From Blockbuster IPO to Record Restructuring
Less than five years ago, Raízen was the crown jewel of Brazil’s energy transition story — a joint venture between Shell and Cosan that raised $1.3 billion in the country’s largest IPO of 2021, commanding a market capitalization of R$76 billion on the promise of becoming the world’s leading producer of cellulosic ethanol. On Tuesday night, it filed the largest extrajudicial restructuring in Brazilian corporate history, covering R$65 billion in financial debt across bonds, bank loans, and local securities.
The filing grants Raízen 90 days of protection to negotiate a definitive restructuring plan while suspending all principal and interest payments on financial obligations. Supplier payments and operational commitments are unaffected. Major bank creditors including Itaú, Santander, and Bradesco have already agreed to the terms, alongside institutional bondholders — collectively representing over 40% of the total debt. The company needs a simple majority to formalize the plan in court.
How a Green Champion Drowned in Red Ink
Raízen’s collapse was not sudden. The company invested aggressively in second-generation ethanol plants and renewable energy projects after its IPO, but weaker-than-expected sugarcane harvests, Brazil’s punishing interest rates — which peaked above 14% — and capital-intensive expansions that failed to deliver returns combined to crush its cash flow. In its most recent quarterly results, Raízen reported a staggering net loss of R$15.6 billion for the third quarter of the 2025/26 crop year, six times the loss recorded in the same period a year earlier. Over nine months, accumulated losses reached R$19.8 billion.
On Tuesday, Moody’s downgraded the company’s credit rating from Caa1 to Caa3 with a negative outlook, citing persistently negative free cash flow and unsustainable leverage. The company’s gross debt exceeds R$70 billion against R$17.3 billion in cash — a ratio that left it unable to service obligations as the sugarcane harvest season approaches with its heavy working capital demands.
Shell Steps In, Cosan Steps Back
The restructuring plan envisions Shell injecting R$3.5 billion and Cosan founder Rubens Ometto contributing R$500 million through his personal holding company Aguassanta. Crucially, approximately R$16 billion in debt may be converted into equity, which would dramatically dilute Cosan’s stake and effectively hand Shell majority control of the venture. Cosan, itself burdened by a R$9.8 billion net debt load and a R$5.8 billion quarterly loss, lacks the resources to match Shell’s capital commitment.
Cosan CEO Marcelo Martins confirmed on Tuesday that his company is no longer negotiating directly with Shell over the Raízen rescue, leaving the restructuring in the hands of creditors and the oil major. An earlier effort that included BTG Pactual — which became a Cosan shareholder last year after coordinating a R$10 billion capital injection — collapsed after the bank’s private equity funds rejected several terms proposed by Shell. Negotiations included a meeting in Brasília with President Lula, underscoring the political sensitivity of a restructuring that affects thousands of jobs across Brazil’s sugarcane belt.
Raízen is being advised by Rothschild & Co and the law firms E.Munhoz Advogados and Pinheiro Neto. Beyond the equity conversion, the restructuring may also involve extending maturities on remaining debt and selling non-strategic assets to reduce the overall burden. The filing joins Oi and the former Odebrecht among Brazil’s largest-ever corporate debt restructurings — a list that reads as a catalog of the country’s boom-to-bust corporate ambitions over the past two decades.