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Cosan Jumps After Shifting More Debt to Raizen Venture With Shell

By Lucia Kassai and Andrew Herndon – Jun 2, 2011 8:38 PM GMT+0100

Cosan SA Industria & Comercio rose the most in a week after it transferring $3.3 billion in debt to a joint venture with Royal Dutch Shell Plc (RDSA), more than previously announced.

Cosan rose 93 Brazilian centavos, or 4 percent, to 24.06 reais at 4:34 p.m. in Sao Paulo trading, the most since May 25. Shell’s Class A shares fell 1.7 percent in London to close at 2,122 pence.

Cosan shifted about 5.24 billion reais ($3.3 billion) in net debt to the Raizen venture, the Barra Bonita, Brazil-based company said today in a regulatory filing. That’s more than the $2.8 billion in debt it said in August that would transfer to the new company, which was formally created today.

By transferring the liabilities to Raizen, Cosan’s net debt dropped 69 percent to 1.63 billion reais, compared with 5.3 billion reais as of Dec. 31, 2010, the latest available figure.

“Cosan is contributing more debt as it is including debt from the Zanin mill acquisition,” chief financial officer Marcelo Martins said on a call with analysts today. “Cosan will become lighter and have an improved capital structure

Cosan bought in February assets from Usina Zanin Acucar & Alcool Ltda in Brazil for 142 million reais in cash and agreed to take on 236 million reais of debt.

Largest Cane Processor

Shell, Europe’s largest oil company by market value, and Cosan combined their their sugar, ethanol and fuel-distribution assets in Brazil to form Raizen, the world’s largest sugar-cane processor. Cosan contributed 23 mills, 1,730 gas stations and other assets, and Shell put up as much as $1.6 billion in cash and assets, including 2,740 stations.

As part of the agreement, The Hague-based Shell transferred a 15.7 percent stake in enzyme producer Codexis Inc. (CDXS) to Raizen, which is now its largest shareholder, Codexis said today.

The deal also includes part of Shell’s interest in Iogen Energy, a 50-50 joint venture with Ottawa-based enzyme producer Iogen Corp. that is developing cellulosic ethanol technology, Shell said today.

Brazilian billionaire Rubens Ometto Silveira Mello, who controls Cosan, will be chairman of Raizen and will have an annual compensation of about 13 million reais, Cosan said.

To contact the reporters on this story: Lucia Kassai in Sao Paulo at lkassai@bloomberg.net; Andrew Herndon in San Francisco at aherndon2@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net

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