* Eike Batista is rapidly downsizing empire amid rout
* Germany's E.ON seen as potential buyer of MPX stake
By Guillermo Parra-Bernal and Sabrina Lorenzi
SAO PAULO/RIO DE JANEIRO, March 19 Billionaire
Eike Batista, Brazil's richest man just a few months ago, is in
talks to sell a stake in power company MPX Energia SA
as crumbling confidence and project delays have cut the value of
his fortune almost $20 billion in the past year.
Batista, who has a 53.9 percent stake in the Rio de
Janeiro-based company, "is mulling the divestiture of a certain
number of shares of MPX that he owns," according to a securities
filing on Tuesday. The filing, which named no potential
investors in MPX, said there is no binding agreement on the sale
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.
"We think that MPX gains by distancing itself from EBX,"
JPMorgan Securities analysts led by Gabriel Salas said in a
client note on Tuesday. "Although the market may be initially
disappointed for the absence of a tag-along offer to minority
shareholders, in the longer run the company would gain by having
a more financially stable controlling shareholder."
Recent media reports have suggested Germany's E.ON SE
as the main candidate to purchase half of Batista's
stake in MPX Energia. E.ON, which currently owns 11.7 percent of
MPX, could with the deal increase its total ownership of MPX to
38.65 percent, Valor Econômico newspaper reported last week,
without citing sources.
Shares of MPX tumbled 4 percent on Tuesday to 10.32 reais.
The stock has shed 7.4 percent of its value this year, on top of
last year's 13 percent drop.
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, JPMorgan's Salas noted, adding that such fact
will make the company's portfolio much more attractive than
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 sees Batista as a partner in Brazil, Chief Financial
Officer Marcus Schenck said last week, adding that the company's
strategy is not to buy majority stakes. E.ON, which owns about
50 percent of MPX's future production pipeline, declined to
comment on a potential bid for the MPX stake.