MMX Falls After Chief Executive Officer Roger Downey Resigns
MMX Mineracao & Metalicos SA, the iron-ore producer controlled by Brazilian billionaire Eike Batista, fell to its lowest in almost two weeks after the resignation of Chief Executive Officer Roger Downey.
MMX slid 3.5 percent to 6.85 reais in Sao Paulo today, its lowest level since Oct. 7. The stock has dropped 39 percent this year, more than the 21 percent decline at Brazil’s benchmark Bovespa Index.
Chief Financial Officer Guilherme Escalhao was named as the new CEO effective immediately, Rio de Janeiro-based MMX said yesterday, adding that Downey’s resignation was for “personal reasons.”
Downey departs as the company is in the midst of negotiations to finance its key iron-ore project, Banco BTG Pactual SA analysts led by Edmo Chagas in Rio de Janeiro said in a note to clients today.
“Although we are confident in MMX’s financial ability to deliver its expansion plans, we remain concerned about delays, cost overruns and balance sheet risks,” they said.
MMX said its financing plans will remain in place after the management change. The company is working to get funding for its 4 billion-real ($2.25 billion) Serra Azul project and expects to use credit lines from Brazil’s BNDES and other development banks to help finance the deposit, Escalhao said late yesterday on a conference call with analysts.
“We have a good chance of passing through this process without dramatic changes,” Escalhao said of the financing process. He plans to hold talks with banks in South Korea.
MMX will have $1.8 billion in loans for its Serra Azul project completed before year-end, Downey said in an interview Aug. 11. Downey, 44, a former mining equity analyst at Credit Suisse Group AG, had been MMX’s CEO since August 2009. Guido Germani was named to replace Escalhao as chief financial officer, MMX said yesterday.
The reason for his resignation is “exclusively personal,” Downey said during the same conference call. He said he wants to “live life a little bit slower, closer to my family.” He plans to remain a shareholder in the company.
A former executive of Vale SA (VALE3), Escalhao has been MMX’s CFO since January. He trained in business administration at the Rio de Janeiro-based Getulio Vargas Foundation and has more than 25 years of experience in the mining industry, MMX said yesterday.
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