Cosan SA (CSAN) saw its stock price plummet by 5.73% in intraday trading on Thursday, as investors reacted to news of financial troubles at Raizen, a company backed by Cosan and Shell. The sharp decline comes amid reports that Raizen is actively seeking new funding to address its mounting debt and weak investment returns.

According to sources familiar with the matter, Raizen's net debt has surged to 49 billion reais (approximately $9.1 billion) as of the end of June, marking a substantial 56% increase from the previous year. The company's Chief Financial Officer, Rafael Bergman, confirmed in a recent earnings call that Raizen is in negotiations for a capital infusion to alleviate its financial pressures.

While a potential capital raise could help ease Raizen's leverage concerns, UBS analysts warn that such a move might dilute existing shareholders in the near term. This development, coupled with challenges posed by Brazil's high interest rates and slower-than-expected returns from Raizen's biofuel and sustainability initiatives, has sparked investor concerns. The news has not only impacted Raizen, whose shares fell 15% to a record low of 1.02 Brazilian reais ($0.19) in Sao Paulo, but has also significantly affected its backer Cosan SA, as reflected in today's sharp stock price decline.