March 3 (Reuters) – Talks to rescue Brazilian sugar and ethanol producer Raizen have fallen apart after co-owners Cosan and Shell failed to agree to a plan to raise capital, Bloomberg News reported on Tuesday, citing people familiar with the matter.
Earlier in the day, Shell’s Brazil CEO said the company was committed to investing 3.5 billion reais ($662.75 million) in the world’s largest sugar producer and that it also expected another shareholder to be able to shore up Raizen’s fortunes with an additional investment of 3.5 billion reais.
Cosan said it cannot match the financial support Shell had agreed to offer Raizen, while some other offers made by Cosan were rejected by Shell, the report said, citing a person.
Private equity funds managed by Banco BTG Pactual, also involved in the talks, disagreed with several terms proposed by Shell and decided against injecting money into Raizen, the report said.
Raizen, Cosan, and Shell did not immediately respond to Reuters requests for comment. Reuters could not immediately verify the report.
Last month, Raizen posted a quarterly net loss of 15.6 billion reais and warned of “significant uncertainty” about its ability to keep operating.
Raizen’s net debt climbed to 55.3 billion reais by the end of December due to a combination of heavy investments, erratic weather and wildfires, which led to weaker harvests and lower crushing volumes.
($1 = 5.2810 reais)
(Reporting by Abu Sultan in Bengaluru; Editing by Sonia Cheema and Subhranshu Sahu)
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