Raízen's Negotiation Terms with Creditors Spark Dissatisfaction

Initial negotiation terms between Brazilian energy giant Raízen and its creditors for an out-of-court restructuring plan have already sparked dissatisfaction. Representatives from banks, holders of foreign bonds, and Raízen are scheduled to meet next week in New York to commence discussions on the company's restructuring plan. This meeting is anticipated to take place on November 8. Creditors received an initial proposal on October 31, which will serve as the starting point for negotiations. According to sources, the plan maintains capital injections of BRL 3.5 billion from Shell and BRL 500 million from Rubens Ometto, through his family office Aguassanta. Furthermore, the proposal includes converting 45% of the debt into equity. The remaining 55% of obligations would see extended payment terms, with the distribution business debt extended to ten years and the mill operations debt to thirteen years. Sources indicate that with these capital contributions, Shell and Ometto would receive a larger proportion of Raízen shares than other creditors during the 45% debt conversion. Banks interpret this as giving existing shareholders greater power than the creditors, who, through debt conversion, would effectively be injecting approximately BRL 30 billion into Raízen. In terms of board representation, shareholders would be able to appoint four members, while creditors would only appoint three. “This is unfair, given that creditors are putting seven times more resources into the company than the shareholders,” a source among the banks stated, adding, “Nobody is happy with this initial proposal.” Banks are also discontent with Cosan's absence from the capital injection into Raízen and are urging Shell to also contribute.