Cosan OKs Acquisition Debt

Cosan will issue BRL3.3bn ($1.68bn) in debentures to cover costs of the acquisition of a majority stake in Comgas, it says. The debentures are to be bought by Bradesco and Itau, functioning basically as a loan, and pay 123% of the DI. Separately, Citi is to provide Cosan with a 5-year GBP54m ($87m) loan featuring a 2-year grace period. Cosan agreed last week to pay BRL3.4bn ($1.79bn) for the 60.1% of Brazilian gas distributor Comgas owned by BG Group. Fitch has placed Cosan on rating watch negative, noting that the debt could increase Cosan’s net leverage, on a pro forma basis, to around 3.7x, from 2.1x.