Cosan Schedules Equity Exchange

Cosan will Thursday give investors in Cosan SA, the original, Bovespa-listed entity, the chance to migrate shares to Cosan Ltd, a US-listed entity created last summer whose voting shares are 90% controlled by a group led by founder Rubens Ometto Mello. The process is part of a promise Cosan made to shareholders to extend the right to own shares in the new holding company. But it is more of a gesture than anything that will concretely alter the status quo. Holders of 272.5m Cosan SA shares will have the option to switch into Cosan Ltd A shares or BDRs. Investors that held Cosan SA on July 26 2007 also have the option to swap their 1-vote A shares in Cosan SA for 10-vote B2 shares in Cosan Ltd They will be subject to a 3-year lockup that effectively requires them to hold onto 100% of the non-listed stock, lest it be converted into 1-vote A shares. If they do choose that path, they would still have far less than 10% of Cosan Ltd voting rights, since 90% of the voting capital in Cosan Ltd is held by Ometto Mello. “At current prices, we see no reason for shareholders to participate in the exchange offer, unless they have a very large position and liquidity becomes an issue for them,” says Itau. Investors have until April 11 to trade in CSAN3 shares.