Brazilian Sugar Giant’s Rescue Talks Collapse as Owners Can’t Agree on Funding

Negotiations to save Brazilian sugar and ethanol producer Raizen have broken down after co-owners Cosan and Shell couldn't reach agreement on a capital raising plan. The world's largest sugar producer recently reported massive losses and warned about its ability to continue operations.

Efforts to save one of Brazil’s major sugar and ethanol companies have collapsed after its owners couldn’t reach an agreement on how to provide emergency funding, according to a Bloomberg News report released Tuesday.

The rescue discussions for Raizen broke down when co-owners Cosan and Shell were unable to come to terms on a capital injection plan, sources familiar with the negotiations told Bloomberg.

Earlier on Tuesday, Shell’s Brazil chief executive had expressed the company’s willingness to invest 3.5 billion reais (equivalent to $662.75 million) into Raizen, which holds the distinction of being the world’s biggest sugar producer. The executive also indicated expectations that another shareholder would contribute an additional 3.5 billion reais to help stabilize the company’s financial situation.

However, according to the Bloomberg report, Cosan stated it was unable to provide financial support matching what Shell had proposed for Raizen. The report also indicated that Shell turned down several alternative proposals put forward by Cosan.

Private equity funds under the management of Banco BTG Pactual, which had also participated in the rescue discussions, ultimately chose not to invest in Raizen after expressing disagreement with multiple conditions suggested by Shell, the report stated.

When contacted by Reuters for comment, Raizen, Cosan, and Shell had not immediately provided responses. Reuters was unable to independently confirm the Bloomberg report’s details.

The failed rescue talks come after Raizen disclosed severe financial troubles last month, reporting a quarterly net loss of 15.6 billion reais. The company also issued a warning about “significant uncertainty” regarding its capacity to maintain ongoing operations.

By December’s end, Raizen’s net debt had reached 55.3 billion reais, a result of multiple challenging factors including substantial capital investments, unpredictable weather patterns, and destructive wildfires. These conditions contributed to reduced harvest yields and decreased processing volumes for the struggling company.