By Luciana Magalhaes and Oliver Griffin
SAO PAULO, Feb 9 (Reuters) - Brazil's Raizen, the beleaguered sugar and ethanol producer, has appointed law firms Pinheiro Neto and Cleary Gottlieb as advisors to strengthen its liquidity as it tries to turn its fortunes around, three people familiar with the matter said on Monday.
Raizen, a joint venture between Brazilian conglomerate Cosan and London-listed oil company Shell, has posted a series of heavy quarterly losses and racked up high levels of net debt.
Last November the company reported a net loss of over 2.3 billion reais ($443.2 million) for the second quarter of the 2025-2026 sugar crop, while net debt for the six months ended September 30 hit $53.4 billion reais.
The sources spoke after Raizen earlier confirmed in a regulatory filing that it had appointed advisors with the aim of strengthening its liquidity position and optimizing its capital structure, adding that the preliminary efforts do not amount to any potential agreed transactions.
"Recent results show that the capital structure is not sustainable," one of the people said, though adding that the company still has some time to try and turn things around.
Ratings agencies Fitch and S&P Global cut their ratings for Raizen to B and CCC+ respectively, following the news that the company had appointed advisors.
"The engagement of financial advisors indicates the high likelihood of debt restructuring, following the weakening signals of the previously expected capitalization and asset sales," S&P said in a statement accompanying its decision.
The company has previously announced a number of divestments as it seeks to bring its debt under control, while owners Cosan and Shell have evaluated options for injecting more capital into the troubled sugar maker, including the possibility of bringing in new investors.
In an email to Reuters, representatives for Raizen declined to confirm if Pinheiro Neto and Cleary Gottlieb had been appointed to advise the company.
Pinheiro Neto and Cleary Gottlieb also declined to comment.
Raizen is due to report its financial results for the third quarter of the 2025-2026 sugar crop later this week.
($1 = 5.1897 Brazilian reais)
(Reporting by Luciana Magalhaes and Oliver Griffin; Writing by Oliver Griffin; editing by Diane Craft)
