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Sugar-Energy Crisis Pressures Raízen Debt and Leads Company to Initiate Extrajudicial Recovery with Support from Shell Cosan.
The Raízen recovery entered a new phase after the company filed a extrajudicial recovery plan this Wednesday (11), which could profoundly alter the company’s ownership structure.
The process involves the current controllers — Shell Cosan — as well as creditors and other investors, and aims to restructure the Raízen debt, estimated at around R$ 65 billion.
The measure occurs in Brazil, amid a challenging economic scenario and a sugar-energy crisis that has pressured the sugar and ethanol sector in recent years.
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If the plan advances, the company’s control block could drop from 88% to approximately 30% of the total capital.
Moreover, the move anticipates the conversion of part of the debt into equity, which could transform creditors into new partners of the company.
The restructuring aims to alleviate the financial burden on the company and ensure the continuity of operations in a more adverse economic environment.
Raízen Control Block Could Fall from 88% to 30%
Currently, the control of the company is concentrated in the hands of Shell Cosan, which equally shares the controlling block of the company. Each group holds about 50% of the shares within this block.
With the advancement of Raízen recovery, however, this structure could change significantly. The expectation is that the control block will represent only about 30% of the company.
In this new scenario, control would be divided among Shell, Cosan, and Aguassanta, a holding company owned by entrepreneur Rubens Ometto, the main shareholder of Cosan.
Even with the redistribution of shares, Shell is expected to remain the largest individual shareholder of the company.
Nonetheless, important details about governance remain undefined. For example, the composition of the board of directors and the exercise of control are still being discussed among the parties involved.
Raízen Debt Conversion Could Transform Creditors into Shareholders
Another central point of the extrajudicial recovery process involves the renegotiation of Raízen debt with creditors.
The negotiations include the possibility of converting approximately R$ 25 billion of the debt into equity of the company. If the agreement is finalized, creditors could become significant shareholders of the company.
This strategy is common in financial restructuring processes, as it reduces indebtedness and strengthens the companies’ balance sheets.
If the plan is fully implemented, the estimate is that Raízen’s debt will decrease from about R$ 65 billion to approximately R$ 35 billion.
Experts assess that this could become the largest extrajudicial recovery process ever registered in Brazil.
Although companies like Oi and Odebrecht have restructured larger debts, those cases occurred within judicial processes.
According to sources close to the negotiations, there is currently no active search for new external investors.
Billion-Dollar Investment from Shell Cosan to Support Raízen Recovery
To enable the restructuring plan, the current controllers will also need to inject new resources into the company.
The estimated amount of direct investment is about R$ 4 billion.
Of this total:
R$ 3.5 billion will be provided by Shell;
R$ 500 million will come from Aguassanta, a holding linked to Rubens Ometto.
In recent weeks, representatives from Shell Cosan, executives from Raízen, and members of BTG Pactual participated in several meetings to discuss the terms of the investment.
These negotiations even included meetings in Brasília with President Luiz Inácio Lula da Silva, indicating the strategic relevance of the company for the Brazilian energy sector.
Thus, despite the discussions, the final amount of the investment remained limited to the initially proposed R$ 4 billion.
Sugar-Energy Crisis and High Interest Rates Pressure Raízen Debt
Thus, the company attributes its current financial situation to a combination of economic and operational factors.
Among them are:
cycles of lower agricultural productivity;
compression of margins in the sector;
significant increase in the cost of debt.
In an official document released by the company, Raízen explained the impact of this scenario.
“The alteration of the scenario – resulting from cycles of harvests with lower productivity, margin declines, and high costs of financial indebtedness – has harmed the activity of the operational companies and the entire operation structured by the Debtors over years of activity in the segment,” it states.
Additionally, the increase in interest rates in Brazil has exacerbated financial pressure.
According to the document, there was a “significant increase in the basic interest rate in the domestic market”, with the Selic rate jumping from about 2% in 2020 to approximately 15% in 2026.
This advance significantly increased the financing cost for the group of companies and contributed to raise Raízen’s debt.
Raízen Recovery Could Redefine the Energy Sector in Brazil
Thus, Raízen recovery is seen by analysts as a decisive move for the future of the company and also for the renewable energy sector in the country.
Therefore, the company is one of the largest producers of sugar, ethanol, and bioenergy in the world. Thus, changes in its financial structure could have significant impacts on the entire sugar-energy chain.
If the plan is approved by creditors, the company could significantly reduce its financial leverage and reorganize its governance.
At the same time, the process highlights the challenges faced by the industry amid the sugar-energy crisis, marked by price volatility, climate change, and higher financial costs.
In the coming months, the outcome of the negotiations will define not only the future of Raízen’s debt but also the new balance of power between Shell Cosan and the other shareholders of the company.
See more at: Share of Control Block in Raízen Could Fall from 88% to 30% and Capadocianas: Share of Control Block in Raízen Could Fall from 88% to 30%, Raquel Landim – FSP
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