Raízen nears $1.4 billion sale of Argentina business

The transaction, which could be signed within the coming days, is expected to close within three months and would provide a significant cash boost to Raízen. The energy company, a joint venture between Cosan and Shell, is currently restructuring R$65 billion in debt through an out-of-court reorganization process. Some contractual details are still pending approval.

Raízen’s assets in Argentina include a refinery, a lubricants plant, and a fuel station network that previously belonged to Shell. Those assets were sold to the joint venture in 2018 for $950 million.

The sale process, which began about 18 months ago, attracted interest from major industry players, including Trafigura, Vitol, and Saudi Aramco. Local investors also reviewed the asset, and Argentine businessman José Luis Manzano—already a partner of Mercuria in other ventures—is part of the buying consortium, according to sources.

With leverage remaining elevated—net debt stood at 5.3 times EBITDA as of March—Raízen has sold roughly R$5 billion in assets since early last year, including sugarcane mills and distributed-generation businesses.

The Argentina operation, however, represents the company’s largest divestment to date and has been closely watched by creditors, who are nearing completion of negotiations over Raízen’s restructuring plan.

Broadly speaking, the proposed restructuring includes an injection of at least R$3.5 billion from Shell and a potential R$500 million contribution from a vehicle controlled by Aguassanta, the family office of Rubens Ometto, Cosan’s controlling shareholder. The plan also calls for a swap of 45% of the debt into equity and the restructuring of the remaining 55% debt profile.

BTG Pactual is advising Raízen on the sale of its Argentina business, while UBS is advising Mercuria. Raízen declined to comment, and Mercuria had not responded by press time.

According to sources, Raízen is also expected to finalize the wording of the documentation required to obtain creditor approval of its out-of-court restructuring plan in the coming days. There had been expectations that the process would be completed by last weekend, but several adjustments were required given the complexity of the negotiations, Valor has learned.

The broad terms of the agreement have already been settled, including with holders of the company’s international bonds, who had temporarily withdrawn from negotiations several weeks ago. As a result, the company expects to secure support from more than half of the outstanding debt volume required to approve the restructuring plan.

As previously reported by Valor, the group of foreign bondholders succeeded in obtaining a modest improvement in the interest rate on the remaining debt that will be extended, from 7.5% to 8%, prompting them to return to the negotiating table.

Of the R$65 billion in debt subject to restructuring, 45% will be converted into equity, effectively making creditors the company’s controlling shareholders.

It remains unclear whether Ometto will ultimately provide the planned R$500 million capital injection, as creditors have demanded that he step down as chairman.