5 Min Read
* Buy-back follows waning appetite in billionaire's empire
* LLX shares rise 3.86 percent
* Batista betting that LLX is undervalued
RIO DE JANEIRO, July 30 (Reuters) - Brazilian billionaire Eike Batista, facing tumbling confidence among investors in his energy and mining conglomerate, said on Monday he will delist logistics company LLX Logistica SA.
After years of wooing investors with a string of blockbuster public offerings, Batista said in a securities filing that he would now move in the other direction - buying up to 100 percent of the outstanding stock of LLX, whose shares have lost 80 percent of their value since 2010.
The transaction could be valued at as much as 620 million reais ($340 million).
The decision marks an about-face for Batista, who spent much of the past six years tapping into investor appetites for Brazilian assets by selling the shares of companies in sectors ranging from oil, to shipbuilding, to coal mining.
It also unleashed a flurry of questions about the rest of Batista's empire, given the closely connected nature of his various ventures: Will he buy back any of the rest? Will investors further doubt the viability of other Batista units?
Except for the securities filing, Batista kept quiet on Monday. Spokespeople for EBX, his holding company, declined to comment.
Some investors speculated that Batista, in characteristic style, is merely taking advantage of the drop in the LLX share price to double down.
"It's lost a lot, so this could be a sharp bet on the future upside," said Bill Rudman, a portfolio manager at London-based Blackfriars Asset Management. "But it does look, in image at least, like something of a backward step."
Batista's success made him an icon of Brazil's high-flying stock market before the country's recent economic boom stalled last year. The former speedboat racer and gossip page fixture grew famous for his can-do smile and brash boasts that he would soon surpass Mexico's Carlos Slim as the world's wealthiest businessman.
After an early career as an Amazon gold trader, Batista built a succession of companies by first tapping well-heeled connections in his base of Rio de Janeiro and then the growing appetite by foreign investors for Brazilian commodities. Fond of the letter X, perceived by Batista to represent growth, he included the letter in each of his new ventures, promising the multiplication of riches.
Lately, though, his fortunes have diminished as investors began questioning his ability to deliver growth after a series of missed projections and a drop in global demand for commodities. The doubts cost Batista almost 5 billion reais ($2.46 billion) worth of market value in one day in late June after oil producer OGX slashed production estimates.
Since then, investors have continued to sell the shares of Batista companies, questioning whether the group's inter-related business model would ever pay off.
Part of Batista's early promise was built on the idea that each of his empire's companies, poised to flourish amid the recent commodities boom, would help fuel business among the others. LLX, for instance, was created to manage the ports through which the commodities produced by other Batista companies would be shipped.
In the securities filing, Batista said he would delist LLX from Brazil's BM&FBovespa stock exchange with the buyback, set at a maximum price of 3.13 reais per share. That represents a 25 percent premium over the average price of 2.50 reais over the previous 20 sessions, according to the filing.
Before Monday's announcement, LLX shares were down 15.4 percent this year, while the local exchange's blue-chip Bovespa stock index is flat. LLX shares fell 28.8 percent in 2011 and over 53 percent in 2010.
LLX shares traded as much as 6.7 percent higher early on Monday, before closing with a 3.86 percent rise for the day. Shares of other Batista companies varied slightly during the day, differing little from a benchmark Bovespa index that closed 1.22 percent higher.
The filing said the Ontario Teachers Pension Plan, the second biggest investor in LLX and a longstanding partner in Batista ventures, will also take part in the transaction. The fund, which declined to comment, will increase its share of the company, according to the filing.
In addition to LLX and OGX, Batista's EBX holding company controls mining company MMX, shipbuilder OSX , energy generator MPX Energia and coal miner CCX.
LLX and coal company CCX both issued statements with local market regulator CVM on July 24 in response to market talk the two companies were considering closing their capital.
In identical statements, the companies said they were "always looking for ways to maximize shareholder value and always studying new business and partner arrangements," but no new material decisions had been taken at the time.
Representatives from CCX were not available for comment on Monday.