EBX Tycoon Batista Misleads Investors, Fined $93,000

Eike Batista

By MarEx 2015-03-18 14:43:00

Brazil's securities regulator said on Wednesday that former billionaire Eike Batista failed to provide investors with timely information about a takeover and on the delisting of a company as his EBX energy, mining, port and shipbuilding empire collapsed starting in 2013.

The regulator fined Batista 300,000 reais (US$93,000) because responses to media reports about a takeover of MPX Energia SA by Germany's E.ON SE were not clear enough and 500,000 reais because he did not keep the market properly informed about the delisting of his port operation and real estate company LLX Logística SA. MPX's name was later changed to Eneva SA.

The regulator also said Jose Gustavo de Souza Costa, former CEO of CCX Carvão da Colombia SA, failed to properly inform the market of his departure from the company and fined him 200,000 reais. Other MPX and LLX officials were also judged to have failed to provide information in a timely and proper manner.

There are five cases on Wednesday's docket involving EBX companies and their executives at the Rio de Janeiro headquarters of the regulator, known by its Portuguese-language acronym CVM.

The CVM complaints stem from the 2013 collapse of Batista's EBX oil, energy, port, shipbuilding and mining group. Investors have said Batista sold stock in his companies without properly informing other investors of difficulties that cut the value of EBX companies traded on the Sao Paulo stock exchange to nearly zero from a peak of about $60 billion.

Some investors also complained about public statements and tweets by Batista that his flagship oil company OGX Petroleo e Gas Participações SA would deliver good returns even as it missed offshore production targets.

Only months later, OGX, now known as Oleo e Gas Participações SA, filed the biggest-ever bankruptcy protection filing in Latin American history. Shipbuilder OSX Brasil SA followed soon after.

Batista has also been on trial in criminal court in Rio de Janeiro for alleged insider trading. Those charges have been suspended after the judge in the case was found driving a luxury car seized in the case and after giving a seized piano to a neighbor.

Batista said he was forced to sell the shares as his companies' share values plunged to pay debts to banks and other investors.

Batista, once Brazil's richest man, saw his fortune of about $30 billion almost totally disappear.

Notification on unpaid debt

OSX Brasil SA said on Wednesday it had been notified by Nordic Trustee that its subsidiary OSX 3 had failed to pay a debt of $560.1 million on time.

Nordic Trustee works on behalf of OSX creditors to make sure corporate debts are honored. Creditors approved OSX's bankruptcy plan in December.

OSX-3 is a floating production, storage and offloading ship (FPSO) that Brazilian oil company Oleo e Gas uses to manage production at its Tubarão Martelo oil field northeast of Rio de Janeiro in the offshore Campos Basin.

Oleo e Gas depends on Tubarão Martelo to keep the company's plans for production alive after filing the biggest bankruptcy protection petition in Latin American history in October 2013. Its only other producing field, Tubarão Azul, has seen output fall to about 2,800 barrels a day from more than 4,000.

But Oleo e Gas said on Monday it had suspended payments for OSX-3 for six months because it had failed to come to an agreement with OSX over future payments to use the vessel.

Copyright Reuters 2015.