Raízen secures 75% creditor support for Brazil's largest extrajudicial restructuring

Raízen, the energy company jointly controlled by Cosan and Shell, has crossed a threshold that few Brazilian corporations ever reach. With roughly three-quarters of its creditors now on board, the company is preparing to file what will become the largest extrajudicial restructuring in Brazilian corporate history—a financial overhaul involving R$66 billion in debt.

The scale of this undertaking becomes clear when you look at who is affected. Nineteen financial institutions, about eighty significant bondholders, and more than one hundred thousand individual investors who bought company securities are all caught in the restructuring. For many of those retail investors, the impact will be severe. The company's stock, which opened at R$7.40 when Raízen went public in August 2021, now trades at R$0.40. That collapse in value is not incidental to the restructuring—it is the reason the restructuring exists.

The plan converts forty-five percent of the company's debt directly into equity. Creditors will receive shares at R$0.25 each. Those holding smaller positions in the company's credit instruments—up to R$13,000 worth—will take an immediate twenty-five percent haircut and be paid in cash. After the conversion, creditors will own more than eighty percent of Raízen, including roughly seventy-two percent of ordinary shares. Cosan, which is not injecting new money into the company, will see its stake shrink to between three and four percent. Shell, by contrast, is committing R$3.5 billion in fresh capital at the same R$0.25 share price. Rubens Ometto's family office, Aguassanta Investimentos, is adding R$500 million.

Control of the company will shift dramatically when the restructuring closes, expected in the first quarter of 2027. The board will expand to seven seats. Creditors will nominate four of them, including the chairman. Shell gets two seats. Aguassanta gets one. Rubens Ometto, the Cosan founder, will remain as chairman at least until the transaction closes, but his influence over the company's future direction will be substantially diminished. The board will operate by simple majority on most matters, though certain decisions require a supermajority that includes at least one Shell-nominated director. Nelson Gomes stays on as CEO. Lorival Luz, the CFO, takes on the title of Chief Restructuring Officer and will oversee implementation with support from a consultant chosen by creditors. Creditors also retain veto rights over material decisions.

The path to this moment was not smooth. When Raízen presented its initial restructuring plan in March, the company set a ninety-day deadline to finalize an agreement with creditors. Tensions ran high during negotiations. Bradesco, one of the major creditors, at one point threatened to block the IPO of Compass, another company in the Cosan orbit, after learning that Cosan would not be putting new capital into Raízen. The company initially considered filing for judicial recovery—a more aggressive process—before settling on the extrajudicial route, which gives all parties more control over the outcome.

The restructuring plan extends well beyond debt conversion. Raízen will split into two separate companies by the end of 2027. Raízen Energia will hold the ethanol, sugar, and bioenergy operations. Raízen Combustíveis will manage fuel distribution across Brazil. After the split, the company plans to divest certain assets from the energy unit, including power generation operations, non-core holdings, and some mills. It is also exploring bringing in a new investor for the fuel distribution business. Creditors who convert debt to equity can restructure the remaining fifty-five percent of their claims into new debt instruments with maturity dates stretching to 2033, 2034, and 2035, depending on which company issues them.

The financial math behind the restructuring reveals why it became necessary. Raízen went public on the premise that it would generate strong returns from second-generation ethanol—a fuel made from sugarcane waste rather than the grain itself. That bet did not pay off. Neither did other ventures, including distributed energy generation. Meanwhile, Brazil's central bank raised interest rates to levels that made servicing Raízen's debt increasingly unsustainable. The company's leverage will drop to around three times EBITDA after the restructuring and capital injection—still not ideal, but it will eliminate an annual interest expense burden of R$4.5 billion at current rates. That relief is the whole point. Without it, Raízen would have faced insolvency.

The restructuring now moves to judicial homologation, a formal approval process that will test whether the agreement holds. The company has set a target of eighty percent creditor support by Monday. If it reaches that threshold, the path forward becomes clearer. But for the one hundred thousand retail investors who bought Raízen bonds, the path is already set: they will own a smaller piece of a company that is worth far less than they paid for it, and they will wait years to see if the restructured business can rebuild value.