Brazilian billionaire begins major reorganisation

Eike Batista Batista branded all of his companies with an "X" to signify the multiplication of wealth

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Brazilian billionaire Eike Batista has begun a major reorganisation of his business empire.

The company is heavily in debt and the money raised will be used to pay off creditors, including Brazilian banks Itau and Bradesco.

Once complete, Mr Batista will be left with $1.7bn (£1.1bn) of debt. His empire was once valued at $60bn.

Most shares in Batista's EBX Group, comprising of oil, mining and energy companies, are now almost worthless.

Brazil's economy is struggling as its currency weakens and the driving force behind its growth in the last decade - demand from China - is slowing down.

Start Quote

Batista got investors excited about Brazil's potential, which was real, but like Brazil, Batista failed to deliver”

End Quote Alexandre Barros Founder, Early Warning

Mr Batista has stepped down as chairman of electricity generation MPX Energia SA, which is EBX Group's most promising business. That firm will rebrand by October to position itself outside the EBX Group.

German utility company E.On SE has agreed to buy up to 367m reais ($163m; £108m) worth of stock in MPX. It currently owns 36% of the company, and it could see its share increase to 38%.

"MPX is the best company in the group, and they are working quickly to insulate the company and separate it from the risk associated with Batista's EBX Group," said Ricardo Correa, analyst at energy company Ativa Corretora.

Reports say that to avoid bankruptcy, Batista will have to sell most of his remaining stakes in EBX companies, with the Port of Acu, north of Rio de Janeiro, the only major asset likely to remain.

"Batista's plight is like Brazil's, a sign we can no longer ignore the country's plight," said Alexandre Barros from political risk consultancy Early Warning.

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