* MMX expected to have new controlling shareholder
* Cash burn at OGX, MMX, LLX worries investors
* Batista ceded control of two of six EBX units; MMX next
(Adds details of companies EBX divested, those likely to be
sold, updates prices)
By Jeb Blount and Guillermo Parra-Bernal
RIO DE JANEIRO/SAO PAULO, Aug 15 Debt-ridden
Brazilian tycoon Eike Batista is accelerating the breakup of his
tottering energy, port and mining empire, ceding control to new
investors as some of the companies he founded scramble for fresh
With cash holdings plunging and Batista's own fortune
largely earmarked to guarantee Grupo EBX's estimated $11 billion
in debt, the companies in his group face the choice of trimming
capital spending or reducing their size to stay afloat.
On Thursday, the day after Batista agreed to cede control of
port operator LLX Logística SA to Washington-based EIG Global
Energy Partners, officials at MMX Mineração e Metálicos SA
, the backbone of the EBX conglomerate, said the iron
ore producer will soon have a new controlling shareholder.
With the previous sale of controlling stakes in power
producer MPX Energia SA to German utility E.ON SE and
LLX's sale to EIG Global Energy Partners, two of six traded
companies in the EBX group are no longer under Batista's
MMX, the third, is likely to be next and he is expected to
have little more than minority stakes in the pieces of his
former empire when restructuring is complete.
"We are reviewing all our options and focusing on the port
operations so that the new shareholder can make the decisions
necessary to ensure the company's growth and expansion," Chief
Executive Officer Carlos Gonzalez told investors on a conference
In the last quarter, MMX, LLX and oil producer
OGX Petróleo e Gas Participações SA reported
worse-than-expected losses as they spent capital faster than
their nascent operations could generate revenue. As capital
spending grew debt rose.
In the case of MMX, cash holdings of about 450 million reais
($192 million) may not be enough to cover both 1.2 billion reais
of maturing obligations over the next 12 months and planned
investments of some 700 million reais.
Estimated investments at the LLX Minas-Rio iron ore terminal
that LLX is building with Anglo American Plc inside
LLX's Port of Açu jumped to 1.7 billion reais from 974 million
reais, the company said.
MMX fell 6.7 percent to 1.98 reais on Thursday in Sao Paulo
after Wednesday's announcement of a 441.5 million real
second-quarter loss. It was the stock's first drop in six
OGX tumbled 7.4 percent to 0.63 real after the company's net
loss rose 12-fold, cash holdings dropped and debt soared. LLX
stock was up 11 percent to 1.67 reais, its highest close in
"While the operational results are unlikely to catch
investors' attention, we believe that the low cash position, in
face of OGX's liabilities and capex requirements, will weigh on
the stock's performance," Paula Kovarsky, a senior analyst with
Itau BBA in Sao Paulo, said in a client note.
OUT OF THE PUBLIC EYE
A former billionaire whose conglomerate of mining, energy
and logistics companies once symbolized Brazil's rise to global
prominence, Batista is now a reflection of the nation's recent
He had long courted publicity, but has stayed out of the
public eye amid a drop of more than $25 billion in his fortune
that knocked him from the top of Brazil's wealth list this year.
The moves at LLX and MMX are the latest steps in Batista's
efforts to shore up EBX, which was once valued at $60 billion
but suffered from a series of project delays and dwindling
confidence that its largely startup companies could deliver
revenue and profit before being overwhelmed by debt.
The value of EBX assets, which had soared on hopes that
Brazil's China-driven commodities boom would continue, is now
less than $5 billion, according to Thomson Reuters estimates.
When EBX restructuring ends, Batista will be left with
between $1 billion and $2 billion in assets and $1.7 billion of
long-term debt, sources with direct knowledge of the situation
told Reuters. That is a sliver of his former fortune, which last
year reached about $35 billion, according to Forbes magazine.
About the only asset that is not on the block is his
shipbuilder and ship-leaser OSX Brasil SA. A sale of
OSX is not being considered at this time because it could
trigger clauses in bond contracts that would force the company
to buy back its debt if Batista and his family's holding company
are replaced as controlling shareholder, OSX said.
Batista is already looking for buyers for Colombian coal
mining rights owned by his coal mining company CCX Carvão da
Colombia SA. OGX, after declaring several oil field prospects
non-commercial is looking for partners to pick up some of the
large costs of ramping up output at several offshore fields.
OGX sold a 40 percent stake in two of its most promising
blocks to Malaysian state oil company Petroliam Nasional, or
Petronas for $850 million in May.
MMX ON THE BLOCK
Talks with potential bidders for MMX, which owns several
iron ore projects in Latin America, including the giant Serra
Azul project in Brazil's southeastern highland state of Minas
Gerais and a nearly complete iron ore port near Rio de Janeiro,
are advanced and MMX has put nearly all activity outside of port
construction on hold in deference to potential buyers.
The MMX port, west of Rio, is not related to LLX's Port of
Açu, north of Rio.
Batista will leave the board of LLX, but retain a "relevant"
stake and the right to choose a representative on the board. He
may also keep a stake in MMX, which already has investment from
South Korea's SK Holdings Co and China's Wuhan Iron
and Steel Co.
MMX's Gonzalez also said the company has put its Corumbá
mine up for sale along with other assets in hopes of finding
investors that will shore up its dwindling cash position.
He also said it is unlikely that MMX will sell its port
separately as the buyer risks not having enough iron ore to move
through the terminal without ore from MMX's Serra Azul project,
which is linked to the port by rail.
As part of the sale to a new controlling shareholder, MMX is
likely to offer more stock to the general public and existing
shareholders to raise additional capital, Gonzalez said.
($1 = 2.34 Brazilian reais)
(Editing by Kieran Murray, Leslie Gevirtz and Matthew Lewis)