SCHEDULE: Cosan S.A. Plans R$7.25B Share Offering

Cosan S.A. announced an amendment to its Schedule 13D, detailing a proposed R$7.25 billion primary public offering of up to 2 billion shares, anchored by major investors.

Summary

• Cosan S.A. plans two primary public offerings of shares, potentially issuing up to 2,000,000,000 new shares.
• The first offering, without priority rights, targets up to 1,450,000,000 shares (First Base Offering), with a potential increase of 25% (up to 362,500,000 additional shares).
• Anchor Investors (Holdings Aguassanta, BTG Pactual, Perfin Infra) have committed R$7,250,000,000 to subscribe 100% of the First Base Offering at R$5.00 per share.
• A second offering, with priority rights for existing shareholders (excluding those from the first offering), is expected to issue up to 550,000,000 shares at the same price as the first offering.
• The total number of shares issued across both offerings will not exceed 2,000,000,000.
• The implementation is contingent on an Extraordinary General Meeting (EGM) approval for an authorized capital increase to 8,000,000,000 common shares and a waiver for Anchor Investors from a tender offer requirement.
• The EGM is scheduled for October 23, 2025, and the First Public Offering settlement must occur by November 14, 2025.

Sentiment

Score: 7

Explanation: The capital raise is a significant positive for Cosan S.A., providing substantial funding for growth or debt reduction. However, the large number of new shares could lead to significant dilution for existing shareholders, which tempers the overall positive sentiment. The commitment from anchor investors and the controlling shareholder indicates strong internal confidence.

Positives

• Secures significant capital infusion of at least R$7,250,000,000 through anchor investor commitments.
• Strengthens the company's capital structure and provides funds for strategic initiatives.
• Broadens the shareholder base through public offerings.
• The involvement of institutional investors like BTG Pactual and Perfin Infra signals confidence.

Negatives

• Significant potential dilution for existing shareholders due to the issuance of up to 2,000,000,000 new shares.
• The R$5.00 per share commitment price for the anchor investment, while a floor, could be perceived as a discount depending on the market price at the time of the offering.
• Lock-up periods for new shares could affect market liquidity for those specific tranches.

Risks

• The Public Offerings are contingent on approval by an Extraordinary General Meeting (EGM) for an increase in authorized capital and a waiver of tender offer requirements.
• The First Public Offering must achieve a minimum issuance of 1,450,000,000 shares.
• The settlement of the First Public Offering must occur no later than November 14, 2025.
• A termination fee, consistent with market practice, applies if the Public Offerings are not completed as a result of a decision by the Issuer's management.
• The source of funds for AS Investimentos and Queluz for subscribing to shares has not yet been determined.

Future Outlook

Cosan S.A. is structuring two primary public offerings to raise capital, with a significant portion anchored by existing controlling shareholders and institutional investors. The successful completion of these offerings is contingent on shareholder and board approvals, aiming to strengthen the company's capital base for future strategic endeavors.

Management Comments

• The Reporting Persons intend to review their holdings in the Issuer on a continuing basis and, depending upon the price and availability of the Issuer securities, subsequent developments affecting the Issuer, the business prospects of the Issuer, general stock market and economic conditions, tax considerations and other factors deemed relevant, may consider increasing or decreasing their investment in the Issuer.
• Each of the Reporting Persons reserves the right to change its plans at any time, as it deems appropriate, in light of its ongoing evaluation of (i) its business and liquidity objectives, (ii) the Issuer's financial condition, business, operations, competitive position, prospects and/or share price, (iii) industry, economic and/or securities markets conditions, (iv) alternative investment opportunities, and (v) other relevant factors.

Industry Context

This capital raise by Cosan S.A., a diversified Brazilian conglomerate, suggests a strategic move to fund growth or strengthen its balance sheet. Given its involvement in sectors like energy, logistics, and infrastructure, such a large capital infusion could enable expansion in these capital-intensive industries, potentially positioning it for market leadership or to capitalize on specific economic opportunities in Brazil.

Corporate Governance

Related Party Transactions

• Rubens Ometto Silveira Mello, the chairman of Cosan S.A. and its controlling shareholder, also controls the Reporting Persons (Queluz, AS Investimentos, AS Negocios, Rio das Pedras) who are participating as Anchor Investors in the capital raise.
• Holdings Aguassanta (comprising Queluz and AS Investimentos, both controlled by Mr. Mello) is a key Anchor Investor, committing to subscribe a significant portion of the First Public Offering.
• The investment by Anchor Investors will be made through a newly established holding company (New Holding), in which Holdings Aguassanta will also hold a stake.

Stakeholder Impact

• Shareholders: Potential significant dilution due to the issuance of up to 2,000,000,000 new shares. Existing shareholders will have priority rights in the Second Public Offering to mitigate some dilution.
• Investors (Anchor): Will gain significant ownership stakes and influence through the New Holding and a Shareholders' Agreement, with long lock-up periods indicating a long-term commitment.
• Company (Cosan S.A.): Will receive a substantial capital injection (at least R$7,250,000,000), strengthening its financial position and enabling strategic growth initiatives.

Next Steps

• Issuer's board of directors to determine the actual price per share for the First Public Offering after the bookbuilding process.
• Extraordinary General Meeting (EGM) scheduled for October 23, 2025, to approve the authorized capital increase and tender offer waiver.
• Holdings Aguassanta, the New Holding, and the Investors are expected to enter into a Shareholders' Agreement on the settlement date of the First Public Offering.
• Settlement of the First Public Offering no later than November 14, 2025.

Key Dates

Recommendation

The proposed capital raise is substantial and, while it provides significant funding for Cosan S.A.'s future, it also introduces considerable share dilution. The R$5.00 per share commitment price from anchor investors, while a floor, could be seen as a discount depending on the market price at the time of the offering. Investors should hold to assess the final pricing of the offerings, the market's reaction to the dilution, and the specific strategic uses of the raised capital before making further investment decisions. The long lock-up periods for anchor investors suggest a long-term commitment, which is a positive signal, but the immediate impact of dilution needs careful consideration.

Keywords

Cosan S.A., CSAN, Share Offering, Capital Raise, SEC Filing, Schedule 13D/A, Equity Issuance, Investment Agreement, Rubens Ometto Silveira Mello, Brazil, Public Offering, Anchor Investors, BTG Pactual, Perfin Infra, Dilution, Corporate Governance