Shell-Cosan Venture Plunges 19% After Raízen Sets Out Rescue Plan

BRAZIL · CORPORATE

The Raízen recovery plan landed in the market with force on Thursday. The Cosan-Shell joint venture published detailed restructuring terms for R$65.4 billion (US$13 billion) in debt, including a 0.25 reais conversion price for new equity. Preferred shares closed down 19.05 percent at 0.34 reais after touching 0.33 reais intraday. The plan creates the largest restructuring in recent Brazilian corporate history.

What the Raízen recovery plan actually proposes

Raízen disclosed the detailed terms after weeks of negotiation with financial creditors. The company posted total debt of R$75.35 billion (US$14.9 billion), with R$65.4 billion (US$13 billion) inside the formal extrajudicial recuperação framework. The plan offers creditors three options labeled A, B and C.

Option A converts 45 percent of the restructured debt into equity at 0.25 reais per share, with creditors receiving units composed of one ordinary share and one preferred share. The remaining 55 percent of restructured debt converts into new debt instruments allocated between Raízen Energia and Raízen Combustíveis, the two business lines.

Option B exchanges debt for new debt issued by Raízen Energia with an 80 percent haircut and a maturity in 2047. Option C pays creditors cash equal to the lower of 75 percent of the amount owed or 9,750 reais. Most large creditors are expected to take option A; option C is structured for smaller positions.

The dilution math behind the Raízen recovery plan

The 0.25 reais conversion price drives the share-price reaction. Issuing massive new equity below the secondary-market level dilutes existing holders proportionally. UBS BB analysts said creditors will end up controlling about 83 percent of the company by share count, equivalent to about 72 percent of voting shares.

The implied equity conversion is large. Of the R$65.4 billion (US$13 billion) inside the extrajudicial process, 45 percent corresponds to roughly R$29.4 billion (US$5.82 billion), which at 0.25 reais per share translates into well over 100 billion new shares hitting the registry. Pre-existing shareholders watch their stake compress to a fraction of the new total.

Raízen separately receives fresh capital. Shell will contribute R$3.5 billion (US$693 million) to the equity injection, and Aguassanta Investimentos, the family vehicle of Cosan controlling shareholder Rubens Ometto, adds another R$500 million (US$99 million). The total R$4 billion (US$792 million) aporte is a key part of option A.

Governance under the Raízen recovery plan

The board will be reshaped. Under the plan the seven-member board of directors will include four nominees chosen by creditors and three by current shareholders, with the chair coming from the creditor side. A separate creditor committee will supervise plan implementation and have a say on material decisions.

Current Chief Financial Officer Lorival Luz will lead the restructuring. Creditors will also be entitled to appoint a Creditor Restructuring Advisory Officer or CRAO, while administration otherwise remains in place during the transition. The plan also envisages the eventual splitting of Raízen Energia and Raízen Combustíveis into separate companies.

The new debt instruments offered under option A pay graduated rates: real-denominated paper pays CDI plus 2.75 percent, United States dollar-denominated paper pays 8.5 percent, and euro-denominated paper pays 7.65 percent. Maturities run between six and ten years on the typical paper.

Why Raízen reached this point

Raízen has been Latin America’s largest sugar-cane crusher and ethanol producer. The joint venture between Shell and Cosan was built up through the past decade with aggressive debt-financed expansion. Falling sugar prices, ethanol margin pressure and rising interest rates combined to make the leverage unsustainable.

The company maintains that operational assets remain solid. Raízen executives argue that the problem is exclusively financial-structure and not commercial. The Brazilian fuel market continues to depend on road transport, which sustains demand for ethanol and gasoline distribution at scale.

Asset sales will accompany the restructuring. Raízen plans to divest non-strategic energy-generation units and selected sugar mills, and the distribution arm may bring in a strategic investor or undergo a secondary share offering. The eventual split of the two business lines is targeted for late 2027.

Regional read on the Raízen recovery plan

The Raízen restructuring affects regional bioenergy markets. Brazil supplies roughly half of the world’s sugar exports and is the world’s largest ethanol producer alongside the United States. Disruption to Raízen capacity would ripple into global sugar and ethanol prices, even with operations continuing through the restructuring.

Analyst reactions diverged on adjacent listed names. Goldman Sachs maintained a neutral rating on Cosan with a target price of 5.10 reais, kept a buy rating on fuel distributor Vibra with a target of 43.20 reais, and held a neutral rating on Ultrapar with a target of 36.30 reais. Vibra and Ultrapar are the most direct competitors to Raízen Combustíveis.

The 2026 sugar season has been strong in Brazil. Output is high enough that prices have come down even as mills tilt toward ethanol on policy and pricing dynamics. The macro backdrop is at the same time tightening, with Selic anchored at a restrictive level and credit spreads widening for highly leveraged corporates.

The Rio Times — Friday, May 29, 2026 — 05:00 BRT — By Sofia Gabriela Martinez

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