MMX Mineracao & Metalicos SA, the miner controlled by billionaire Eike Batista, expects to sell as much as $2.2 billion of new shares to existing shareholders by year’s end, the company’s chief executive officer said.
“I would say, with confidence, that all will be executed by the end of the year,” MMX CEO Roger Downey said today in an interview in Rio de Janeiro.
The share sale is part of an agreement in which SK Networks Co., a Seoul-based trader, will take a $700 million stake in the iron-ore mining company. Rio de Janeiro-based MMX will use the proceeds to buy the Sudeste port project in southeastern Brazil from LLX Logistica SA, a logistics company also controlled by Batista, and to acquire reserves in Brazil, MMX said Aug. 13.
MMX joins Petroleo Brasileiro SA and Repsol YPF SA in planning to issue new shares this year. Petrobras, as Brazil’s state-controlled oil producer is known, plans to offer $75 billion of stock later this month, while Repsol aims to sell about 40 percent of its Brazilian business through an initial public offering. The Madrid-based company is seeking to raise about $4 billion from the stock sale, two people familiar with the plan said in July.
The supply of new shares in the Brazilian market in coming months is not a concern, Downey said.
“There are no worries about that,” Downey said. “This is a good moment, in which the confidence in our industry remains very strong.”
Batista, who bought his first gold mine at age 24, more than tripled his wealth in the past year to $27 billion to be listed by Forbes as the eighth richest man. His EBX Group Ltd. holding company aims to tap oil, iron ore and coal deposits in South America, generate electricity and create a port complex to facilitate exports to Asian markets.
EBX will own 35 percent of MMX after the deal, and SK will own 11 percent, Roger Downey said on a Sept. 13 conference call.
LLX shareholders will be paid partly with bonds that will entitle holders to payments of $5 per metric ton of iron-ore shipped from the Sudeste port, said Paulo Gouvea, head of corporate finance at EBX. Shareholders will be able to choose whether to receive the other part in stocks or cash, he said on the conference call.
MMX fell 8 centavos, or 0.6 percent, to 13.27 reais as of 5:08 p.m. in Sao Paulo trading. The stock has surged 68 percent in the past year, more than the 12 percent gain for Brazil’s benchmark Bovespa index.