share as a condition of effectiveness of its Priority Subscription Reservation Request, without the need for further confirmation. If the Shareholder chooses to establish a maximum price per Share in the Priority Subscription Reservation Request and the Price per Share is set at an amount greater than that established, its Priority Subscription Reservation Request will be automatically canceled by the relevant Escrow Agent that received it. Given that the Shareholder will indicate the number of Shares to be subscribed considering the placement of the Supplementary Lot, if there is no placement of the Supplementary Lot, the excess amounts eventually deposited by such Shareholder will be returned, observing the procedures described in item (xi) below; (ii) there is no minimum investment amount (or minimum number of Shares) to be realized by the Shareholders, provided that, however, the maximum amount (or maximum amount of Shares) of investment, within the scope of the Priority Offer, is subject to the respective Proportional Subscription Limit; (iii) due to the possibility of Partial Distribution, each Shareholder shall indicate in the Priority Subscription Reservation Request its choice to: (1) subject the exercise of its Priority Right to the 8

9 distribution of the entirety of the Shares offered (without considering the Supplementary Lot); or (2) exercise its Priority Right, provided that the Restricted Offer Minimum Volume is reached. If the Shareholder chooses to establish the condition set out in sub-item 2 above, it shall indicate whether, upon reaching the Restricted Offer Minimum Volume, it wishes to acquire: (a) the totality of the Shares indicated in its Priority Subscription Reservation Request; or (b) the ratio between the number of Shares actually distributed up to end of the Restricted Offer and the total number of Shares (without considering the Supplementary Lot) originally subject to the Restricted Offer, applied to the number of Shares indicated in its Priority Subscription Reservation Request. In case the Shareholder fails to make the indication in sub-item 1 above, it will be assumed the interest in receiving the totality of the Shares indicated by it in the Priority Subscription Reservation Request, as if it had indicated the option of sub-item 2, letter a. Additionally, in case of Partial Distribution, there will be no extension of deadline for withdrawal, nor for modification of Priority Subscription Reservation Requests. The Shareholders should be aware that they have agreed to increase their proportionate shareholdings in the Company s capital stock in the events where the Partial Distribution of the Offer is verified and: (a) indicate, or it is assumed they have indicated sub-item 2, letter a, in their Priority Subscription Reservation Requests; or (b) indicate sub-item 2, letter b, in their Priority Subscription Reservation Requests, if they indicate in their Subscription Reservation Requests a number of Shares greater than the Shares to which they are entitled after the application of the Proportional Subscription Limit. In the event of Partial Distribution and the Shareholder indicates sub-item 1 above, its respective Priority Subscription Reservation Request will be automatically canceled by the relevant Escrow Agent and any amounts deposited by such Shareholder will be returned observing the procedures described in item (xi) below; in the event of a Partial Distribution and the Shareholder indicates letter b of sub-item 2 above, any excess amounts eventually deposited by such Shareholder will be returned, observing the procedures described in item (xi) below; (iv) there will be no possibility of requesting subscription of leftovers in the Priority Offer; after the allocation of the Shares (considering the Supplementary Lot) in the Priority Offer, in accordance with the Proportional Subscription Limit, any Shares that may remain shall be allocated to the Institutional Offer; (v) the number of Shares (considering the Supplementary Lot) to be subscribed, the amount of the respective investment, the Settlement Date and the Price per Share will be informed to each Shareholder by 4:00 pm on the Business Day following the disclosure of the Notice of Price per Share, by the Escrow Agent who has received the respective Priority Subscription Reservation Request, through its electronic address, or, in its absence, by facsimile, telephone or mail, with the payment limited the financial amount indicated in the Priority Subscription Reservation Request; (vi) each Shareholder shall make the payment in cash of the amount indicated in item (v) above, with the Escrow Agent with whom it has made the respective Priority Subscription Reservation Request, in immediately available resources, in national currency, until 10:00 am of the Settlement Date, unless otherwise required by the Escrow Agent; (vii) on the Settlement Date, after 4:00 pm, the Escrow Agent who has received the respective Priority Subscription Reservation Request, through B3, will deliver to each of the Shareholders who have 9

