Raízen’s debt-cutting plan advances with sale of sugar mill - Valor International

Raízen, the joint venture between Cosan and Shell, announced on Monday (10) the sale of its Continental sugar and ethanol mill, located in São Paulo state, for R$750 million. The deal is part of the company’s restructuring plan, as its total debt nears R$50 billion.

With the sale to Grupo Colorado, Raízen will operate 24 sugar mills with a total crushing capacity of 73 million tonnes per harvest, the company told the market. Under the terms of the agreement, Raízen will transfer its own sugarcane supply and engage in negotiations with growers linked to the plant, which has a crushing capacity of roughly 2 million tonnes per harvest.

Raízen’s preferred shares rose 3.57% on Monday (10), closing at R$0.87, following the announcement.

The company’s asset sales strategy has been well-received by the market. Investors are now focused on the expected divestment of Raízen’s refinery in Argentina, a move that could help reduce the company’s leverage.

In a report, Citi highlighted that the R$750 million transaction should help the company lower its debt and refocus on a “back to basics” strategy. The assets in Argentina are valued at around $1.6 billion and are seen as a key step toward the full restructuring of Raízen’s portfolio.

According to the bank, after acquiring Biosev, Raízen had a total crushing capacity of about 105 million tonnes (excluding idled plants), meaning the company has already reduced its operating capacity by roughly 30%.

Shell and Cosan are in talks for the British group to inject new capital into Raízen. Cosan, owned by businessman Rubens Ometto, is expected to see its stake diluted, although the deal’s structure is still under discussion, according to sources.

On Monday (10), Cosan reported that Aguassanta Investimentos and Queluz Holding—both linked to Mr. Ometto—signed a shareholders’ agreement with funds managed by Perfin and BTG Pactual, completing an important stage of the deal announced in the second half of the year.

Last week, Cosan conducted a share offering that raised R$4.5 billion from BTG Pactual and R$2 billion from Perfin. “With the settlement of the company’s first public share offering, the shareholders’ agreement becomes effective,” the company said in a statement.