Raízen US$12.1 Billion Restructuring Homologated as Shell Set to Take Control

M&A: Brazil

A São Paulo bankruptcy court has made Brazil’s largest-ever extrajudicial restructuring binding on all creditors, unwinding Shell and Cosan’s 15-year joint-venture control of the sugar, ethanol and fuels giant Raízen.

The Homologation

On July 30, 2026, Judge Larissa Gaspar Tunala of São Paulo’s 3rd Court of Bankruptcy and Judicial Reorganization homologated Raízen’s extrajudicial reorganization plan, making the restructuring of approximately R$61.4 billion in financial debt effective and binding under case number 4037759-13.2026.8.26.0100 (Migalhas).

Creditors representing 81.6% of the unsecured financial credits subject to the plan had adhered by the time of the ruling, comfortably above the legal quorum, and no objections were filed during the process (UOL, Migalhas). Under Brazil’s bankruptcy law, Law 11.101/05, the terms now bind every creditor covered by the plan, including those who never formally signed on.

Judge Tunala described the negotiation as a “historic precedent” given the scale of credits involved, and noted that judicial review of an extrajudicial reorganization is limited to checking the plan’s legality and formal regularity — not the economic merits of the discounts, grace periods or debt-versus-equity choices negotiated between the company and its creditors (Migalhas). The case originated from a petition Raízen filed on March 10, 2026, after Shell and Cosan failed to agree on matching capital contributions to rescue the company (CNN Brasil, Reuters).

The Debt Breakdown

The R$61.4 billion covered by the plan is split into two tracks: 45% of each creditor’s claim will convert into equity, while the remaining 55% is replaced with new long-term secured debt instruments carrying longer maturities and interest terms tied to the company’s future cash-generation capacity (UOL, Migalhas).

The largest identified creditor is Bank of New York Mellon (BNY), which holds roughly R$26.1 billion in Raízen bonds with long-term maturities. Other major creditors named in the process include global bondholders (~R$7.5 billion), fiduciary agent Pentágono S.A. (~R$6.35 billion), True Securitizadora (~R$6.43 billion) and BNP Paribas (~R$4.2 billion), while debentures worth R$13.8 billion are held by institutional investors including pension funds, BTG Pactual, Porto Seguro and Citibank (UOL). In total, the deal covers 19 financial institutions and 80 bondholders (O Globo).

Roughly R$33.49 billion in intra-group obligations between Raízen companies were subordinated to the external financial debt, meaning they cannot be repaid until outside creditors are made whole — a measure the judge said reinforces protection for external creditors (Migalhas). New incentivized debentures preserve tax exemptions for individual investors and offer returns of IPCA+9% a year, with maturities in 2033 and 2035 (UOL).

New Shares and Dilution

Raízen will issue 14 billion new common shares to Shell alone, in exchange for the R$3.5 billion cash injection Shell Brasil Petróleo Ltda. committed to the company, at a reference price of R$0.25 per share (UOL). Aguassanta Participações S.A., the holding company of Cosan’s controlling shareholder Rubens Ometto Silveira Mello, may separately contribute up to R$500 million, taking the total new capital injection to as much as R$4 billion — but Cosan itself is not participating (Migalhas).

On top of Shell’s subscription, the 45% debt-to-equity conversion for creditors — roughly R$27.6 billion of the R$61.4 billion total, at the same R$0.25 reference price — points to a further wave of new ordinary and preferred shares. Market calculations based on that math suggest total new issuance could top 100 billion shares once all conversions are finalized, though the exact final count depends on how creditors split between share classes (A Revista).

Cosan’s own leadership has acknowledged the scale of the dilution ahead. “Our stake in Raízen should not be significant,” Cosan CEO Marcelo Martins told investors in May, adding that Cosan will not match Shell’s investment and expects to become a minority shareholder that could eventually sell out of Raízen entirely, exiting the 15-year shareholders’ agreement with Shell (G1).

Shell Set to Take Control as Cosan Is Diluted

Before the restructuring, Shell and Cosan each held 44% of Raízen, an 88% controlling bloc built over 15 years since the joint venture’s creation, with the remaining 12% held by the free-float market (O Globo, Reuters).

Analysts at UBS BB now project creditors will end up holding roughly 83% of Raízen’s total capital and about 72% of its ordinary voting shares once the conversion is complete, according to data compiled by ADVFN — meaning the historic Shell-Cosan control bloc could shrink to somewhere near a fifth to a third of the company (iG/InvestNews). An earlier market estimate from March put the combined bloc falling from 88% to around 30%, split between Shell, Cosan and Aguassanta, with Shell emerging as the largest single shareholder (Visão Agro).

Even so, both founding shareholders are expected to remain on the register. “Shell and Cosan continue as relevant shareholders and strategic partners, even without majority control,” market commentary on the deal noted, describing the shift as ending a cycle of shared control and opening a quiet contest for influence over Raízen’s next chapter (NC News).

What It Means for the Sugar-Ethanol Sector

Beyond the balance sheet, the plan unwinds the joint-venture structure itself: Raízen is set to split into two independently listed companies, Raízen Energia (sugar, ethanol and bioenergy) and Raízen Combustíveis (Brazil’s roughly 6,800 Shell-branded filling stations and lubricants business), by December 31, 2027, with the underlying debt restructuring required to close by March 31, 2027 (AgFeed, iG/InvestNews).

The split follows a broader divestment push: Raízen already sold its entire Argentine fuels and refining business — the Avellaneda refinery, a lubricants plant, LPG assets and more than 800 filling stations — to companies controlled by Swiss trader Mercuria Energy Group for US$1.42 billion, with proceeds feeding debt paydown (O Globo). The company had already suspended its Santa Elisa mill in Sertãozinho, São Paulo state, in July 2025, cutting 1,200 jobs, while workforce-tracking data shows Raízen’s headcount has fallen from about 42,000 in 2023 to roughly 35,700 by early 2026 (G1, Revelio Labs).

For Brazil’s sugar-ethanol sector, the case sets a precedent for how a heavily leveraged agribusiness giant can restructure without collapsing into full-blown bankruptcy — and signals that even a company co-founded by two of the world’s largest energy and industrial groups is not immune to losing control to its own creditors. Post-split, the fuels unit is targeted to reduce leverage to about 4.8 times EBITDA and the energy unit to about 2.2 times, as Raízen’s board also plans a competitive process to bring in a strategic investor for the fuels business (iG/InvestNews).

Frequently Asked Questions

How much of Raízen’s debt was restructured?

A São Paulo court homologated the restructuring of approximately R$61.4 billion in Raízen’s financial debt on July 30, 2026, making the terms binding on all covered creditors. Of that amount, 45% converts into equity and 55% is refinanced through new long-term secured debt instruments.

Will Shell and Cosan still control Raízen?

No. Shell and Cosan previously held 44% each, an 88% combined controlling bloc. Analysts now project creditors could hold about 83% of total capital after the conversion, shrinking Shell and Cosan’s combined stake to somewhere in the range of 17% to 30%. Both companies are expected to remain shareholders, but without majority control.

What happens to Raízen’s operations going forward?

The plan calls for splitting Raízen into two independently listed companies by December 31, 2027: Raízen Energia, covering sugar, ethanol and bioenergy, and Raízen Combustíveis, covering Brazil’s roughly 6,800 Shell-branded fuel stations and lubricants business. The company has also been selling assets, including its Argentina fuels operation, to reduce leverage.

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