Mubadala Investment Cut After Batista’s $10 Billion Rout

Eike Batista’s EBX Group Co. restructured a $2 billion investment by Mubadala Development Co. after a stock-market selloff pushed down the value of the Brazilian billionaire’s companies to half their combined debt.

EBX, based in Rio de Janeiro, and Abu Dhabi’s Mubadala also reached agreements to protect the wealth fund’s remaining investments in Batista’s group of interlinked energy, commodities and logistics startups, EBX said in an e-mailed statement. The partners will continue discussions on developing EBX’s companies, EBX said.

“Under the new agreement, EBX has redeemed a significant portion of Mubadala’s initial investment,” the Brazilian holding company said. “EBX and Mubadala have also entered into new agreements ensuring enhanced protection vis-a-vis the remaining portion of the investment from Mubadala.”

Batista’s six publicly traded companies have lost almost $10 billion in combined market value this year. OGX Petroleo (OGXP3) & Gas Participacoes SA, Batista’s oil explorer that is a client for his shipbuilding and port companies, has plummeted 88 percent after missing production targets and abandoning oil fields it had previously declared commercial.

The six companies’ market capitalization is 9.4 billion reais compared with total debt at the end of the first quarter of 24.5 billion reais, according to data compiled by Bloomberg.

‘Long’ Process

Government-owned Mubadala agreed to take a 5.63 percent stake in EBX at the peak of the Brazilian group’s market value in March last year. EBX declined to comment today on the value of Mubadala’s investment and how much of a stake it owns following the restructuring.

“This is the beginning of a long restructuring process,” Luana Helsinger, an analyst at brokerage GBM Grupo Bursatil Mexicano, said by phone from Rio. “It’s necessary given that the companies in the pipeline didn’t manage to become operational with cash flow in the expected time frame.”

Mubadala said in a July 4 response to questions that it is “monitoring” the situation with EBX and is in frequent discussions with the company.

To contact the reporter on this story: Peter Millard in Rio de Janeiro at pmillard1@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

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