2011-08-25

Holding Company with Five Affiliates: 1996-2003

CMPC's revenue in 1996 came close to $1.2 billion. In that year the company had 22 affiliates and subsidiaries in Chile and was taking part in 12 joint ventures; it also had six affiliates and subsidiaries abroad. The Puente Alto and Talagante (constructed in 1994-95) plants in Chile were giving it 80 percent of the domestic tissue market. Talagante also was producing toilet paper, paper towels, and folded products such as paper handkerchiefs and napkins. CMPC was investing 70 percent of its profits in new businesses. Projects totaling $500 million were under way. In 1996-97 CMPC purchased La Papelera del Plata S.A. in Argentina for $50 million, raising its share of that tissue market to 40 to 50 percent. In Peru, CMPC was preparing to open paper-tissue and paper-bag plants.

In Chile, CMPC was investing, in 1996, in the modernization of the Laja and Nacimiento plants, and in the new Maule plant for the production of boxboard, or bristol board. With the object of constructing a plant for short-fiber bleached cellulose, the company initiated the planting of trees in the north of Chile and acquired 20,000 hectares (nearly 50,000 acres) of forest property in the provinces of Corrientes and Misiones. By this time the firm had made investments equivalent to $1.3 billion for new plantations and industrial plants over the last five years. On the other hand, CMPC was falling further behind Copec's Celulosa Arauco y Constitucion S.A., the rival cellulose-producing giant owned by the Angelini group, which outbid the Matte interests for Alto Parana S.A., the largest producer of cellulose in Argentina. But, unlike Copec, CMPC regarded wood pulp as only a means to an end. Curiously, the two groups, despite their rivalry, coexisted amicably, with the Matte group actually owning 10 percent of Copec and represented on its board by Bernardo Matte Larrain, Eliodoro's brother. The two companies also shared participation in an investment fund.

At this point CMPC (renamed Empresas CMPC in 1993) was a holding company with five affiliates. CMPC Forestal was responsible for raising the trees from hatchlings until harvesting and sale as doors and tables. CMPC Celulosa was responsible for producing cellulose in bundles for paper production and flat rolls for the manufacture of disposable diapers and sanitary napkins. This subsidiary also was responsible for Forestal e Industrial Santa Fe S.A., in which CMPC had taken a 20 percent share in 1995 and which was raised to 80 percent in 1997 (its properties including a eucalyptus pulp mill), and Celulosa del Pacifico S.A., a giant pulp mill in Mininco that it held as a joint venture with Simpson Paper Co. from 1989 to 1998, when it bought Simpson out. Simpson also sold its half-interest in a eucalyptus plantation to CMPC. The total cost of the buyout was $476 million.

A third affiliate was CMPC Productos de Papel, consisting of Envases Impresos S.A., a corrugated-boxboard factory; Grafex S.A., producing boxes (estuches) and napkins, but sold the following year; Proyectos Australes S.A., a factory for notebooks, photocopy paper, and flexible packing containers; Propa S.A., a factory making industrial paper bags; Chilena de Moldeados S.A. (Chimolsa), a 40 percent-owned firm producing cardboard trays for the export of fruit; Fabi Argentina, making bags filled with cement; and Fabi Peru S.A. Proyectos Australes later changed its name to Forestal Bosques del Plata S.A. Chimolsa became fully owned by CMPC in 2003.

The major novelties in 1996 were CMPC Tissue and CMPC Papeles. The latter combined the newsprint plants, printing paper, and stationery, and the Maule plant for folding boxboard, in which the parent company was investing $200 million to make it the primary plant of its kind in Chile and to export its product for the production of packing containers. It opened in 1997. But without doubt CMPC Tissue was the major development of this period. In addition to the completion of the $60 million Talagante plant, 1995 saw as well the inauguration of an $80 million Protisa plant in Zarate, Argentina. The subsequent acquisition of Papelera del Plata at a cost of $50 million gave CMPC one of the most famous brands in Argentina and 55 percent of the Argentine market. CMPC Tissue also added Ipusa, in Uruguay, and entered Peru for napkins and hygienic paper. This affiliate also managed Prosan, CMPC's share of the joint venture with Procter & Gamble, turning out Pampers, Babysec disposable diapers, and Ladysoft sanitary pads in Argentina, Bolivia, Chile, Paraguay, and Uruguay until 1998, when CMPC sold its share to Procter & Gamble. CMPC Tissue was producing toilet paper, disposable tissues and diapers, napkins, paper towels, and sanitary napkins in Puente Alto, Talagante, and Zarate, Argentina, and was converting folding products at Naschel, Argentina.

As of 2003, CMPC Forestal (renamed Forestal Mininco S.A.) was administering 709,018 hectares (about 1.75 million acres) of forest. CMPC Celulosa was running the Pacifico, Santa Fe, and Laja mills, which turned out 1.14 million metric tons of wood pulp that year. Much of the timber came from third parties rather than the company's own holdings. CMPC Papeles was responsible for the Nacimiento newsprint plant, the Maule and Valdivia facilities turning out folding boxboard, and the Puente Alto factory producing corrugated container board. CMPC Productos de Papeles was producing boxes in Buin, Quilicara, and Til Til, multiwall sacks in Chillan, and molded trays in Puente Alto. As of 2004, CMPC's projects included a new corrugated board factory in Puente Alto and an expansion of the Pacifico plant to produce 475,000 metric tons of wood pulp per year. In that year the company earned an impressive CLP 219.22 billion ($393.25 million) profit on revenue of CLP 1.08 trillion ($1.94 billion).

Jorge Gabriel Larrain, brother-in-law of Elidorio and Bernardo, was in charge of Minera Valparaiso, the family group's 65 percent-owned major holding outside CMPC. The private port and electric generators used by this company also were being put to use by CMPC. The Matte group owned 55 percent of CMPC.

Principal Subsidiaries: CMPC Celulosa S.A.; CMPC Papeles S.A.; CMPC Productos de Papel S.A.; CMPC Productos Tissue S.A.; Forestal Mininco S.A.

Principal Divisions: Cellulose; Forestry; Paper; Paper Products; Tissue Products.

Principal Competitors: Empresa Copec S.A.