EIG may bid for more of Brazilian Batista's troubled EBX group
NEW YORK/RIO DE JANEIRO
NEW YORK/RIO DE JANEIRO (Reuters) - EIG Global Energy Partners LLC is interested in buying more assets from troubled Brazilian tycoon Eike Batista, a person familiar with the U.S. investment company's plans said days after it closed a $544 million deal that gives it control of a major new port.
EIG, however, is not actively negotiating with Batista's Rio de Janeiro-based EBX Group, said the person, who declined to specify which assets the $12.8 billion investment-management firm has its eye on.
Forced by debt woes to dismantle an energy, port and mining empire that had been worth $35 billion last year, Batista is seeking partners or buyers for oil company OGX Petróleo e Gás Participações SA (OGXP3.SA), iron ore miner MMX Mineração e Metálicos SA (MMXM3.SA), shipbuilder OSX Brasil SA (OSXB3.SA) and coal miner CCX Carvão da Colombia SA (CCXC3.SA).
EIG declined to comment. EBX executives were not immediately available for comment late on Sunday.
EIG, seeking to profit from a Brazilian oil rush, said last week it will buy 1.3 billion reais ($544 million) of new stock in port operator LLX Logística SA LLXL3.SA to help complete the Port of Açu, a giant complex north of Rio de Janeiro. EIG approached Batista about a possible deal for the port around six to seven weeks ago, the person said.
The port will ease transport bottlenecks for Brazil's commodities producers and provide a home for factories, power plants and oil storage and processing facilities. It will also serve as a base to help develop a giant new offshore oil play known as the Brazilian subsalt.
Last year, EIG also agreed to invest 500 million reais, then worth $280 million, in Sete Brasil, which is building 28 deep-water drilling rigs for Brazil's state-led Petroleo Brasileiro SA, or Petrobras (PETR4.SA).
EIG got the LLX assets for a fraction of what they could be worth if the Port of Açu realizes its potential. Companies such as U.S.-based General Electric Co (GE.N), which builds power plants for offshore oil platforms, and France's Technip (TECF.PA), a major offshore oil engineering contractor, have agreed to buy land at the port.
EIG expects the Port of Açu will be busy serving Brazil's state-led Petroleo Brasileiro SA, or Petrobras (PETR4.SA) and partners such as Britain's BG Group Plc (BG.L) and Spain's Repsol SA (REP.MC).
The subsalt oil reserves they have discovered, named for their location beneath a layer of salt, runs along Brazil's coast near Rio de Janeiro and may contain 100 billion barrels of oil, according to the Brazilian Petroleum Institute at Rio de Janeiro-State University. That's enough to supply more than 14 years of U.S. needs at current consumption levels.
"The landing point for all of that oil is Açu port," the person said. "It's a crown jewel."
Many expect the region to attract more than $500 billion of investment over the next decade and that Brazil will as much as triple output to more than 6 million barrels a day, helping Brazil surpass the United States as the world's No. 3 oil producer after Saudi Arabia and Russia.
This isn't the first time EIG has been in the spotlight in the wake of a corporate melt-down. In the weeks before Chesapeake Energy CEO Aubrey McClendon was stripped of his chairmanship over his personal financial dealings, he arranged an additional $450 million loan from EIG, a long-time backer of McClendon's and Chesapeake's. In total, EIG since 2010 lent McClendon $1.33 billion.
EIG, which was spun out of the Los Angeles-based bond investor TCW in 2011, has not made any personal loans to Batista, the person said.
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 person who has direct knowledge of EBX plans has told Reuters. His empire once was valued at over $60 billion.
($1 = 2.39 Brazilian reais)
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