Raizen restructures $12.7bn debt in Brazil's largest out-of-court deal
Brazilian energy group Raizen has secured creditor support for a record $12.7 billion out-of-court debt restructuring, providing a crucial lifeline for the Shell-backed firm and a new blueprint for capital-heavy companies squeezed by the country's high interest rates.
Raizen has finalized an extrajudicial recovery plan covering R$64.7 billion ($12.7 billion) in financial debt, marking the largest out-of-court restructuring in Brazilian history. The agreement, which requires only court ratification rather than ongoing supervision, secured roughly 75% adhesion from its creditor base. This coalition includes 19 financial institutions and more than 80 domestic and international bondholders.
The core of the restructuring splits the debt into two distinct paths. Approximately 45% of the obligations will convert into equity, meaning lenders will trade what they are owed for direct ownership stakes in the company. The remaining 55% is being refinanced or amended through newly issued debt securities that push maturities out to 2032 and 2034.
Crucially, the agreement preserves the backing of Raizen's powerful joint venture parents. Shell is injecting roughly R$3.5 billion ($686 million) to shore up the balance sheet. Aguassanta, the holding company tied to the Ometto family that controls Cosan, may add up to R$500 million ($98 million).
Raizen operates as Brazil’s second-biggest fuel distributor, running the sprawling network of Shell-branded service stations, and ranks among the world’s largest producers of sugar and ethanol. Like many capital-heavy industrial operators, it borrowed aggressively to expand its footprint. Brazil’s steep interest rate environment subsequently turned that strategic debt into an unsustainable burden.
The deal validates Brazil's extrajudicial recovery process as a viable alternative to a full judicial recovery, which operates much like a US Chapter 11 filing. Because the out-of-court route requires a company to negotiate directly with lenders and only ask a court to ratify a consensus, it demands a high degree of coordination. Raizen achieved that threshold.
For the broader market, the restructuring is a clear indicator of the pressure elevated rates exert on blue-chip corporates. More practically, it provides a working template for other heavily indebted Brazilian giants seeking a path between muddling along and entering full-scale bankruptcy proceedings.
