Raizen, creditors said near deal for out-of-court debt rework

Raízen SA, Brazil’s largest sugar and ethanol producer, has reached a preliminary agreement with creditors for an out-of-court debt restructuring, according to recent filings and reports. The company announced plans to convert part of its debt into equity, extend maturities, and divest non-strategic assets to stabilize its balance sheet according to recent filings. Shareholders Shell Plc and Cosan SA founder Rubens Ometto have pledged combined investments of 4 billion reais ($765 million), with Shell contributing 3.5 billion reais and Ometto’s holding company injecting 500 million reais as reported.

The move follows failed negotiations between Cosan and Shell earlier in March, when disagreements over capital-raising terms led to the collapse of a proposed 7-billion-reais rescue plan according to Reuters. Private equity funds linked to Banco BTG Pactual SA also rejected Shell’s proposed terms, further complicating efforts to secure funding as reported. Raízen’s financial struggles stem from heavy investments, erratic weather, wildfires, and weaker harvests, which pushed net debt to 55.3 billion reais by year-end 2025, a 43% increase from the prior year according to Reuters.

The restructuring aims to create a “protected and orderly environment” for negotiations with creditors while avoiding formal insolvency proceedings according to Bloomberg. Creditors had previously demanded a substantial capital injection to address Raízen’s deteriorating credit profile, which triggered downgrades and a bond selloff. The company’s leverage ratio now stands at 5.3 times EBITDA, up from 3 times in 2024 according to Bloomberg.

Brazilian President Luiz Inácio Lula da Silva reportedly intervened to facilitate talks, underscoring the economic and political significance of Raízen’s stability according to Bloomberg. Final terms of the restructuring remain subject to creditor approval.