Batista exit from MPX begins breakup of EBX empire

Thu Jul 4, 2013 11:11pm EDT
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By Jeb Blount and Guillermo Parra-Bernal

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

Batista, the founder and vital force behind the oil, energy, port, shipbuilding and mining group, stepped down as chairman of MPX Energia SA MPXE3.SA, the embattled EBX Group's most promising company. The electricity generation firm will also change its name by October to position itself outside the EBX Group, MPX executives said on a conference call.

The magnate, who branded all his companies with an "X" for "the multiplication of wealth," will now attempt to restructure his companies to alleviate debt woes and other problems that have slashed more than $20 billion from his holdings in the group.

When restructuring of EBX ends, Batista will be left with between $1 billion to $2 billion of assets and $1.7 billion of long-term debt, a source with direct knowledge of EBX plans told Reuters. That is only a sliver of his former empire that was once valued at over $60 billion.

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. Brazil's economy is also struggling, its currency weakening and Chinese demand - the driving force behind the Brazilian boom of the last decade - slowing.

"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."

To avoid bankruptcy, Batista will have to sell most of his remaining stakes in EBX companies, the source with knowledge of the company's plans said. The only major asset likely to remain is LLX Logistica SA LLXL3.SA, the owner of the Port of Açu, north of Rio de Janeiro, the source said.

The source asked not to be identified because he is not authorized to speak to the media. EBX declined to comment.   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