10 made the Priority Subscription Reservation Request and paid the Shares, the number of Shares (considering the Supplementary Lot) informed to the Shareholder under item (v) above. If such ratio results in a fraction of the Share, the amount to be subscribed will be limited to the whole part only, disregarding any fractions of Shares; (viii) the Escrow Agent that is to fulfill the Priority Subscription Reservation Request shall, within the period and in the amounts established by B3, pursuant to the Official Letter 87/2014, make the deposit of the necessary guarantees so that the Priority Subscription Reservation Request can be settled, within the term and in the amounts established by B3, pursuant to the Official Letter 87/2014 ( Security Deposit ) to qualify in the Priority Offer; (ix) in the event that a certain Escrow Agent fails to make the Security Deposit, the Priority Subscription Requests received by such Escrow Agent will be canceled, and neither the Company, the Leading Coordinator nor B3 shall be liable for any losses, claims, or damages incurred by the Shareholder who has made its Priority Subscription Reservation Request with such Escrow Agent; (x) in the event that a particular Escrow Agent partially realizes the Security Deposit, the Priority Subscription Reservation Requests received by such Escrow Agent that have not been secured will be canceled by the Escrow Agent, and neither the Company, the Leading Coordinator nor B3 shall be responsible for any losses, claims or damages incurred by the Shareholder whose Priority Subscription Reservation Request has not been secured under the terms of this item. In the event that the Escrow Agent does not cancel the Priority Subscription Reservation Requests whose value has not been secured under this item, in the form and within the period determined by B3, pursuant to the Official Letter 87/2014, all Priority Subscription Reservation Requests fulfilled by the Escrow Agent will be canceled, and neither the Company, the Leading Coordinator nor B3 shall be responsible for any losses, demands or damages incurred by the Shareholder who has made its Priority Subscription Reservation Request with such Escrow Agent; (xi) in the cases provided for in this Material Fact, including those provided for in items (i), (iii), (ix) and (x) above, the Shareholder who has its Priority Subscription Reservation Request canceled: (a) will not participate in the Priority Offer; and (b) any amounts deposited by such Shareholder shall be fully refunded by the Escrow Agent who has received the respective Priority Subscription Reservation Request, without interest or monetary restatement, without reimbursement of costs and with deduction, if any, of any applicable taxes on the amounts paid, including, due to IOF/Exchange and any other taxes that may be created, including those with a current rate equivalent to zero that have its rate increased, within a maximum period of 3 (three) Business Days from the cancellation of the respective Priority Subscription Reservation Request; and (xii) in the event that the Restricted Offer is not completed or in case of termination of the Placement Agreement or cancellation or revocation of the Restricted Offer, all Priority Subscription Reservation Requests will be canceled and the Escrow Agent who has received the Priority Subscription Reservation Request shall notify the respective Shareholder of the cancellation of the Restricted Offer, which may occur upon disclosure of a material fact. In case the Shareholder has already made the payment in accordance with item (vi) above, the amounts deposited shall be returned without 10

11 interest or monetary restatement, without reimbursement of costs and with deduction, if applicable, of any applicable taxes on amounts paid, including, due to IOF/Exchange and any other taxes that may be created, including those with a current rate equivalent to zero that have their rate increased, within a maximum period of 3 (three) Business Days from the notice of cancellation of the Restricted Offer. If the number of Shares indicated by the Shareholders in their respective Priority Subscription Reservation Requests is sufficient to acquire the totality of the Shares, there will be no Shares to be allocated to the Professional Investors, within the scope of the Institutional Offer. INVESTMENT INTENTIONS AND/OR COMMITMENTS The management of the Company received from: (i) the shareholder PREVI Banco do Brasil Employees Pension Fund; (ii) the shareholder Caixa Econômica Federal; and (iii) Mineração Buritirama S.A., a company controlled by Bonsucex Holding S.A. (a shareholder of the Company), subject to certain conditions, expressions of interest to provide $ 120,000, (one hundred and twenty million Reais), R$ 114,000, (one hundred and fourteen million Reais) and fifty million Reais (R$ 50,000,000.00) under the Restricted Offer. In addition, pursuant to the investment agreement entered into between Glencore International Investments Ltd. ( Glencore ) and the Company, approved by the Company s Board of Directors on July 21, 2017, as disclosed by material fact published by the Company on the same date, subject to certain conditions, including the realization of the Debenture Offer, Glencore has undertaken to contribute at least sixty-six million Reais (R$ 66,000,000.00) to the Company ( Investment Agreement ). The Investment Agreement was signed within the scope of a private negotiation, but will be settled under the Restricted Offer. RESOURCE ALLOCATION The Company intends to use the net proceeds from the Restricted Offer to strengthen its cash. Thus, even in the case of Partial Distribution or placement of the Supplementary Lot, there will be no need for an alternative source of resources to meet the objectives of said allocation. For further information on the allocation of the Restricted Offer resources, see item Securities Other relevant information of the Company s Reference Form. FUNDING For information on the impacts of the Restricted Offer on the Company s funding, see item Securities Other Relevant Information of the Company s Reference Form. DILUTION Shareholders who do not exercise their Priority Right under the Priority Offer or exercise their Priority Right 11

