Eneva SA (ENEV3), the Brazilian utility founded by Eike Batista, is seeking to raise about 1.5 billion reais ($700 million) in a capital increase that will push up EON SE’s stake, three people with knowledge of the plan said.
Grupo BTG Pactual and Banco Itau BBA SA are advising on the private transaction, the people said, asking not to be identified because it hasn’t been made public.
The capital increase would dilute Batista’s 23.9 percent stake, they said. Even so, Dusseldorf-based EON’s shareholder agreement to control Eneva together with the former billionaire will be retained, one of the people said, adding that the transaction may be announced as early as this week.
Eneva is the worst-performing power producer stock among global peers since EON began building a 37.9 percent stake in April 2012. Management led by former Goldman Sachs Group Inc.’s co-head of Brazilian investment banking Fabio Bicudo is seeking to bolster finances amid project delays that have increased costs and forced the company to buy on the spot market at a time of record prices, deepening its losses.
Eneva fell 9.4 percent to 1.35 reais in Sao Paulo today, the most since Feb. 18, with 3.7 times the 3-month average volume. EON rose 2.1 percent to 13.45 euros in Frankfurt, the biggest gain since March 12.
EON spokeswoman Sabine Meixner, officials at BTG, Itau and Eneva and Batista’s press representatives in Rio declined to comment when contacted by Bloomberg.
EON Chief Executive Officer Johannes Teyssen said last week the company wasn’t seeking control of Eneva.
Eneva had total debt of 6.2 billion reais at the end of last year, of which 2.4 billion reais is maturing in the short term, according to data compiled by Bloomberg.
“In terms of financial issues, the management -- together with its stakeholders -- is actively working on a plan to reinforce its capital structure,” Eneva told Bloomberg News last month in an e-mailed response to questions. “The company is analyzing several alternatives and the plan will be announced in due time,” the company said at the time.
The capital boost being planned would be the second for Eneva in less than a year. EON sank 367 million reais into the company in July as part of an 800 million-real capital increase, following the purchase of a 24.5 percent stake from Batista for 1.4 billion reais earlier last year.
Once the world’s eighth-richest man, Batista has been selling assets or stakes in his energy, mining and transport ventures for the past year as missed targets and mounting debt forced him to cancel projects. He stepped down as chairman of Eneva July 3 and the company changed its name from MPX Energia in September as EON moved to restore credibility.
EON bought an initial 10 percent stake in 2012 for 850 million reais and laid out plans for a grand partnership with the Brazilian entrepreneur.
While Eneva has become the biggest private thermoelectric generator in the country, it posted a record loss of 942.5 million reais last year and its debt-to-market value ratio is the highest after state-owned Centrais Eletricas Brasileiras SA among 148 major utilities in the Americas tracked by Bloomberg. The venture will return to profitability next year, according to analyst estimates tracked by Bloomberg.
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