Brazil's Eike Batista, facing tumbling confidence among investors in the value of his energy and mining conglomerate, said on Monday he plans to delist his logistics company LLX, whose shares have lost 80 percent of their value since 2010.
The Brazilian billionaire, who lost almost 5 billion reais ($2.46 billion) worth of market value in one day in late June as investors dumped his companies' shares, said he plans to repurchase up to 100 percent of outstanding stock in LLX Logistica SA, according to a regulatory filing on Monday.
Once the symbol of Brazil's high-flying stock market before the country's recent economic boom stalled last year, Batista's companies have lost their glow in recent months as investors doubt his ability to deliver the blockbuster growth he promised across an empire that includes oil exploration, coal mining and shipbuilding.
After his oil producer OGX slashed production estimates in June, investors dumped that company's stock and other Batista-related shares, questioning whether the group's inter-related business model would ever pay off. Part of Batista's early promise was built on the idea that each of his empire's companies, poised to flourish amid the recent commodities boom, would help fuel business among the others.
In early interpretations of the buy-back plan for LLX, created to run the ports that will convey the commodities produced by Batista's other companies, analysts say the tycoon is acting on his belief that LLX is undervalued.
"It shows that he has confidence on the value of the company's shares," said a local equities analyst at a large multinational bank.
Batista plans to delist the company from Brazil's BM&FBovespa stock exchange with the buyback, set at a maximum price of 3.13 reais per share. That represents a 25 percent premium over the average price of 2.50 reais over the previous 20 sessions, according to the filing.
LLX shares are down 15.4 percent this year, while the local exchange's blue-chip Bovespa stock index is flat. LLX shares fell 28.8 percent in 2011 and over 53 percent in 2010.
In addition to LLX and OGX, Batista's EBX holding company controls mining firm MMX, shipbuilder OSX, energy generator MPX Energia and coal miner CCX .
EBX press representatives confirmed the plans, but declined to provide further details.
LLX shares traded up early on Monday 6.7 percent at 3.04 reais.
LLX and coal company CCX both issued statements on July 24 with the local market regulator CVM in response to market talk that the two companies were considering closing their capital.
In identical statements, the two companies said they were "always looking for ways to maximize shareholder value and always studying new business and partner arrangements," but no new material decisions had been taken at the time.
Representatives from CCX were not available for comment early on Monday.
This article is copyrighted by Reuters
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