Fitch Revises Masisa's Outlook to Negative; Affirms Ratings.

CHICAGO -- Fitch has affirmed the following ratings for Masisa S.A. (Masisa):

--Local currency Issuer Default Rating (IDR) 'BBB-';

--Foreign currency Issuer Default Rating (IDR) 'BBB-'.

--National scale 'A(chl)';

--Local bonds 'A(chl)';

Fitch has

Masisa generated $154 million of EBITDA during 2006, a decline from $158 million in 2005. Masisa had $606 million of debt and $47 million of cash as of Dec. 31, 2006. These figures translate into a total debt-to-EBITDA ratio of 3.9 times (x) and a net debt-to-EBITDA ratio of 3.6x. Masisa's performance in 2006 has been hindered by high raw material costs for wood and resin and a contraction of the U.S. housing market, which has hurt pricing and demand for some of the company's key products. Masisa's net debt increased by $7 million during 2006 due to $122 million of capital expenditures. The change in Masisa's Rating Outlook to Negative from Stable reflects the weakness of the company's ratings in their respective rating categories. Without significant debt reduction during 2007, Masisa's ratings will likely be downgraded by year-end.

Masisa is the largest manufacturer of board products in Latin America with 2.3 million cubic meters of annual production capacity. It has 707,000 cubic meters of annual sawn lumber capacity and supports its operations with 243,000 hectares of forestry land in Chile, Argentina, Brazil, and Venezuela. In addition to having large production and sales operations in these markets, Masisa has large commercial operations in the U.S. and Mexico. These two markets accounted for about 41% of the company's sales during 2006. During the middle of 2007, Masisa will complete construction of a new medium density fiberboard (MDF) mill in Chile that will have an annual output of 340,000 cubic meters of MDF. This plant is not expected to operate at full capacity until 2008.

Masisa S.A. was created on Aug. 4, 2005, when the company was merged into Terranova. Prior to this transaction Terranova owned 52.4% of Masisa. As a result of this merger, Terranova assumed all of the assets and liabilities of Masisa and was later renamed Masisa.

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