Eike Batista, the Brazilian billionaire whose estimated net worth has plunged 71 percent since March, is seeking to raise more than $5 billion by selling his AUX gold business and a controlling stake in MPX Energia SA, a person with direct knowledge of the matter said.
EON SE, Germany’s biggest utility, is in discussions to boost its MPX stake to 37 percent from 12 percent and gain effective control as the Brazilian development bank, known as BNDES, increases its holding to 13 percent from 10 percent, said the person, who requested anonymity because the talks are private. Batista also would sell MPX shares to the public in the divestiture, which may raise $2 billion, the person said.
Batista, 56, sold part of holding company EBX Group Co. last year, slowing an expansion into mining and energy in Brazil, Colombia and Chile to focus on raising cash to boost output at existing projects. His oil business, OGX Petroleo e Gas Participacoes SA, cut production targets in June, fueling additional declines at six publicly traded firms he owns. His net worth has plunged to $9.9 billion today from $34.5 billion on March 31, according to the Bloomberg Billionaires Index.
“If the wind doesn’t turn, you have to adjust the sail,” Eric Conrads, who oversees $750 million in Latin American stocks at ING Investment Management, said of Batista’s efforts to liquidate assets. “Moving from exploration to production is not an easy transition. There are a lot of bumps in the road.”
BNDES would pay about 500 million reais ($255 million) for the additional 3 percent of Rio de Janeiro-based MPX. Batista’s holding, now exceeding 50 percent, would drop to as little as 5 percent, a person with knowledge of the talks said.
MPX has dropped 24 percent in the past year, outpacing the 15 percent decline for the benchmark Bovespa index. The stock declined 6.4 percent to 9.99 reais at the close in Sao Paulo today, the biggest fall since Jan. 30.
MPX posted a fourth-quarter net loss of 135.8 million reais yesterday, missing analysts’ estimates. The company said its total debt as of Dec. 31 rose to 6 billion reais, similar to MPX’s current market value, according to data compiled by Bloomberg.
Batista’s aim to sell all of AUX reflects a change from last year, when he disclosed plans to divest a 49 percent stake in the gold business, two people familiar with the matter said. Vancouver-based Goldcorp Inc., the world’s second-biggest miner of the precious metal by market value, entered the talks for AUX after an agreement to negotiate exclusively with Qatar’s government expired in October, the people said.
The pace of negotiations for AUX has slowed and a deal may not happen, one of the people said.
Gold has dropped 5.8 percent this year, underperforming a 6 percent increase in the Standard & Poor’s 500 Index of equities, as signs of economic improvement curbed demand for the metal as a protection of wealth. Gold futures for April delivery retreated 1.6 percent to $1,578 an ounce on the Comex in New York.
EBX, which holds most of Batista’s assets, declined to comment, as did representatives of Dusseldorf-based EON, Goldcorp, BNDES and Qatar Investment Authority, the Persian Gulf nation’s sovereign-wealth fund.
Batista also had sought to sell shipbuilder OSX Brasil SA to Sete Brasil Participacoes SA in exchange for a stake in the oil-rig contractor, according to two people with direct knowledge of the matter. He eventually gave up on the idea, Folha de S. Paulo reported in October, citing an interview with Batista.
“Brazil is not really in favor these days,” said ING’s Conrads. “People are not looking for exposure.”
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