Mubadala Said to Join Trafigura in Batista’s MMX Buyout RaceCristiane Lucchesi and Juan Pablo Spinetto
Mubadala Development Co. has joined Trafigura Beheer BV to bid for Eike Batista’s iron-ore unit, seeking to beat offers by Glencore Xstrata Plc and MRS Logistica SA, three people with direct knowledge of the matter said.
Mubadala and Amsterdam-based commodities trader Trafigura presented a joint offer for Batista’s stake in MMX Mineracao & Metalicos SA, the people said, asking not to be named as the talks are private. MMX, a part of Batista’s holding company EBX Group Co., is studying the bid together with offers from Glencore and Brazilian railway operator MRS, they said.
Batista, 56, is running against the clock to sell pieces of his commodities and logistics empire as the companies run out of cash amid ballooning debt. MMX, based in Rio de Janeiro, is in “advanced” negotiations to sell the company and has received interest from funds, miners and commodity traders, Chief Executive Officer Carlos Gonzalez said this month.
“Mubadala remains in close discussions with EBX and a number of interested parties as EBX continues to restructure its businesses,” Brian Lott, a Mubadala spokesman in Abu Dhabi, said in a statement. “Many EBX assets have significant potential value for Mubadala and other investors.”
MMX declined to comment in an e-mailed statement, as did MRS’s press office. Victoria Dix, a Trafigura spokeswoman, and a spokesman for Glencore also declined to comment.
The parties are still discussing a price for Batista’s stake and no decision on a deal has been taken, two of the people said. Notes linked to royalties of Sudeste, a port that MMX is developing in Rio’s Sepetiba bay, are taken into consideration for the valuation of the company, the people said.
Batista owns a stake valued at $694.9 million of those securities, known as MMXM11, according to the Bloomberg Billionaires index. Some of these notes have been given as collateral to creditors including Banco Bradesco SA and Itau Unibanco Holding SA, people with knowledge of the matter told Bloomberg News this month.
MMX, Brazil’s fourth-largest iron-ore producer, expects to start operations at Sudeste by year-end, allowing the unit to ship the steelmaking material to more profitable Asian markets.
The company had 3.02 billion reais ($1.28 billion) of total debt and 451.3 million reais of cash at the end of the second quarter, according to data compiled by Bloomberg.
MMX rose 5.5 percent to 2.10 reais at the close in Sao Paulo today, the best-performing stock in the benchmark Ibovespa index. The securities linked to Sudeste dropped 0.4 percent to 2.45 reais.
A rout on Batista’s oil producing unit OGX Petroleo & Gas Participacoes SA deepened today as the entrepreneur sold stock and a dispute with Petroliam Nasional fuels speculation the venture will run out of cash. OGX slumped 12 percent in Sao Paulo to close at 50 centavos, extending a three-day slide to 38 percent, the steepest since July 3, after the company said Batista sold a 1.54 percent stake. Shipbuilder sister unit OSX Brasil SA tumbled 18 percent to a record low 72 centavos.
Batista, who last month lost his billionaire status after Mubadala converted an investment in his EBX Group into debt, decided to cut his stake in MMX and a new controlling shareholder is expected in the short term, CEO Gonzalez told investors on a conference call Aug. 15.