Shell committed to backstop Raizen with $668-MM investment, Brazil CEO says
London listed oil company Shell is committed to investing 3.5 billion reais ($667.84 MM) in troubled sugar and ethanol maker Raizen, the energy company's Brazil CEO said on Tuesday.
Raizen has reported a string of losses and soaring net debt in recent quarters amid costly investments and poor weather negatively impacting crops, prompting the company to warn in February of "significant uncertainty" about its ability to keep operating.
Media last week reported that Shell would pump 3.5 billion reais into Raizen, with sources suggesting that sum would be disproportionate to funds coming from Cosan, which also owns the company in a joint venture with the oil firm.
Reuters also reported that Raizen's creditors were unhappy with a proposal from BTG Pactual, which runs a fund that entered Cosan's controlling shareholder group last year, to split Raizen in two by separating the fuel distribution business from refineries and other assets.
Shell would prefer to keep the beleaguered sugar maker together, said Cristiano Pinto da Costa, CEO of the British oil major's Brazil unit, adding that Shell also expects another shareholder to be able to shore up Raizen's fortunes with an additional investment of 3.5 billion reais.
There exists a possibility to split Raizen into two separate units in the future, Costa said. However, such an eventuality should only be assessed once recapitalization has been completed, he added.
($1 = 5.2408 reais)
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