June 18, 2002    

Joseph A. Hall, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017

Dear Mr. Hall:

In your letter dated June 18, 2002, as supplemented by conversations with the staff, you request on behalf of J.P. Morgan Securities Inc. (the "Lead Manager"), an exemption from Rule 101 of Regulation M under the Exchange Act to permit the Lead Manager, the other underwriters expected to act as distribution participants (together with the Lead Manager, the "Distribution Participants"), and their respective affiliates, to act as market makers in ações preferenciais, without par value ("Preferred Shares") and American Depositary Shares ("ADSs"), each representing 500 Preferred Shares, of Votorantim Celulose e Papel S.A. ("VCP") while they are participating in a global offering of Preferred Shares and ADSs of VCP (the Offering) by BNDES Participações S.A.-BNDESPAR (the "Selling Shareholder"), a subsidiary of Banco Nacional de Desenvolvimento Econômico e Social-BNDES (the Brazilian national development bank). We have attached a copy of your letter to avoid reciting the facts that it presents. Unless otherwise noted, each defined term in this letter has the same meaning as in your letter.

Response:

On the basis of your representations and the facts presented, but without necessarily concurring in your analysis, the Commission hereby grants an exemption from Rule 101 of Regulation M to permit the Distribution Participants, and their affiliates, in connection with their role as market makers, to bid for or purchase Preferred Shares and ADSs of VCP during the applicable restricted period for the distribution of the Preferred Shares and ADSs of VCP. In particular, this exemption is based on the facts that:

• In common with other Brazilian public companies, the Preferred Shares and ADSs are securities through which the public participates in the capital stock of the Issuer -- in the same way that common equity is typically the security through which the public participates in the capital stock of a U.S. public company. If the Preferred Shares and the ADSs were treated as non-voting common equity for purposes of Rule 405 and Regulation M, then given their ADTV and public float value, the Preferred Shares and the ADSs would constitute actively-traded securities within the meaning of Rule 101 and no exemption would be necessary.
   
• The Preferred Shares are a component of the Ibovespa, the IBX, and the FGV-100, which are the three most widely followed market indices in Brazil. The Ibovespa is the principal Brazilian market index and is currently composed of 57 shares issued by 48 companies that collectively represent the most liquid stocks traded on the BOVESPA during the 12 months prior to the readjustment date. The Preferred Shares are among the 50 most actively traded securities on the BOVESPA.
   
• Purchases by the Lead Manager and the other Distribution Participants are unlikely to have a significant impact on the price of the Preferred Shares and ADSs due to: (i) the high liquidity and significant depth of the trading market in the Preferred Shares and ADSs, particularly in light of the large ADTV and public float value, and (ii) the large number of dealers who regularly place bids and offers for, or continuously make markets in, the Preferred Shares and ADSs.
   
• The issuer is a company whose financial affairs are widely reported on both in Brazil and internationally, and the Offering is expected to be global in nature rather than domestic.
   
• The Brazilian securities markets have legal safeguards designed to prevent manipulation by market participants, including trade reporting and sanctions for insider trading and price manipulation. These safeguards are enforced by the CVM through regular market surveillance and, when necessary, through sanctions.

This exemption is subject to the following conditions:

1. The Lead Manager shall provide to the Division of Market Regulation, upon request, a daily time-sequenced schedule of all transactions by the Lead Manager, the other Distribution Participants, and their affiliates, in the Preferred Shares and ADSs of VCP made during the period commencing five business days prior to the pricing of the Offering, and ending when the distribution in the United States is completed or abandoned, on a transaction-by-transaction basis, including:
    
   1. size, broker (if any), time of execution, and price of each transaction;
       
   2. the exchange, quotation system, or other facility through which the transaction occurred; and
       
   3. whether the transaction was made for a customer account or a proprietary account.
   
   These records must be maintained by the Lead Manager, the other Distribution Participants, and their affiliates, for a period of at least two years from the date of the termination of the distribution of ADSs and Preferred Shares of VCP; and
    
2. The prospectus for the Offering must disclose that the Lead Manager, the other Distribution Participants, and their affiliates, have been exempted, consistent with this relief, from the provisions of Rule 101.

The foregoing exemption from Rule 101 is based solely on your representations and the facts presented, and it is strictly limited to the application of this rule to the proposed transactions. Such transactions should be discontinued, pending presentation of the facts for our consideration, if any material change occurs with respect to any of the facts or representations.

In addition, your attention is directed to the anti-fraud and anti-manipulation provisions of the federal securities laws, including Section 9(a)(2) and 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 under the Exchange Act. Responsibility for compliance with these any other applicable provisions of the federal securities laws must rest with the Lead Manager, the other Distribution Participants, and their market maker affiliates. We express no view with respect to any other questions that the proposed transactions may raise, including, but not limited to, the adequacy of disclosure concerning, and the applicability of any other federal or state laws to, the proposed transactions.

For the Commission, by the Division of Market Regulation, pursuant to delegated authority,

James A. Brigagliano
Assistant Director

Incoming Letter