Raizen seeks standstill with main creditors - O Globo

Raizen seeks standstill with main creditors - O Globo

Raízen, Brazil’s largest sugar and ethanol producer, has confirmed a R$4 billion capital injection from its controlling shareholders—R$3.5 billion from Shell and R$500 million from Rubens Ometto’s family—to address its financial challenges according to reports. This follows weeks of intense negotiations between shareholders, creditors, and government officials, as the company seeks to stabilize its capital structure amid a severe liquidity crisis. Raízen’s net debt surged to R$55.3 billion by year-end 2025, driven by weak harvests, high interest rates, and underperforming investments.

Creditors had previously demanded a significantly larger R$25 billion capital infusion, urging shareholders to anchor a share offering that would allow bondholders to convert debt into equity using full face value according to reports. However, Raízen’s proposed solution focuses on restructuring existing debt—potentially converting part of it into equity, extending maturities, and selling non-strategic assets—while maintaining operational continuity according to reports. The company has also explored an out-of-court restructuring process to negotiate with creditors, though no formal agreement has been reached according to reports.

Shareholders and creditors remain divided on the optimal path forward. While creditors oppose splitting Raízen’s sugar/ethanol and distribution businesses before resolving debt issues according to reports, Shell’s CEO emphasized the need for proportional shareholder contributions and a “protected environment” for negotiations according to reports. Brazilian President Lula has engaged in discussions to ensure a resolution that safeguards the company’s role in Brazil’s energy sector according to reports. Raízen reiterated its commitment to uninterrupted operations and minimizing disruptions for partners according to reports.

With Raízen’s leverage ratio at 5.3x EBITDA—up from 3x in 2024—urgency persists to secure a sustainable solution amid ongoing asset sales and creditor pressure according to reports.