* 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 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
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
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
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