UPDATE 3-Batista quits as chairman of Brazil's MPX as share sale scrapped
* MPX halts share sale as market conditions deteriorate
* Chooses to carry out $380 mln private placement instead
* Batista resignation was 'personal decision,' E.ON notes
* Cash to be used to help MPX become 'independent entity'
SAO PAULO/RIO DE JANEIRO, July 4 (Reuters) - Embattled billionaire Eike Batista stepped down as chairman of MPX Energia SA on Thursday as dwindling market confidence forced the Brazilian power producer to scrap a planned share offering.
The Rio de Janeiro-based company halted an offering that sought to raise an estimated 1.2 billion reais ($528 million) from controlling and minority shareholders, as market conditions deteriorated, according to a securities filing. Grupo BTG Pactual SA, the company's financial advisor on the plan, recommended the decision, the filing said.
MPX will instead sell 800 million reais worth of shares at a lower-than-planned price of 6.45 reais each in a so-called private placement in which Batista, partner E.ON SE and BTG Pactual will be allowed to participate, the filing added. The scrapped offering was part of E.ON's $1 billion purchase of a stake in MPX that was announced in late March.
The private placement could be a watershed for Batista as he is desperately seeking to lower his stake in some of his Grupo EBX mining, energy and logistics conglomerate. Investors have voiced concern that his stable of start-up companies were behind schedule, running out of finance and failing to deliver promised returns.
Batista, who at the start of last year was named by Forbes Magazine the world's seventh-richest man with a fortune estimated at $30 billion, has seen his fortune shrink by more than $20 billion over the past year.
Under the March agreement, E.ON agreed to pay Batista 10 to 11 reais per share of MPX. EON, Germany's largest utility, agreed to subscribe 367 million reais worth of stock in the private placement, while BTG Pactual committed to buy the remainder.
"We see a wide range of opportunities as a result of this capitalization," Chief Executive Officer Eduardo Karrer said in a conference call with investors on Thursday. "This is part of the evolution process of MPX as an independent entity."
The MPX-E.ON deal came at a time when Brazil's electricity industry is going through one of its most traumatic periods since a brush with power rationing in 2001. Government moves to cut and control power prices have saddled many generators with losses after the government granted early renewal of expiring hydrodam rights in exchange for price cuts.
There is no guarantee that Batista will participate in the offering, executives said on the same call. If the parties involved take part in the private placement, E.ON would own about 38 percent, compared with about 35 percent now, while Batista's stake could go down to about 24 percent from 29 percent now.
Proceeds will be used to "strengthen the company's balance sheet and prepare it for growth." MPX wants to participate in several government energy auctions through year-end, Karrer said.
MPX needs fresh capital to finance about 600 million reais of generation plant investment that will transform it from a start-up to a fully operating power company.
The private placement should be concluded within the next 40 days.
The situation underpins the challenges facing Batista, 56, who is struggling to shore up his Grupo EBX from the impacts of rising debt, output misses and slumping confidence. Analysts said that a 42 percent drop in MPX shares this year have led him to gauge alternative ways to capitalize the company and even transfer control to E.ON.
A spokesman for E.ON said Batista's resignation as MPX chairman was "his personal decision." Jorgen Kildahl, a board member for E.ON, will replace Batista, who founded MPX in 2001, on an interim basis, the E.On spokesman added.