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Brazil' s Batista may focus on MPX, MMX to restructure EBX group

BY LUCIANA MAGALHAES AND MATTHEW COWLEY

SAO PAULO -- Eike Batista is likely to focus on two of the companies in his stricken industrial group to generate enough cash to help reorganize the firms that are in financial dire straits, according to a person familiar with the group.

MPX is emerging as one of the main firms on which creditors are betting their hopes, as it is one of the few in the EBX Group that is operating and generating cash. Germany' s EON owns a 36.2% stake in the firm.

MMX is also seen as a strategic asset, largely for the port under construction in the south of Rio de Janeiro state, said the person.

Mr. Batista declined a request for an interview.

Both MPX and MMX are in a position to attract new investors, the person said, although this is a difficult moment as the EBX Group is caught up in a whirlwind of bad news.

Meanwhile, shares and bonds in OGX are trading at levels considered to be distressed. The person said that OGX will essentially have to be reinvented, perhaps starting again with new blocks that it recently acquired at an auction, and that is reflected in the rock bottom prices for its shares and bonds.

Because the bonds aren' t due for several years, OGX isn' t in a hurry to restructure, unless it wants to raise fresh capital to be able to develop new fields, the person said. For that to happen, the existing debts will have to be renegotiated, the person said.

Closely linked to OGX is the group' s shipyard and oil platform leasing firm, OSX. OGX recently canceled orders for five oil platforms with OSX. The person said that OSX will now likely shut down the shipyard and focus on the leasing business; the debts it has are mostly related to platforms under construction, and so won' t have to be renegotiated.

LLX Logistica, which is building a huge port in the north of Rio de Janeiro state, is in a "more complicated" position, as it still requires fresh capital expenditures to continue with construction, but EBX is no longer in a position to provide finance, the person said.

There are global infrastructure funds that might be interested in investing, but the timing makes it difficult to strike a deal, he said.

Dow Jones Newswires

07/04/2013

 

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