Efforts to secure fresh funding for Brazilian sugar and ethanol producer Raízen have failed after its co-owners were unable to agree on a capital plan, according to a Bloomberg News report citing people familiar with the matter, Reuters reported.
Raízen is jointly controlled by Brazilian conglomerate Cosan and energy major Shell. Earlier in the day, Shell’s chief executive in Brazil said the company was prepared to invest 3.5 billion reais, or about $662.75 million, into Raízen. He also said another shareholder was expected to provide an equal amount to help strengthen the company’s financial position.
However, Cosan reportedly told Shell it could not match the level of financial support being offered. Some alternative proposals put forward by Cosan were rejected, the report said. Private equity funds managed by Banco BTG Pactual, which were also part of the discussions, disagreed with several of Shell’s proposed terms and decided against investing in the company.
Raízen, Cosan and Shell did not immediately respond to requests for comment. The report could not be independently verified.
The breakdown in talks comes at a challenging time for Raízen. Last month, the company reported a quarterly net loss of 15.6 billion reais and warned of significant uncertainty about its ability to continue operating.
By the end of December, Raízen’s net debt had climbed to 55.3 billion reais. The rise in debt has been linked to heavy investments as well as poor weather conditions and wildfires, which affected harvests and reduced crushing volumes.
