With leverage markedly improved, Cosan is taking a new look at assets it had prepared to sell, people familiar with the discussions said. Over the past year, the company sold farmland and listed Compass Gas e Energia SA to shore up its balance sheet. It also received a 10 billion real capital infusion late last year backed by BTG Pactual Holding and Perfin Infra Fund.
Holding-company debt is now significantly lower, reducing any urgency to roll out another divestment this year and giving the company more flexibility on when and at what price to proceed, one person said. Cosan has trimmed expenses too, including cutting about 100 positions. The company did not immediately provide a comment.
After the first round of voting showed opposition candidate Flávio Bolsonaro ahead of Lula, investors and some business leaders judged Bolsonaro more likely to confront fiscal issues in ways that could eventually bring interest rates down, even though he has yet to lay out an economic plan. Market participants quickly started pricing in a Bolsonaro win in the Oct. 25 runoff. This week the Ibovespa is up 6.9% and the currency gained 4.8% against the dollar. Cosan's stock soared 24% for the week, the third largest rise among the 76 Ibovespa constituents.
Cutting debt changes what a company is free to do next. Market Briefs covers corporate balance sheets free every morning.
One transaction now being weighed is the sale of part of Cosan's stake in rail operator Rumo SA, according to people familiar. In June, Cosan hired Banco BTG Pactual SA to assess options for that holding. Some proposals received for the Rumo stake valued the company at roughly 30% below its current market price, one person said.
With holding-company debt significantly lower and fresh capital in place, Cosan has more breathing room on whether and when to sell assets, and at what price. Remember, the group touches sugar, lubricants, fuel distribution, rail, and home natural gas supply. Any changes to what it sells and when could shift how predictable its cash flows look and how much it can invest if Brazil's rate outlook continues to improve.
Deleveraging often ends the pressure to sell good assets cheaply. Get the free Market Briefs daily newsletter and follow the turn.
