Material Fact – Corporate Reorganization

Cosan S.A. – Sole Holding Company

The corporate restructuring shall consist of a merger of companies under common control, as provided for by art. 264, paragraph 4^th, of Law No. 6,404, pursuant to which CZZ and Cosan Log will be merged into Cosan (the “Proposed Transaction”). Following completion of the Proposed Transaction, outstanding shares of Cosan will be directly owned by all shareholders of Cosan, CZZ and Cosan Log as of immediately prior to the completion of the Proposed Transaction, and Cosan will continue to be controlled by Aguassanta, which is Mr. Rubens Ometto Silveira Mello’s investment vehicle.

As part of the Proposed Transaction, Cosan intends to issue to the shareholders holding CZZ shares prior to the approval of the Proposed Transaction, American Depositary Shares (“ADSs”) listed on the New York Stock Exchange (“NYSE”) or shares issued by Cosan listed under Novo Mercado at the Brazilian Stock Exchange, B3 S.A. – Brasil, Bolsa and Balcão in São Paulo (“B3”).

As for Cosan Log, once the Proposed Transaction is completed, Cosan Log shareholders holding RLOG3 shares immediately prior to the approval of the Proposed Transaction will become owners of shares of Cosan, a company that will, therefore, become the direct controlling shareholder of Rumo S.A. (B3: RAIL3) (“Rumo”), which is currently a direct subsidiary of Cosan Log. See the corporate chart below for an illustration of the expected structure of the Proposed Transaction.

The Proposed Transaction will only be completed if the amount allocated pursuant to the withdrawal rights of Cosan Log’s shareholders does not affect the financial stability of Cosan. For such purposes, a maximum fixed amount will be established for the exercise of the withdrawal rights. Cosan’s shareholders are not entitled to withdrawal rights under Brazilian law.

Cosan intends to prepare its main operational subsidiaries and co-controlled companies for a potential public offering. The feasibility and timing for the potential public offering of each business is different and the actual listing will depend on a number of conditions, which may be outside Cosan’s control. However, our intention is to be ready in case such conditions are met.

Exchange Ratios and CVM 35 Guidance Opinion

The Companies’ boards of directors have decided that, on a provisional basis and in accordance with CVM’s Guidance Opinion No. 35, special independent committees will be established to negotiate the exchange ratios for the exchange of shares of: (i) CZZ for Cosan shares; and (ii) Cosan Log for Cosan shares, resulting from the potential implementation of the Proposed Transaction. The Companies clarify that the committees of Cosan and Cosan Log will be composed of non-managers, all independent with recognized technical capacity, whose members will be disclosed in due course. For consistency purposes and good corporate governance practice, CZZ will also have its own independent committee, formed of independent directors of CZZ. The boards of directors of Cosan and Cosan Log approved that the shareholders’ meetings that will deliberate on the Proposed Transaction will also deliberate on amending their respective bylaws to include transitory provision providing for, on a retroactive basis, terms and conditions under which such independent committees will work, as well as the appointment of members to such committees, subject to the subsequent approval of the respective shareholders.

The Companies clarify that the following assumptions will be observed by management when considering the Proposed Transaction:

a)    The share exchange ratios applicable to the Proposed Transaction will be fixed without attributing any particular benefit to a certain type or class of shares of the Companies;

b)    There should be no holding discount when appraising the Companies; and

c)    Companies must be appraised by their economic (fair market) value.

These assumptions are intended to guide the review of the Proposed Transaction by the boards and, subsequently, the analysis and negotiation of the exchange ratio by the independent committees, without limiting in any way the autonomy of the committees’ work.

Closing conditions

The Companies estimate that the Proposed Transaction will be completed in approximately 180 days. Completion of the Proposed Transaction is also contingent upon corporate and regulatory approvals, including, without limitation, approvals from  the CVM and the U.S. Securities and Exchange Commission (“SEC’), debt holders and suppliers of the Companies and their affiliates.

Access to documents and additional information

All the information required by the CVM Ruling No. 565, dated June 15, 2015, regarding the Proposed Transaction will be disclosed in due course, following the completion of negotiations between the independent committees and the Companies’ management, when the Companies’ board of directors will meet to approve final terms for the Proposed Transaction to be subject to further approval by shareholders’ meetings of the Companies.

The Companies will keep shareholders and the market in general updated on any progress or news regarding the Proposed Transaction.

Click here to access the Material Fact.    

São Paulo, July 3, 2020

Marcelo Eduardo Martins  
Chief Financial and Investor Relations Officer

Cosan S.A. – Investor Relations
Phillipe Casale –  IR Executive Manager
Ana Luísa Perina –  IR Manager
Daniel Kuratomi – IR Coordinator
Ailime Freitas – IR Analyst

Tel: +55 11 3897-9797   |    ri@cosan.com  |   ir.cosan.com.br