Raizen Seals Brazils Biggest-Ever Out-of-Court Debt Deal

BRAZIL · MARKETS

Key Facts

—The deal: Raízen secured the backing of creditors holding about 75% of the debt in its restructuring plan.

—The size: The plan covers roughly R$65bn ($12.6bn), making it the largest out-of-court restructuring in Brazil’s history.

—The backers: The agreement brings together 19 financial institutions and around 80 major bondholders.

—The structure: About 45% of the restructured debt converts into equity, with the rest rolled into new bonds.

—The owners: Raízen is the joint venture between oil major Shell and Brazil’s Cosan.

—The next step: The company has begun submitting the deal to a São Paulo court for formal approval.

Raízen, the Shell-Cosan fuel and ethanol giant, has won the support of about 75% of its creditors for a roughly R$65bn ($12.6bn) restructuring, sealing the largest out-of-court debt deal in Brazil’s history just before a legal deadline.

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Raízen clears its biggest hurdle

After months of tense talks, the company has the support it needed. Creditors holding roughly three-quarters of the debt in the plan have signed on to the agreement.

That cleared the bar just before a legal deadline this week, the point at which a failure to win backing could have tipped the company toward a far messier court process.

The deal pulls together 19 financial institutions and around 80 major bondholders, a broad coalition for a restructuring of this scale and complexity.

Raízen has now begun the formal procedure of submitting the documents to a court in São Paulo, the step that turns the private agreement into a binding plan.

Reaching that point was far from certain, with earlier rounds of talks in New York having broken down over how much fresh money each owner should put in.

What the plan actually does

At its core, the deal swaps debt for ownership. About 45% of the restructured debt converts into equity, handing creditors a large stake in the company in exchange for relief.

The remaining 55% is rolled into new bonds, pushing out repayment dates and easing the immediate cash squeeze that had pushed Raízen to the brink.

The two owners are also putting in fresh money, with Shell pledging billions of reais and the Cosan founder’s holding company adding a smaller sum.

For existing shareholders, the swap means heavy dilution, the price of keeping the company out of formal bankruptcy and on a more sustainable footing.

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Raízen

RAIZ4 · B3 São Paulo

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R$0.43

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Peers & comparators

CSAN3 · Cosan

▼ -3.90%

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▲ +0.44%

UGPA3

▼ -1.40%

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How Raízen got here

The crisis built over years. After its 2021 listing, Raízen spent heavily on new ethanol plants and renewable projects, betting that growth would outrun the borrowing.

It did not. Weak sugarcane harvests, costly expansions that underdelivered, and Brazil’s punishing interest rates left the company unable to service a mountain of debt.

By early this year the strain was undeniable, with a huge quarterly loss, a string of credit downgrades to junk, and bonds trading at a fraction of their face value.

In March the company filed the restructuring, and the months since have been a grind of proposals, counter-demands and brinkmanship between the owners and the creditors.

Why it matters beyond Raízen

The stakes reach well past one company. Raízen is the world’s largest sugarcane ethanol producer and runs one of Brazil’s biggest fuel-distribution networks.

A disorderly collapse could have rippled into global sugar and ethanol prices, so a negotiated fix is reassuring for commodity markets as well as for creditors.

The case is also a major test of Brazil’s out-of-court restructuring framework, designed to resolve big corporate crises without a destructive courtroom battle.

For foreign investors, a clean resolution signals that even a distressed Brazilian giant can be reworked through negotiation, a point that matters for how they price risk.

What comes next

Court approval is the immediate hurdle, since the plan still needs a judge’s sign-off to bind every affected creditor to the agreed terms.

Beyond that, the company has signalled a longer-term reshaping, including the eventual separation of its energy and fuel arms into stand-alone businesses.

Asset sales are part of the picture too, with Raízen recently agreeing to sell its Argentine business to help bring down what it owes.

None of this makes the company healthy overnight, but it buys time and a structure, turning an existential threat into a long, manageable recovery.

Frequently Asked Questions

What did Raízen agree with its creditors?

It secured the backing of creditors holding about 75% of the debt in its plan, sealing a roughly R$65bn ($12.6bn) out-of-court restructuring, the largest of its kind in Brazil.

How does the restructuring work?

About 45% of the restructured debt converts into equity and the rest into new bonds, while owners Shell and Cosan inject fresh capital. Existing shareholders face heavy dilution.

Why did Raízen run into trouble?

Heavy spending on new plants after its 2021 listing, weak sugarcane harvests and Brazil’s high interest rates left it unable to service a large and growing debt load.

What happens next?

The plan needs court approval to bind all creditors, after which Raízen plans asset sales and an eventual split of its energy and fuel businesses.