By Brazil Stock Guide – Any plan by Cosan SA (B3: CSAN3) to restructure Raízen SA’s (B3: RAIZ4) towering R$50 billion debt must first go through Itaú Unibanco SA (B3: ITUB4), according to O Estado de S. Paulo’s Broadcast column.
The bank became an indirect shareholder in 2022 after lending R$4.1 billion to Cosan Nove Participações, the holding through which Rubens Ometto’s group controls 39% of Raízen. That deal left Itaú with 27% of Cosan Nove and an indirect 10.5% stake in Raízen itself. Any formal debt workout, whether out-of-court or judicial, could trigger a “put option” forcing Cosan to buy back Itaú’s stake and repay roughly R$2 billion.
The Itaú clause
The shareholder agreement tied loan payments to Raízen’s dividends and granted Itaú the right to exit if a restructuring occurred. Cosan already redeemed R$2.17 billion of the bank’s position in April, leaving about R$2 billion outstanding. Those funds had originally financed Cosan’s 2022 purchase of a 4.9% stake in Vale SA (B3: VALE3). Before Cosan can renegotiate Raízen’s liabilities, it will likely need to unwind Itaú’s residual exposure — a necessary step to avoid activating the clause and compounding its liquidity stress.
Raízen’s steep fall
Formed in 2011 as a 50-50 joint venture between Cosan and Shell, Raízen listed on B3 in 2021 with a R$76 billion valuation. Its market cap has since collapsed to about R$1.25 billion, with shares trading below R$1. The IPO raised R$6.9 billion for bioenergy expansion, especially second-generation ethanol (E2G), but heavy capex and weak cash generation swelled leverage to 4.5× EBITDA by early 2025. The company has explored selling mills and Argentine assets — including the Dock Sud refinery, with capacity for 100,000 barrels a day — to inject capital and reduce leverage.
Ratings pressure adds urgency
Raízen’s fragile balance sheet took another hit in late October, when Moody’s Ratings placed the company and its units Raízen Energia and Raízen Fuels Finance under review for downgrade from Baa3. The agency cited weak free cash flow, rising leverage and operational challenges in the 2024–25 harvest. The review also affects Raízen’s $187 million and $225 million notes due 2027, guaranteed by Cosan. According to Moody’s, cash flow recovery will depend on asset sales and the success of Cosan’s planned capital injection.
Cosan’s own balancing act
Cosan itself is engaged in a R$10 billion recapitalization, including R$7.5 billion supported by BTG Pactual (B3: BPAC11), Perfin, and Ometto’s family offices Aguassanta Investimentos and Queluz Holdings Limited. The remainder will come from a follow-on share offering expected to be priced on November 3. The move underscores the strain on the group, whose net debt surpassed R$30 billion in mid-2025, reflecting years of leveraged bets in Vale, Rumo (B3: RAIL3) and Moove. With both Cosan and Raízen under pressure — and ratings agencies watching closely — Ometto’s challenge is to stabilize the group without triggering cross-default clauses or diluting shareholder control.
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