OREANDA-NEWS. Fitch Ratings believes there is no impact on Empresas CMPC S.A.'s (CMPC) credit ratings at this time following the ruling by Chile's antitrust court on Oct. 28, 2015 that the company colluded illegally with a competitor in the Chilean tissue market. CMPC has not been fined a monetary amount as of today's date as a result of its cooperation with the Chilean authorities. See the list of ratings below.

Fitch's expectation is that CMPC will suffer a degree of reputational damage as a result of the collusion, but that the effect on its domestic tissue sales will likely be muted. The company has a market share of approximately 76% in Chilean tissue. The company launched its own internal investigation in its Chilean tissue operations and found some irregularities that it reported to the relevant authorities. The internal investigation resulted in the dismissal of four of CMPC's Chilean tissue employees. CMPC hired external consultants in March to improve its internal checks and balances to ensure no repetition of this event.

CMPC's credit ratings continue to reflect the company's strong business positions within Latin America as the leading tissue producer in Chile, Peru, Argentina and Uruguay, with a growing presence in markets such as Brazil and Mexico. The company's strong market position in tissue, which accounted for 23% of its EBITDA during the LTM ended June 30, 2015, is the result of the strong brand equity of its products, its low production cost structure and strong distribution network.

CMPC also has a solid presence in the global pulp market with around 2.1 million tonnes of market pulp sold during the LTM to June 30, 2015. These sales generated about 47% of the company's EBITDA. CMPC's presence in market pulp has grown, as it finished its USD2.1 billion investment to add 1.3 million tons of additional eucalyptus market pulp production capacity in Brazil (Guaiba II). Guaiba II started operations on May 7, 2015 and its target is to achieve 500,000 tons of sales in 2015 during its ramp-up process.

The company's cash production costs are amongst the lowest in the world for both hardwood and softwood pulp, ensuring its long-term competitiveness. Fitch estimates that the Guaiba II mill should enhance the company's annual EBITDA by between USD250 million and USD500 million per year, depending upon the point in the cycle, once it becomes operational. At that time, leverage should range between 1.5x and 2.75x depending upon the pricing environment.

Fitch has the following ratings on CMPC:

--Long-term (LT) Issuer Default Rating (IDR) of: 'BBB+'; Stable Outlook;
--Local Currency LT IDR of: 'BBB+'; Stable Outlook;
--National LT Rating of 'AA(cl)'; Stable Outlook;
--National Short-term rating of 'N1+(cl)';
--National Equity Rating: Primera Clase Nivel 1(cl).