Batista exit from MPX begins breakup of EBX empire

Thu Jul 4, 2013 4:09pm EDT
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By Guillermo Parra-Bernal and Jeb Blount

SAO PAULO/RIO DE JANEIRO (Reuters) - Brazilian billionaire Eike Batista's EBX Group, a once high-flying industrial conglomerate, began breaking up on Thursday, the latest victim of a decade-long commodities boom that has come to a screeching halt.

Batista, the founder and vital force behind the oil, energy, port, shipbuilding and mining group who branded all his companies with an "X" for "the multiplication of wealth," stepped down as chairman of MPX Energia SA MPXE3.SA, the embattled EBX Group's most promising company.

The electricity generation company will also change its name by October to position itself outside the EBX Group, MPX executives said on a conference call.

The move crosses Batista out of MPX as the value of his wider empire, once valued at about $60 billion, crumbles. Once Brazil's richest man, Batista's personal stake in EBX has shrunk by more than $20 billion in the last year, as promises of oil wells, ports, power plants and ships failed to materialize.

Most EBX Group shares are now almost worthless and debt trades at levels suggesting default, leading investors to question Batista's promise to invest more. With Brazil's economy struggling, its currency weakening and Chinese demand - the driving force behind the Brazilian boom of the last decade - slowing, investors have little appetite for new investment.

"Batista's plight is like Brazil's, a sign we can no longer ignore the country's plight," said Alexandre Barros, founder of Early Warning, a Brasilia political risk consultancy. "Batista got investors excited about Brazil's potential, which was real, but like Brazil, Batista failed to deliver."

Batista's departure came after MPX canceled a 1.2-billion-real ($528 million) sale of stock to controlling and minority shareholders. The offer became untenable as market conditions deteriorated, the company said in a securities filing. Grupo BTG Pactual SA (BBTG11.SA: Quote), the investment bank controlled by Brazilian billionaire Andre Esteves and MPX's advisor on the plan, recommended the decision, the filing said.

Instead, MPX will sell 800 million reais of stock at 6.45 reais a share in a so-called private placement in which Batista, partner E.ON SE (EONGn.DE: Quote), a German utility, and BTG Pactual will be allowed to participate, the filing added.   Continued...

Eike Batista, Chairman and CEO of EBX Group speaks at a dinner panel discussion at the Milken Institute Global Conference in Beverly Hills, California April 30, 2012. REUTERS/Mario Anzuoni