Cosan has reduced its stake in Vale, eliminating about 10% of its debt in the holding, but stated that it maintains a “long-term” view regarding the investment in the mining company.
Throughout last week, Rubens Ometto’s holding sold 33.5 million shares, equivalent to about 0.78% of Vale’s capital.
Following the sale, Cosan’s stake dropped from 4.92% to 4.14% – and, as a result, Cosan’s net debt is expected to decrease from the reported R$ 22.8 billion at the end of December to around R$ 20.8 billion.
Cosan held its position in Vale both through a spot position and through a derivative – a collar financing structure – which was settled with last week’s sale.Furthermore, Cosan still holds another derivative – a call spread – which allows it to increase its position in Vale by up to 1.68% of the capital.
This call has maturities in four installments starting from November this year, but the company has already stated that it has no plans to exercise it.
The reduction in Vale’s stake is significant because a large part of Raízen and Compass’s dividends are committed to serving the debt.
This structure – which gives the financing banks preference shares in Raízen and Compass – is not being altered, but the sale of part of Vale’s shares cuts a debt that was financing the collar.
