Negotiations for the capitalization of Raizen, a joint venture between Cosan and Shell with a gross debt of R$73 billion, have reached an impasse that could bring the company closer to bankruptcy protection.
According to information obtained by NeoFeed , Shell rejected a proposal made by Cosan and stated that it intends to carry out a capital increase of R$ 3.5 billion on its own, which Cosan would not follow, leading to a significant dilution of the Brazilian company.
At the same time, sources involved in the negotiation claim that the option of the Brazilian company investing the same amount of resources in Raízen as Shell did was never on the table.
This source recalls that when Cosan received R$ 10 billion in capital, with BTG Pactual and Perfin investing in the company, it was clear that the money would be used to pay off Cosan's debts.
"At the time, it was made public that the funds entering Cosan would be used solely and exclusively for deleveraging Cosan and would not be used for any other purpose."
In the difficult negotiations between Cosan, Shell, and creditors over the past few months, several proposals have been put on the table. The latest involved a capital injection of over R$10 billion, which would include checks from BTG Pactual, Perfin, Cosan, and Rubens Ometto via Aguassanta, his family office, as well as money from Shell and other investors.
The proposal involved splitting Raízen into two companies, separating the sugar and ethanol company from the distribution assets (gas stations). "Several proposals were made, but none of them moved forward," says this source.
Shell's proposal, made public by Cristiano Pinto da Costa, CEO of Shell in Brazil, on Tuesday, March 3rd, involves an investment of R$ 3.5 billion – Aguassanta, owned by Ometto, would contribute R$ 500 million. At the same time, the executive said he expected the same amount from Cosan.
The next objective was to negotiate with bank creditors and bondholders to convert the debt into shares at a significant discount.
In practice, this means that Shell takes control of the company if Shell's strategy goes ahead. If it doesn't work out, bankruptcy protection is the imminent threat.
This strategy, according to sources following the negotiations, could be worse for Cosan, which has all its assets in Brazil, while Shell, in addition to being a global energy giant, has its exploration businesses separate from Raízen, which would not lead to any contamination.
The question that also arises is whether the two proposals would be sufficient to save Raízen. At the end of February, Raízen's creditors, which include banks and holders of foreign debt securities, sent letters to shareholders Cosan and Shell.
At the time, they requested a substantial capital injection, which could reach up to R$ 25 billion, to contain the company's financial crisis. This is a much larger volume of resources than is currently on the table for both sides. In any case, the solution to this impasse lies with the creditors.
On the B3 stock exchange, Raízen's shares have fallen by more than 5%. In 12 months, they have depreciated by more than 60%. Its market value is almost R$ 7 billion.
When contacted, Cosan and Shell did not comment.
