Shell Pledges $668M to Support Struggling Brazilian Sugar Company Raizen

British oil giant Shell has committed to investing $668 million in troubled Brazilian sugar and ethanol producer Raizen. The company has been facing mounting losses and debt issues due to poor weather conditions affecting crops and expensive investments.

British oil giant Shell has pledged to provide financial backing of 3.5 billion reais (equivalent to $668 million) to support struggling Brazilian sugar and ethanol producer Raizen, according to Shell’s Brazil chief executive on Tuesday.

The sugar and ethanol manufacturer has faced a series of financial setbacks in recent months, including mounting losses and escalating debt levels. These challenges stem from expensive capital investments and adverse weather conditions that have damaged crop yields, leading the company to issue a warning in February about “significant uncertainty” regarding its continued operations.

Previous reports indicated that Shell would contribute 3.5 billion reais to Raizen, with sources noting this amount would exceed the funding expected from Cosan, Shell’s joint venture partner in the company.

Creditors of Raizen have expressed dissatisfaction with a restructuring proposal from BTG Pactual, which manages a fund that joined Cosan’s controlling ownership group in the previous year. The proposal suggested dividing Raizen by separating its fuel distribution operations from its refinery and other business segments.

Cristiano Pinto da Costa, who leads Shell’s Brazilian operations, stated that the oil company favors maintaining Raizen as a unified entity. He also indicated that Shell anticipates another stakeholder will contribute an additional 3.5 billion reais investment to help stabilize Raizen’s financial position.

While Costa acknowledged that dividing Raizen into separate business units remains a future possibility, he emphasized that such considerations should only occur after the recapitalization process has been finalized.

Brazilian financial publication Valor Economico reported later Tuesday that Cosan has no intentions of contributing capital directly to Raizen, according to unnamed sources familiar with the matter.

However, the report noted that Rubens Ometto, Cosan’s founder and majority owner, plans to invest 500 million reais in the sugar producer through his family investment office, Aguassanta.