12 under the Priority Offer subscribing for a number of Shares (considering the Supplementary Lot) that is lower than their respective proportion in the shareholding position, may be diluted. For information on the dilution of the value of the Shares resulting from the Restricted Offer, see item Securities Other Relevant Information of the Company s Reference Form. DISTRIBUTION COSTS Commissions and expenses related to the Restricted Offer will be paid exclusively by the Company, pursuant to the Placement Agreement ( Distribution Costs ). For information on the Distribution Costs resulting from the Restricted Offer, see item Securities Other Relevant Information of the Company s Reference Form. RIGHTS, ADVANTAGES AND RESTRICTIONS OF THE SHARES The Shares (considering the Supplementary Lot) will grant their holders the same rights, advantages and restrictions conferred upon the holders of common shares issued by the Company, in accordance with its Bylaws, the Brazilian Corporate Law and the New Market Regulation, as in force on this date, among them the full participation in eventual distributions of dividends and/or interest on own capital that may be declared by the Company as of the date of disclosure of the Price per Share Notice. For further information on the rights, advantages and restrictions of the shares issued by the Company, see item Rights of Each Type and Class of Share Issued of the Company s Reference Form. SHAREHOLDING SPREAD EFFORTS Considering that, on August 28, 2017, 23.13% of the Company s capital stock is owned by individuals, the Company complies with the rules regarding spread efforts, pursuant to item 7.1 of New Market Rules, and which, in the Restricted Offer will be fulfilled in accordance with item 5.4 (a) of Official Letter 72/2014. EXPECTED RESTRICTED OFFER SCHEDULE Below is an indicative and tentative schedule of the stages of the Restricted Offer, informing its main events: Events Expected Date (1) 1 2 Board of Director s Meeting approving the implementation of the Restricted Offer. Disclosure of this Restricted Offer Material Fact. First Cut-Off Date. Beginning of presentations to potential investors (roadshow). (2) Beginning of the Bookbuilding Procedure. August 29, 2017 August 30, Beginning of the Priority Subscription Reservation Period. September 1, Second Cut-Off Date. September 6,

13 5 End of the Priority Subscription Reservation Period. September 8, End of presentations to potential investors. End of the Bookbuilding Procedure. Establishment of the Price per Share. Meeting of the Company s Board of Directors approving the Price per Share, the actual capital increase, as well as its approval. Disclosure of the Price per Share Notice. September 13, Beginning of the trading of the Shares at B3. September 15, Date of physical and financial settlement of the Shares at B3. September 19, 2017 (1) All expected future dates are merely indicative and are subject to changes, suspensions, anticipations or extensions at the discretion of the Company and the Leading Coordinator. Also, in case of changes in circumstances, revocation or modification of the Restricted Offer, such schedule may be modified. (2) The presentations to potential investors (roadshow) shall occur exclusively in Brazil. DISCLOSURE OF THE REFERENCE FORM The Company s Reference Form, containing the information mentioned in this Material Fact, was disclosed on August 29, 2017, on the websites of CVM and the Company. The financial information for the threemonth period ended June 30, 2017 was disclosed on July 21, 2017, on the websites of CVM and the Company. GUIDANCE DISCONTINUITY The Company s management has opted to discontinue the disclosure of financial projections (guidance) previously presented in item 11 of the Company s Reference Form, in view of the need to align its guidance disclosure policy with the procedures adopted by its independent auditors and other consultants within the scope of public offers of distribution of securities issued by the Company in Brazil. Any forward-looking statements relating to the plans, expectations about future events, strategies and financial trends affecting the Company s activities, including any guidances, which involve risks and uncertainties and that, therefore, are not indicative or constitute guarantees of future results, should not be considered by investors in order to base their decision to invest in the Restricted Offer. ADDITIONAL INFORMATION Pursuant to CVM Instruction 530, dated November 22, 2012, it is forbidden the subscription of the Shares (including the Supplementary Lot) by investors who have made short sales of shares issued by the Company on the date of determination of the Price Per Share and in the five trading sessions preceding it. Short sales are those made by investors who are not holders of the common shares issued by the Company, or whose ownership results in a loan or other agreement of equivalent effect. In addition, short sales and the acquisition of common shares issued by the Company carried out in the own name of an investor or by any means whose investment decision is subject to its influence are considered operations of a same investor. Investment funds whose investment decisions are made by the same manager will not be considered as a 13

