British energy company Shell has committed to providing financial support of 3.5 billion reais (about $668 million) to help stabilize struggling Brazilian sugar and ethanol producer Raízen, according to the head of Shell’s operations in Brazil, Fine Day Radio reported.
Raízen has been facing financial difficulties in recent months, including rising losses and increasing debt. The company has also been affected by high investment costs and poor weather conditions that have reduced crop production. In February, it warned of “significant uncertainty” about its future operations.
Earlier reports had suggested that Shell would contribute 3.5 billion reais, an amount expected to be higher than the support from Cosan, Shell’s joint venture partner in Raízen.
Creditors have raised concerns over a restructuring plan proposed by BTG Pactual, which manages a fund that became part of Cosan’s controlling group last year. The proposal called for splitting Raízen by separating its fuel distribution business from its refinery and other divisions.
Cristiano Pinto da Costa, who oversees Shell’s operations in Brazil, said the company prefers to keep Raízen operating as a single entity. He also said Shell expects another investor to contribute an additional 3.5 billion reais to strengthen the company’s finances.
While he did not rule out the possibility of dividing the company in the future, he said any such decision should only be considered after the recapitalization process is completed.
Meanwhile, Brazilian financial newspaper Valor Econômico reported that Cosan does not plan to invest directly in Raízen, citing unnamed sources. The report also said that Rubens Ometto, founder and majority owner of Cosan, intends to invest 500 million reais in Raízen through his family investment firm, Aguassanta.
