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Eike Batista, the Brazilian billionaire, plans to delist the logistics arm of his energy and mining empire, taking advantage of a sharp fall in the share prices of the group.
The move by Mr Batista to buy back LLX Lógistica, which is building a giant port to serve the country’s burgeoning oil industry, raises questions over his plans for the rest of the group.
“I have informed the board of LLX Lógistica of my intention, directly or through affiliates, to buy 100 per cent of the shares of LLX in circulation,” Mr Batista said in a statement to the stock exchange on Monday.
Until recently Brazil’s richest businessman, Mr Batista’s paper wealth plummeted last month when his start-up oil company OGX, the intended cash cow of the group, was forced to drastically downgrade its production estimates.
The stock fell 41 per cent in one week, dragging down the rest of his empire with it and calling into question the future of one of Brazil’s most ambitious entrepreneurs.
LLX was among the worst hit in the group then. Shares of the logistics company have lost about 48 per cent of their value over the past 12 months and 80 per cent since 2010, according to Bloomberg calculations.
Mr Batista said Monday he would buy back LLX shares at R$3.13, representing what he said was a 25 per cent premium over an average price of R$2.50 during the previous 20 sessions.
In a potential vote of confidence, the Ontario Teachers’ Pension Plan, the biggest minority investor in LLX, pledged to remain invested in the company and to participate alongside Mr Batista in the buy back.
Ontario Teachers “confirmed its promise to increase its minority stake in LLX through the delisting”, LLX said.
Aside from LLX and OGX, Mr Batista’s empire includes holding company EBX, mining group MMX, power company MPX and oil services group OSX. The “X” in group company names signifies his promise of delivering multiple returns.
Co-investors in Mr Batista’s group include General Electric and Mubadala Investment Company, owned by the Abu Dhabi government.
LLX’s principle asset is the Açu Superport under construction in Rio de Janeiro state, a giant complex for the production and export of oil, minerals and commodities, dubbed as Mr Batista’s “road to China”.
Among the facilities planned for Açu are a shipyard and a steel plant to be operated by China’s Wuhan Iron & Steel.
However, there have been recent reports in the Chinese media that Wuhan is reconsidering its investment.