UPDATE 1-Brazil's Batista, Germany's E.ON in talks over MPX stake

Thu Mar 21, 2013 6:43pm EDT

Related Topics

* Batista admits he is talks to sell undisclosed stake

* Company is seeking fresh capital to boost investment

RIO DE JANEIRO/SAO PAULO, March 21 (Reuters) - Eike Batista, the controlling shareholder of Brazilian power producer MPX Energia SA, is in talks to sell a stake to Germany's E.ON SE as he moves to fund investment plans and bolster the company's capital position.

Batista, who has a 53.9 percent stake in the Rio de Janeiro-based company, said he plans to remain the largest single shareholder of MPX. In a securities filing, Batista said that he is also in talks to increase MPX's capital.

The filing said there is no binding agreement on the sale yet between both parties.

Batista is downsizing his Grupo EBX conglomerate of energy, oil, mining and logistics companies after a series of setbacks led some of the group's listed companies to lose an average 70 percent of their value over the past year. Earlier this month, he turned to BTG Pactual Group, Brazil's largest independent investment bank, to spearhead a turnaround of his businesses and provide much-needed funding.

A stake sale in the coming days makes sense since MPX's first batch of assets should reach commercial operations in the next few weeks, analysts at JPMorgan Securities said this week, adding that such a fact will make the company's portfolio much more attractive than development projects.

Fresh capital is seen as key to help MPX carry out planned capital expenditures of about 600 million reais ($306.3 million) this year, to complete electricity generation plants as it shifts from start-up mode to a fully operating power company. E.ON currently owns 11.7 percent of MPX.

A deal with Batista could help E.ON increase its stake in MPX to 38.65 percent, Valor Econômico newspaper reported last week, without citing sources.

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