Batista’s LLX Slumps on Subsea 7 Contract Termination: Rio Mover
LLX Logistica SA, the port developer backed by billionaire Eike Batista, lost the most on the Bovespa index today after the cancellation of a contract to rent space at its Acu complex to pipeline builder Subsea 7 SA.
LLX dropped 5.5 percent to 1.91 reais in Sao Paulo today, the lowest close since Nov. 28. The stock, which has declined 48 percent in the past 12 months, was the worst performer on Brazil’s benchmark Bovespa index, which fell 0.2 percent.
The contract for London-based Subsea 7 to rent space at Acu for making oil and natural gas pipelines was terminated with no prospects of renewal in the “immediate future,” Rio de Janeiro-based LLX said Feb. 8 after the market closed for Brazil’s Carnival break. The cancellation is due to “external factors” mainly related to changes in the oil and gas industry, the company said in an e-mailed reply to questions today.
Investors become suspicious about the expansion of startups like LLX when projects aren’t delivered, according to Pedro Galdi, the chief strategist at Sao Paulo-based brokerage SLW Corretora.
“The exit of a project like this certainly impacts the company’s shares,” he said in a telephone interview. “It was a big client that wanted to establish itself at Acu.”
Subsea 7’s communications office in London didn’t reply to an e-mail by Bloomberg News today seeking comments on the contract cancellation.
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