Av. Brigadeiro Faria Lima, 4100, –
16th floor
São Paulo, SP 04538-132 Brazil
(Address of principal executive offices)
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Date: February 8, 2021
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COSAN LIMITED
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By:
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/s/ Marcelo Eduardo
Martins
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Name:
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Marcelo Eduardo Martins
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Title:
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Chief Financial and Investor Relations Officer
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Item 1
Material
fact, filed by Cosan S.A. with the Brazilian Securities Commission on February 8, 2021, regarding the acquisition of Biosev S.A. by Raízen.
COSAN S.A.
Publicly-held
Company
CNPJ/ME n°
50.746.577/0001-15
NIRE 35.300.177.045
CVM Code nº
19836
MATERIAL
FACT
Cosan
S.A. (“Cosan”) (B3: CSAN3), in compliance with the provisions of CVM Instruction 358/02, and in continuity with
the Notice to the Market of January 28, 2021, informs its shareholders and market in general that its jointly controlled company
RAÍZEN ENERGIA S.A., a category B publicly-held corporation (“RESA”) , together with Raízen Combustíveis
S.A. (“RCSA”) (and combined with RESA, “Raízen” or “Company”), on the
date hereof, has entered into a certain acquisition agreement (“Agreement”) with Biosev S.A. (“Biosev”)
and Hédera Investimentos e Participações S.A. (“Hédera”), in its capacity as the controlling
shareholder of Biosev, among other parties, pursuant to which Raízen has agreed, on the terms and subject to the conditions
set forth therein, to acquire up to 100% (one hundred percent) of the equity of Biosev (“Transaction”).
In summary,
the Transaction consists in a business combination involving an exchange of shares, with issuance of 3.5% of Raízen’s
Preferred Shares and an amount paid in cash (R$ 3.6 billion) to refinance part of Hédera’s debt in an efficient way.
Thus, after the conclusion of the Transaction, Raízen's leverage, measured by Net Debt/EBITDA ratio, will be preserved.
In addition, there will be an issuance of 1.49% of Redeemable Shares at a symbolic value and an Earn-out with the objective to
divide the sugar and ethanol prices variation. Both Redeemable Shares and Earnout will cease to exist in a Raízen's liquidity
event, as detailed below.
STRATEGIC
RATIONALE – SUGAR & RENEWABLES
The Transaction
has a strategic fit into Raízen’s long term business plan based on strengthening further its leadership position
on the energy transition providing the most efficient, cleaner and renewable energy, while being accretive within Company’s
highest financial discipline. Highlights of combined operations:
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2019/20
crop year figures*
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Raízen
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Biosev
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Combined
Operations
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mILLS
(UNIT)
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26
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9
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35
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Crushing
Capacity (mln tons)
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73
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32
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105
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Sugar
Production (mln tons)
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3,791
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1,163
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4,954
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Ethanol
PRODUCTION (mln liters)
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2,498
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1,346
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3,844
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Electricity
Production (thousand MWh)
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2,200
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800
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3,000
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EBITDA
ex-IFRS16 (R$ bln)
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R$ 3.4
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R$ 1.8
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R$ 5.2
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CAPEX
(R$ bln)
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R$ 2.8
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R$ 1.2
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R$ 4.0
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* All
figures reported by Raízen and Biosev, respectively, on their annual Earnings Releases.
SUMMARY
OF THE TRANSACTION
As of the
Transaction, Raízen will:
(i) issue
new shares to Hédera, as a result of a capital increase, divided into two different classes of preferred shares
with distinct characteristics, as follows:
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3.5000%
of the capital stock of Raízen as non-voting and non-redeemable shares (“Preferred
Shares”); and
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1.4999%
of the capital stock of Raízen as redeemable at a symbolic price and non-voting
shares (“Redeemable Shares”); and
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(ii) pay
R$ 3.6 billion as cash consideration for new Biosev shares, at the closing date of the Transaction (“Closing”), subject
to certain statutory preemptive rights (the “Cash Consideration”). The proceeds will ultimately be used by Biosev
to partially repay its existing financial debt as Biosev will be transferred to Raízen free of the existing net debt,
as well as with a normalized working capital position, immediately after Closing. The Cash Consideration will be subject to a
customary price adjustment mechanism based on variations of the net debt and working capital positions, as well as certain other
adjustments.
Following
the fifth (5th) anniversary of the Closing date, Raízen may be required to pay an additional contingent cash consideration
(“Earn-out”) to Hédera, limited to R$ 350 million. Such amount will depend on certain targets based on sugar
and ethanol market prices, as defined in the Agreement. In case of a liquidity event by then, such as an IPO of the Company,
the Earn-out structure is automatically canceled with no additional obligation for Raízen.
