UPDATE 1-Brazilian Batista cedes control of LLX, latest step in EBX breakup
SAO PAULO/RIO DE JANEIRO, Aug 14 (Reuters) - Brazilian tycoon Eike Batista took another step in the break-up of his once high-flying energy and mining empire on Wednesday by agreeing to cede control of port operator LLX Logística SA to U.S. investment group EIG Global Energy Partners.
Batista, 56, and Washington, D.C.-based EIG, which oversees $12.8 billion in assets, agreed on terms of a private placement worth 1.3 billion reais ($562 million). Under the plan, Batista gave EIG the right he has to acquire LLX shares in the deal, raising cash to finish the Açu Superport, a mining, energy and shipbuilding compound in Rio de Janeiro state.
The purchase will give EIG control of LLX. Batista, currently LLX's largest shareholder, will leave the company's board when the deal is finished, but will retain a "relevant" stake and also have the right to name a member to the board.
"The commitment undertaken by EIG proves LLX's ability to attract global leading investors specialized in the energy and infrastructure sectors and acknowledges the competitive advantage offered by Açu Superport," LLX Chief Executive Officer Marcus Berto was quoted as saying by a securities filing.
The move marks an important step in Batista's efforts to shore up EBX, which was once valued at $60 billion but suffered from a series of project delays, rampant assumption of debt and dwindling confidence in some of its main companies. The value of EBX assets, which range from logistics to oil and gas to mining and shipbuilding, is now less than $5 billion.
The break-up of EBX began early in July, when Batista stepped down as chairman of MPX Energia SA, the embattled EBX Group's most promising company, ceding control of the company to Germany's E.ON SE.
Shares of LLX jumped 17 percent on Wednesday, leading gains in Brazil's benchmark Bovespa stock index. The stock is down 46 percent so far this year - the best-performing asset among Batista's six listed companies in Brazil.
EIG has been involved in energy and energy-related infrastructure for more than 30 years, investing more than $15 billion in about 290 energy companies and projects in 34 countries, according to its Website.
Batista, whose fortune was ranked by Forbes Magazine as the world's seventh-largest last year, is selling assets in his struggle to keep some of the EBX companies afloat, and using cash to reduce debt.
In recent weeks, Batista has renegotiated debts with Abu Dhabi sovereign wealth fund Mubadala Development Co PJSC and local banks Itaú Unibanco Holding SA and Banco Bradesco SA, sources familiar with the situation told Reuters.
EBX might be on the brink of more deals, as Batista exits some of the group's companies to repay debt. Mubadala is looking for partners to buy stakes in oil producer OGX Petróleo e Gas Participações SA and miner MMX Mineraçao e Metálicos SA, a source told Reuters on Wednesday.
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, sources said. That is only a sliver of his former fortune, which last year reached about $35 billion.
The funding raised through the capital increase, coupled with existing financing, should cover LLX's capital spending projects, including the construction of the Açu Superport, Berto said in the filing.
Under terms of the deal, EIG will buy LLX stock for 1.20 reais a share each, the filing said. Minority shareholders will be allowed to participate, it added.
EIG, which also has offices in Rio de Janeiro, where LLX is also based, pledged to buy all the shares that Batista could acquire in the capital injection.
The transaction is subject to regulatory and corporate approvals as well as the execution of due diligence procedures by EIG, LLX said in statement.