Paranapanema : Notice to Shareholders - Paranapanema concludes another stage of its process of strengthening its capital structure

Dias d'Ávila, August 29, 2017. PARANAPANEMA SA, in light of the information already disclosed by the Company to its shareholders and to the market in general, in different opportunities in the past weeks, provides the following clarifications in order to summarize the latest developments in the process of strengthening the capital structure and of the restructuring of the Company's indebtedness ("Debt Restructuring").

According to a material fact disclosed on July 21, 2017, the Company signed, in the scope of the Debt Restructuring, an investment commitment with Glencore International Investments Ltd. ("Investment Agreement" and "Glencore", respectively), pursuant to which Glencore has committed to participate in a potential capitalization transaction that may be carried out through the issuance of new shares.

In the scope of the Debt Restructuring, the Company also disclosed that there were negotiations in progress with other reference shareholders for possible contribution of funds and negotiations with its main creditors to reprofile its indebtedness ("Creditors").

On August, 08, 2017, the Company signed, with its subsidiary CDPC - Centro de Distribuição de Produtos de Cobre Ltda. and with Creditors, the Global Restructuring Agreement ("Global Agreement"), within the scope of the Restructuring. The Global Agreement involves the renegotiation of existing debts with Creditors totaling approximately $ 616 million.

In line with the provisions of the Investment Agreement and the Global Agreement, the Extraordinary General Meeting held on August 28, 2017 and the Board of Directors of Paranapanema at a meeting held on August 29, 2017, respectively, approved a public offering of convertible debentures with restricted placement efforts ("Debentures Offer") and public offering of shares with restricted efforts (the "Offering of Shares" and jointly the "Offering"). The Offerings represent two important stages in the scope of the Restructuring.

Within the scope of the Offering of Shares, the Company's management received expressions of interest from its reference shareholders to inject BRL 284 million to the Company, subject to certain conditions, in addition to the Investment Agreement itself with Glencore, which involves the commitment to inject BRL 66 million.

According to the schedules published in the respective Offerings, the Company expects to complete them by the end of this quarter. Further details of each Offering can be found in the respective material facts released on this date. The minimum aggregate amount of the Offerings already committed between investors and creditors is of BRL 710 million.

The Investment Agreement, the Offerings, the Debt Restructuring and the Business Plan are the main efforts undertaken by the Company in the pursuit of the full resumption of its operations and the generation of value to its shareholders and other stakeholders.

The Company will keep its shareholders and the market in general informed of any development related to the Debt Restructuring, specially regarding the facts of this communication, observing all relevant legislation.

For any questions, please contact the Investor Relations area: (11) 2199-7604 or [e-mail].

André Luís da Costa Gaia

Chief Financial Officer and Investor Relation's Officer

We make forward-looking statements that are subject to risks and uncertainties. These statements are based on estimates and assumptions of our management and information to which the Company currently has access. Forward-looking statements include information on our intentions, beliefs or current expectations, as well as those of the Board of Directors and Officers of the Company. Reservations in relation to statements and information about the future also include information on possible or presumed operating results, as well as statements preceded by, followed by or include the words "believes", "may", "will", "continue" "expects", "anticipates", "intends", "plans", "estimates" or similar expressions. The statements and information about the future are not guarantees of performance. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur. Future results and the creation of value for shareholders may differ materially from those expressed or suggested by statements in the future. Many of the factors that will determine these results and values are beyond our ability to control or predict Paranapanema.

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