POST
TRANSACTION SHAREHOLDER STRUCTURE
* The
stock participation percentages represented in this structure chart are mathematically rounded.
** After
the redemption of the (Temporary) Shares, participation in the total capital of Shell and Cosan will increase respectively to
48.25%.
PREFERRED
SHARES AND REDEEMABLE SHARES
Both the
Preferred Shares and the Redeemable Shares will be entitled to receive dividends pari pasu with the existing common shares.
The Preferred
Shares will be subject to certain Call and Put Options. In six months after the 6th, 7th, 8th
and 9th anniversaries of the Closing date, Raízen will have a Call Option to buy those shares at market
price. In six months after the 9th anniversary of the Closing date (and after the end of the call option exercise period
for the Company), Hédera will have a Put Option to sell its stake, at 20% discount of market price to Raízen. All
the Call and Put Options will terminate in case Raízen becomes public tradable within certain criteria set forth in the
shareholders’ agreement.
Subject to
certain criteria set forth in the shareholders’ agreement (as described below), the Redeemable Shares will be
mandatorily redeemed for a symbolic nominal amount upon certain events set forth in the shareholders’ agreement, such as:
(i) a liquidity event of the Company (such as in case Raízen becomes public tradable within certain criteria set forth
in the shareholders’ agreement, or in case Raízen exercises the above-mentioned Call Option); or (ii) following the
tenth (10th) anniversary of the Closing date. In that case, the participation of Shell and Cosan in Raízen
will increase respectively to 48.25%.
SHAREHOLDERS
AGREEMENT
On the Closing
date, Hédera and the controlling shareholders of Raízen will enter into a shareholders’ agreement to set forth
customary rights and obligations of Hédera as a minority shareholder of Raízen (“SHA”), as well as the
above-mentioned Call and Put Options.
The SHA
shall terminate automatically in case Raízen becomes public tradable within certain criteria set forth in the SHA.
CLOSING
AND MAIN CONDITIONS PRECEDENT
The Closing
of the Transaction is expected to take place in the next 6 months. The consummation of the Transaction is subject to the satisfaction
of certain conditions precedent set forth in the Agreement. Among other, the main conditions are:
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(i)
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Biosev will conduct
a restructuring process of its current financial indebtedness, taking into consideration that the transaction includes
only the equity with no debt, preserving Raízen’s leverage level;
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(ii)
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Biosev
will conduct a corporate restructuring which will result in Biosev no longer being publicly
traded, as well as to carve out Biosev’s equity stakes in TEAG and Crystalsev,
as such assets do not encompass the transaction perimeter; and
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(iii)
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Approval
of the Transaction by the Brazilian Antitrust Authority – CADE;
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COSAN
- OTHER RELEVANT INFORMATION
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(i)
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In continuity
to the Material Fact of July 3 of 2020 and following the above-mentioned transaction,
Cosan informs that Raízen’s controlling shareholders are constantly analyzing
the possible listing of Raízen through an initial public offering of shares. Although
the effective listing will depend on numerous conditions that may be beyond the control
of Company, this will not prevent from hiring advisors and start the preparation for
an eventual offer. However, our intention is to be prepared if such conditions are met
and market conditions are adequate. Cosan will keep the market informed about any relevant
developments regarding this topic.
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(ii)
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Cosan
and Shell as controlling shareholders of Raízen, signed a Subscription Agreement,
stipulating the procedures and circumstances in which RESA may notify its controlling
shareholders (Cosan and Shell) requesting an equity contribution of up to US$ 700,000,000.00
(seven hundred million dollars), total amount to both shareholders. Under the terms of
the Subscription Agreement, if Raízen reaches certain financial leverage ratios,
it must convene a meeting of the company's board of directors to determine the total
amount of the capital contribution that would be required. It’s important to
highlight that Raízen is rated at Investment Grade supported by rigid financial
discipline.
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Cosan will
hold a conference call on this date to present the operation and will keep the market informed of any further material information
related to the Transaction.
São
Paulo, February 8, 2021
Marcelo Eduardo
Martins
CFO and
Investor Relations Officer
This material
fact statement does not constitute an offer of securities for sale in Brazil or any other market. It is merely intended for information
purposes, under the terms of the applicable regulations, and shall not, in any circumstances, be deemed or considered as an investment
recommendation, an offer for sale, or a solicitation or offer for acquisition of securities of RESA.
