Brazilian businessman Eike Batista ceded control of an iron ore port to Dutch energy firm Trafigura Beheer BV and an Abu Dhabi sovereign wealth fund in a $996-million (U.S.) deal that takes debt off his hands and secures new investment for the port.
The former billionaire’s latest effort to stave off the collapse of his once high-flying Grupo EBX conglomerate follows the sale of other key assets and comes amid talks with creditors of OGX Petróleo e Gas Participações SA. The oil producer missed a $44.5-million bond interest payment this month and, analysts say, risks going bankrupt within weeks.
Under the terms of the deal, Trafigura and investment fund Mubadala Development Co., Batista’s largest single creditor, will get a 65-per-cent stake in MMX Porto Sudeste Ltda, a port under construction that is slated to start operating by mid-2014.
Mubadala, which also owns a stake in EBX, and Trafigura had entered exclusive talks for the asset with Batista and the group’s mining unit MMX Mineração e Metálicos SA last month. MMX will keep the remaining 35-per-cent stake in Porto Sudeste.
Trafigura and Mubadala plan to pump $400-million into the company to finance the completion of the port and iron ore terminal and will assume 1.3 billion reais ($596-million) of debt taken on by MMX Sudeste Mineração SA, an MMX unit linked to the port project, a securities filing said.
Batista’s EBX group was worth as much as $60-billion at the start of last year but the value of its companies collapsed after missed production and profit targets, mounting debt and a weaker outlook for Brazil and other commodities producers.
In July, Batista ceded control of power company MPX Energia SA to German utility E.ON SE. MPX has since been renamed Eneva SA. In August, he agreed to sell LLX Logística SA to U.S.-based investment firm EIG Global Energy Partners LLC for $559-million.
The port, which is located in the southeastern state of Rio de Janeiro, will initially have the capacity to ship up to 50 million tonnes of iron ore annually.
The completion of the Porto Sudeste deal is subject to regulatory approval and the conclusion of a debt refinancing plan. The filing did not provide details on the scope of such a plan.
Trafigura and Mubadala will also pay holders of special MMX unit shares a royalty for iron ore shipped after the port makes a profit. The unit shares, which do not convey ownership in the company, were given to holders of Batista’s LLX when it sold the port project to MMX in 2010.
Both companies will also provide MMX Sudeste Mineração with $100-million in a trade finance facility. “The availability of financial resources, in line with this financing program, is a pre-condition to the approval of the transaction as a whole,” the filing added.
MMX said it will host a conference call with investors as soon as possible but declined to give an exact day for the event.