Raízen Files for Out-of-Court Debt Restructuring to Renegotiate R$65 Billion Debt

Raízen, a joint venture between Shell and Cosan, filed for out-of-court debt restructuring early this Wednesday, seeking to renegotiate approximately R$65 billion in non-operational debt. This strategic move aims to optimize the company's financial structure, separate from its current operational commitments or obligations to suppliers. The restructuring plan has already garnered support from creditors holding about 40% of the total debt. For the agreement to be ratified, it requires the approval of 50% plus one of the creditors. Sources close to the negotiations indicate that major banking creditors, including Itaú, Santander, and Bradesco, along with the company's bondholders, have already accepted the proposal. The remaining challenge lies in securing agreement from various smaller creditors whose stakes are highly diluted within the overall debt, which adds complexity to the discussions. As of the end of December, Raízen reported a cash position of R$17.3 billion. The company's debt portfolio includes US$5 billion in bonds held by foreign investors, another US$5 billion in bank loans, and US$3 billion in local market securities. According to a material fact disclosed by Raízen on March 4, a controlling shareholder proposal under review includes R$3.5 billion from Shell, supplemented by R$500 million from Cosan's founder, Rubens Ometto, through his holding company Aguassanta. This plan will provide Raízen with protection for the next 90 days to negotiate an agreement with its creditors, effectively preserving its cash flow. This represents one of the largest debt restructuring processes in Brazil in recent times.