Eneva SA (ENEV3), the Brazilian utility controlled by Germany’s EON SE and Eike Batista, is in talks with banks and partners to avoid redemption of $300 million of debt owed by a natural gas company it owns with the former billionaire, said three people with knowledge of the talks.
Eneva is seeking accords with creditors of OGX Maranhao Petroleo & Gas SA, in which Eneva has a 33 percent stake, to forego early payment rights that may be triggered if Batista’s OGX Petroleo (OGXP3) & Gas Participacoes SA enters into default, the people said, asking not to be named because discussions are private. The company formerly known as MPX Energia is also in talks with prospective buyers of OGX’s stake in the venture and may acquire the remaining shares itself, they said.
Eneva is attempting to disentangle itself from OGX’s collapse after Dusseldorf-based EON starting buying shares from Batista in January 2012 to gain a foothold in Brazil as profits at home declined. At the time, Chief Executive Officer Johannes Teyssen described German-speaking Batista as “one of the most successful businessmen in Brazil” and MPX as an ideal partner.
EON became Eneva’s largest holder on May 29 and increased its stake in a private placement on July 4, three days after OGX said it would probably have to shut its only producing oil field, and Batista was replaced as Eneva chairman.
Eneva declined to comment on its plans for Maranhao in an e-mailed response to questions. EON is monitoring all relevant developments at Eneva, spokesman Guido Knott said by e-mail, declining to comment on the venture’s businesses with OGX. EON and Batista continue to jointly control Eneva through a shareholder agreement, he said.
Eneva shares slumped 8.1 percent, the most in almost four months, to 4.32 reais at 1:54 p.m. in Sao Paulo, extending a year-to-date decline to 60 percent. Brazil’s benchmark equity index is down 11 percent this year.
OGX, the centerpiece of Batista’s commodities empire, missed an Oct. 1 interest payment on $1.1 billion of bonds, triggering a 30-day grace period. The Rio de Janeiro-based company is also considering filing for bankruptcy protection later this month or early next, two people briefed on the plans said. Either of those events could trigger cross-default clauses in the debt of affiliated companies such as the gas venture with Eneva, the people said.
Maranhao, in which OGX holds a 66 percent stake, has at least 600 million reais ($300 million) of outstanding debt. The company has a 70 percent stake in seven gas blocks at Brazil’s Parnaiba basin in partnership with Petra Energia SA.
Units of Banco Itau BBA and Banco Santander SA each lent 200 million reais to Maranhao, while Morgan Stanley issued a 200 million-real loan, according to the company filings.
Eneva is negotiating with banks to try to avert debt redemption and with Petra and other partners to seek a buyer for OGX’s stake in Maranhao, the people said. EON and Eneva could also buy OGX’s stake, thereby nullifying the cross-default clauses, two people said. Petra is another prospective buyer, one person said.
Grupo BTG Pactual, the investment bank controlled by billionaire Andre Esteves, acquired 28.2 million Eneva shares for $78.7 million, Eneva said Sept. 6. Batista still holds a 24 percent stake.
Eneva said on Sep. 24 that as a minority holder in Maranhao, it would be “natural” for the company to be interested in the remaining shares. The utility has first option to buy shares in the venture, according to a regulatory filing. The company had nothing to announce, it said in response to a regulatory query after O Globo newspaper reported Aug. 21 that OGX may sell its stake in the Parnaiba gas blocks.
Itau, Santander and Morgan Stanley declined to comment.
Batista is seeking 1.2 billion reais for his remaining 24 percent stake in Eneva, according to two people with direct knowledge of the talks. Potential buyers have balked at the asking price because of concern over cross-default risk at Maranhao, said one person familiar with the talks.
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