14 single investor for the purposes of this paragraph, provided that the operations are within the respective investment policies of each fund. The prohibition provided for in this paragraph does not apply in the following cases: (i) operations carried out by legal entities in the exercise of the activity of market maker of common shares issued by the Company, as defined in the specific standard; and (ii) operations subsequently covered by market acquisition of the total number of common shares issued by the Company corresponding to the short position up to a maximum of two trading sessions prior to the date of determination of the Price per Share. The Restricted Offer is automatically exempted from the public distribution registry by CVM, which is dealt with in article 19 of Law 6.385, dated December 7, 1976, as amended, and pursuant to article 6 of CVM Instruction 476, and is therefore not subject to CVM s prior review. The Restricted Offer will not be subject to prior analysis by CVM, the Brazilian Association of Financial and Capital Market Entities ANBIMA ( ANBIMA ) or by any regulatory or self-regulating entity, however, after sending the notice of closing of the Restricted Offer to CVM, as provided in article 8 and Exhibit 8 of CVM Instruction 476, the Restricted Offer will be registered with ANBIMA, according to article 1, paragraph 3 of ANBIMA Code. THE COMPANY STRONGLY RECOMMENDS THAT SHAREHOLDERS INTERESTED IN PARTICIPATING IN THE PRIORITY OFFER CAREFULLY READ THE TERMS AND CONDITIONS, IN PARTICULAR THE PROCEDURES RELATING TO THE PAYMENT AND FIXATION OF THE PRICE PER SHARE AND THE SETTLEMENT OF THE PRIORITY OFFER, THE INFORMATION CONTAINED IN THIS MATERIAL FACT, AS WELL AS THE COMPANY S REFERENCE FORM, WHICH CONTAINS ADDITIONAL AND COMPLEMENTARY INFORMATION TO THIS MATERIAL FACT, IN PARTICULAR THE RISK FACTORS DESCRIBED IN ITEM 4. RISK FACTORS AND ITEMS 17. CAPITAL STOCK AND 18. SECURITIES BEFORE TAKING ANY INVESTMENT DECISION. No efforts will be made to place the Shares (considering the Supplementary Lot) abroad. Accordingly, the Restricted Offer, as well as the Shares (considering the Supplementary Lot), were not, and will not be registered with a regulatory agency or body in the capital markets of other country, including the U.S Securities and Exchange Commission ( SEC ), pursuant to the United States Securities Act of 1933, as amended ( Securities Act ), as well as under any other US and/or other federal and state securities laws ( Rules ), and such Shares shall not be offered, sold, assigned, pledged or otherwise transferred in the United States of America or in any other country, unless they are registered or otherwise not subject to registration under the Rules. The information contained in this Material Fact does not constitute a public offer of Shares in the United States of America or in any other foreign country, and the Company is not requesting offers of purchase in the United States of America or in any other foreign country. For the purposes of this Material Fact, Business Day(s) shall mean any day other than a Saturday, Sunday or national holiday, or even when the banks are not open in the city of São Paulo, State of São Paulo. Any notices to Shareholders related to the Restricted Offer, including any amendments to the Restricted Offer Schedule, will be disclosed by means of a notice to the market or material fact on the electronic pages of CVM ( B3 ( and the Company ( 14

15 The Company will keep its shareholders and the market in general informed about the Restricted Offer process, pursuant to the applicable regulations. Further information may be obtained from the Investor Relations area of the Company, by calling +55 (11) , or by at Dias d'ávila/ba, August 29, André Luís da Costa Gaia Chief Financial Officer and Investor Relations Officer 15