Dreyfus Said to Pledge Brazil’s Raizen Shares as Loan Collateral

Louis Dreyfus Holding BV has pledged its entire stake in Raizen Energia SA as collateral to a loan to appease creditors from its former Brazilian sugar-milling unit, according to people familiar with the matter.

The agricultural commodities trader controlled by billionaire Margarita Louis-Dreyfus promised to the 3.5% stake it will have in Raizen to help pay down debt if Brazil’s top sugar and ethanol producer issues shares in an initial public offering, said the people, who asked not to be identified because the discussions are private. The dividends expected to be received from another 1.49% holding in Raizen’s redeemable stock to be owned by Dreyfus will also be used to pay debt, the people said.

Dreyfus will receive Raizen’s shares in exchange for selling Biosev SA, in a deal announced this month in which Dreyfus got rid of about half of the unit’s debt. It will still be responsible for paying 4.1 billion reais ($740 million) in loans that came from the unit, the people said. That debt will be held by the trader’s investment arm Hedera Investimentos e Participacoes. The transaction still needs approval from antitrust regulator Cade.

A Dreyfus spokesperson declined to comment.

Dreyfus’s stake in Raizen, a joint venture with Royal Dutch Shell Plc and Brazil’s infrastructure giant Cosan SA, could be valued around 3 billion reais, the people said. To acquire Biosev, Raizen will pay 3.6 billion reais, or about 47% of the Brazilian unit’s debt.

In 2018, Dreyfus was forced to inject $1 billion in the Brazil’s Biosev’s sugar unit to be able to extend the subsidiary’s debt maturities, while the business was still sinking with several consecutive years of low sugar prices and weak ethanol demand. Last year, Dreyfus agreed to sell a 45% stake in itself to an Abu Dhabi sovereign wealth fund, opening the family business to outside ownership for the first time.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.