Abu Dhabi’s Mubadala salvages part of deal with Eike Batista empire

Trucks transport material at the Serra Azul iron ore mine in Minas Gerais, Brazil. The Serra Azul mine is operated by MMX Mineracao & Metalicos SA, the iron-ore producer controlled by Brazilian billioShow more

Mubadala Development, the Abu Dhabi Government strategic investment fund, has clawed back a “substantial” part of a US$2 billion soured investment in the company of the former Brazilian billionaire Eike Batista, it said yesterday.

The statement comes after news that Mubadala will get a 10.5 per cent stake worth 24.4 million reais (Dh39.6m) in Mr Batista’s mining company MMX as part of the restructuring of the original deal.

“With the impending closing of the transfer of MMX Mineracao & Metalicos shares, the completion of the Porto Sudeste transaction, and the other interests we received from the earlier restructuring, we have redeemed a substantial part of our original investment,” Mubadala said yesterday. “We also believe that a number of EBX assets continue to have significant potential value for Mubadala and other investors.”

Mr Batista will transfer 17.1 million shares of MMX Mineracao & Metalicos to Mubadala in the third quarter, the Rio de Janeiro-based company said late onMonday. The deal is subject to undisclosed conditions, MMX said without elaborating.

The stake will make Mubadala the third-largest shareholder in the iron ore company, based on holdings data compiled by Bloomberg.

Mubadala invested $2bn with Mr Batista’s EBX Group in 2012, when it valued the former boat-racing champion’s empire of logistics and commodities companies at more than $35bn.

The deal soured later that year when missed targets, mounting debt and accumulating losses forced the former billionaire to cancel projects and sell assets amid a share price slump. In February, the Mubadala and commodities trader Trafigura Beheer completed the purchase of a controlling stake in Mr Batista’s Sudeste port in Rio state for $400m, gaining a foothold to export iron ore.

On its website Mubadala says its “has a strategic partnership agreement with” EBX that “represents an investment in one of South America’s most important markets”.

“EBX is composed of six publicly traded companies listed on the BM&F BOVESPA Novo Mercado, the segment with the highest levels of corporate governance – OGX (oil & gas), MPX (energy), LLX (logistics), MMX (iron-ore mining), OSX (offshore naval industry) and CCX (coal mining),” according to the website.

Yesterday’s deal will cut Mr Batista’s stake in MMX to 46 per cent, ending his full control of the company but leaving him as the largest shareholder.

MMX gained 1.4 per cent to 1.43 reais in Sao Paulo on Monday, giving it a market value of 232m reais. The stock, which at its 2008 peak had a 18.3bn reais market capitalisation, has slumped 84 per cent in the past 12 months.

* with Bloomberg News

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