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Breakingviews: Sifting Eike's ashes

Wednesday, January 08, 2014 - 03:41

Jan 8 - Christopher Swann and Reynolds Holding discuss whether investment opportunities exist in the remains of Brazilian tycoon Eike Batista’s conglomerate.

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Today we're dealing with a bit of a math problem haven't -- Brazilian business empire worth some sixty billion dollars only four years ago. Drop in valley to some 2.5 billion dollars today. We're talking of course about I keep the peace -- conglomeration of business companies in Chris Juan. What happened and is there anything to look forward to these businesses. Well that the companies -- -- to crumble. A few years particularly last. When they think he didn't find any element is very very elaborate company we're not talking about six public companies. Think the public constantly got the oil -- that it wanted to we've got he got oily oil or -- energy act right now that would meant to be that lynch union at a point explorer. That has been going -- at least ships from ship failed. You know that was guarantee you have been nice from -- COLT that was going to export I know right that's not a connect a lot of connect. Depending on and on the problem up until premised on the final but didn't find it. Yeah I think the question is like is that now any value in any of these companies my contention sadly meeting today and then now worth about 2.5 billion. It is nothing obviously that it can appealed for investors Watson -- Kevin and have reserves they have new field that's that's the problem I don't have a lot of means that that nice that had been that they have -- fields. That that have probably left more than the net asset value at the indictment that started in the market capitalism appointment. Probably about half. If once they come out of bankruptcy 90% of the stock is going to be and by credit matter who's gonna want to get out when I'm in no medal and the momentum. President Clinton and wanted to anything it centrists and when. But we've had a problem with the ship so that if the ship building in exchange for debt was given stock in the explore right and an. And about for them to be fully repaid the explorer it would need to be left 21 billion dollars. Right at the moment it's -- 500 million Amex at that some stable companies in this they're also conglomerate what's -- the deal without an ignorant doing well both are doing fine they're the best of the company said the poll to. Brazil really needs extra pools. The trouble is that the -- is trading on really quite an ambitious smoltz but it's about. Fifteen times 2016 estimated edict on him growing fast. But that's about twice. The valuation of its nearest -- which isn't profitable and stable. Brazil is up pretty what I don't know I protect -- trendy company a lot of people have big hopes for. How much of its economy and it's it's prospects play into that yet I think quite well because the two companies and they staple and promising for the whole company right. At least now prove that -- majestic cat. And -- -- which is the electric utility now these are very leveraged to economic growth and part of the problem of course is that Brazil has not had been disappointing nice high expectation to have have been trying to take and how often. And we would expect about 2% next year which is it. And media cut rates even for rich country enough precedent -- shot developing economy that's pretty leg of the case let's talk about the management just to live very briefly Batiste is he still would fall to well he's involved in that some of the companies -- asked. Pretty much -- -- -- missing -- shackled it in an old but he understood the lines and ethics aren't as what throw. I've -- part of the deal. In the bankruptcy was just to get back get this guy count that you know -- of sorts -- it okay. Well that's amazing stuff will be watching that story as well as other so please stay tuned for more breaking news tomorrow.

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Breakingviews: Sifting Eike's ashes

Wednesday, January 08, 2014 - 03:41

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