Raizen Secures Creditor Backing for $12.6 Billion Debt Restructuring, Brazil’s Largest Corporate Workout

The restructuring plan offers creditors three options for managing claims. Under the equity conversion structure, 45% of restructured debt will be converted into units comprising one common and one preferred Raizen share, priced at 0.50 reais per unit or 0.25 reais per share. The remaining 55% will be rolled into new debt instruments with extended maturities. This structure follows an emerging pattern in large Latin American restructurings where creditors accept ownership stakes to preserve long-term value and avoid formal insolvency proceedings.

Shell committed 3.5 billion reais in fresh capital, while Chairman Rubens Ometto’s Aguassanta Participacoes may contribute an additional 500 million reais. Both parties will receive common shares in exchange. A Shell spokesperson confirmed the company supports the agreement and that the structure preserves Shell’s board representation at Raizen.

Raizen’s financial crisis stemmed from aggressive expansion into second-generation ethanol plants and renewable energy projects that failed to deliver expected returns. Weaker-than-anticipated sugarcane harvests reduced feedstock availability while elevated interest rates increased financing costs. Capital-intensive expansion projects consumed cash while generating limited near-term earnings, creating severe cash flow pressure.

The case highlights tensions in Brazil’s restructuring framework as capital markets have overtaken bank loans as the primary source of corporate funding. Market observers note that Brazilian law favors debtors by requiring only 50% plus one creditor approval, with remaining creditors automatically bound to the same terms. In Raizen’s case, local corporate bondholders organized through financial adviser Journey and law firm Felsberg Advogados to negotiate better terms alongside banks and offshore bondholders. The coordination allowed domestic capital market investors to avoid being relegated to inferior positions, a pattern that has emerged in recent Brazilian restructurings including GPA’s supermarket chain workout, where debenture holders faced a 70% discount.