Brazil's embattled sugar and ethanol producer Raizen said it has secured sufficient backing from creditors and bondholders to proceed with an out-of-court restructuring totaling approximately 65 billion reais ($12.57 billion), the largest recorded in the country.
In a statement late on Friday, the company - a joint venture between oil major Shell and Brazil's Cosan - said creditors holding more than 75% of the unsecured financial indebtedness covered by the restructuring deal had signed onto the plan, meeting the legal threshold.
The plan gives creditors three options to handle their claims, including taking on new debt instruments or converting a portion of what they are owed into equity in the company.
The deal was first reported by Bloomberg.
Under the equity option, 45% of the restructured debt will be converted into Units, each comprising one common and one preferred Raizen share, priced at 0.50 reals per Unit, or 0.25 reals per share. The remaining 55% will be rolled into new debt instruments.
Shell has committed 3.5 billion reais in fresh capital, while Chairman Rubens Ometto's Aguassanta Participacoes may contribute an additional 500 million reais, if he opts to do so. Both parties would receive common shares in exchange.
A Shell spokesperson said in a statement that the company supported the agreement and that it kept Shell on the Raizen board.
"We will continue to work with Raizen’s management team, its creditors and other stakeholders to support implementation of the plan and the long-term sustainability of the company,” the statement added.
Raizen's collapse came after the company invested aggressively in second-generation ethanol plants and renewable energy projects, but was surprised by weaker-than-expected sugarcane harvests, high interest rates and capital-intensive expansions, which ultimately failed to deliver returns and crushed its cash flow.
-Reuters
In a statement late on Friday, the company - a joint venture between oil major Shell and Brazil's Cosan - said creditors holding more than 75% of the unsecured financial indebtedness covered by the restructuring deal had signed onto the plan, meeting the legal threshold.
The plan gives creditors three options to handle their claims, including taking on new debt instruments or converting a portion of what they are owed into equity in the company.
The deal was first reported by Bloomberg.
Under the equity option, 45% of the restructured debt will be converted into Units, each comprising one common and one preferred Raizen share, priced at 0.50 reals per Unit, or 0.25 reals per share. The remaining 55% will be rolled into new debt instruments.
Shell has committed 3.5 billion reais in fresh capital, while Chairman Rubens Ometto's Aguassanta Participacoes may contribute an additional 500 million reais, if he opts to do so. Both parties would receive common shares in exchange.
A Shell spokesperson said in a statement that the company supported the agreement and that it kept Shell on the Raizen board.
"We will continue to work with Raizen’s management team, its creditors and other stakeholders to support implementation of the plan and the long-term sustainability of the company,” the statement added.
Raizen's collapse came after the company invested aggressively in second-generation ethanol plants and renewable energy projects, but was surprised by weaker-than-expected sugarcane harvests, high interest rates and capital-intensive expansions, which ultimately failed to deliver returns and crushed its cash flow.
-Reuters
