Raízen SA, the Brazilian sugar and ethanol producer, reported consuming R$3.4 billion ($657 million) in cash during the first three months of 2026. This cash consumption resulted from a strategic decision to reduce supplier financing and replace it with longer-term debt. The company also nearly doubled its projected accounting write-down for the crop year to R$22.5 billion, compared to an initial R$11 billion recorded in the previous quarter. These write-downs reflect significant uncertainty regarding the company's operational continuity and a reduction in the recoverable value of some assets.
Despite these challenges, Raízen recently secured approval from creditors to restructure approximately R$65 billion ($12.6 billion) in debt, marking the largest out-of-court restructuring in Brazil's history. The approved plan involves converting 45% of the debt into approximately 80% of the company's equity, with the remaining 55% restructured through new financial instruments. Additionally, Shell, a key shareholder, will inject R$3.5 billion into the company, and Aguassanta Participações has the option to contribute an additional R$500 million.
As part of its reorganization, Raízen plans to split into two independent businesses by the end of 2027: a fuel distribution company and a sugar and ethanol production company. Most of the restructured debt will be allocated to the fuel distribution unit. The company's adjusted EBITDA saw significant growth in the quarter, with the sugar and ethanol business increasing by 23% and the fuel distribution unit by 60%. This improvement was partly attributed to higher ethanol prices and increased domestic diesel purchases, benefiting from reduced illegal market competition and stable prices during geopolitical conflicts.
