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Eike’s Debentures In Dispute Grant Right To Royalties Of Over R$ 10 Billion Starting In 2025, For 30 Years – A Value That May Fluctuate, As They Depend On MMX’s Revenues
Eike Batista Resurfaces In U.S. Funds! After failing in three auctions regarding the sale of debentures issued by Anglo American, which are part of the bankruptcy process of MMX, the former billionaire’s old mining company, the assets that started to go through a process of direct proposals and were put up for auction this September attracted the attention of heavyweights from the investment world such as BTG Pactual, Citi, XP, and Modal.
But not everything is smooth sailing. According to Valor, the Judiciary of Minas Gerais has again suspended the sales process of Eike Batista’s debentures. The request was made by Argenta, a brokerage based in the British Virgin Islands, which attempted to buy the assets at auction at the end of 2021. The debentures in question were issued by Anglo American in 2008, amid the transfer of control of MMX Minas Rio to the British giant.
It was informed to the Judiciary by the judicial administrator that, besides Argenta, BTG (which would be the “stalking horse” with preference in the purchase, offering a proposal of R$ 360 million), XP and Banco Modal, which offered R$ 380 million, and the American funds Arena Investors and Carval, which offered R$ 612 million, are also vying for the purchase. Citi is also reportedly on the list of interested parties, according to sources from Valor.
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In The Last Auction, The Former Billionaire’s Assets Had A Minimum Sale Price Of R$ 1.25 Billion
The sale of the debentures – which are considered one of the most valuable assets in MMX’s bankrupt estate and whose resources will be allocated to paying creditors and the cooperation agreement made by Eike with the Judiciary as part of the Lava Jato investigation – has become a battleground. These papers grant rights to royalties of US$ 2.1 billion starting in 2025, for 30 years – a value that may fluctuate, as they depend on MMX’s revenues.
It is worth noting that this saga has been unfolding since December: there have been three attempts to auction Eike’s debentures, all unsuccessful. The value set by the Judiciary is considerably lower than the amounts established in the previous auctions. In the most recent attempt, the minimum price was R$ 1.25 billion. In the first attempt, it was R$ 1.8 billion.
Understand The Case
According to Estadão Conteúdo, on July 18, the Minas Gerais Judiciary decided that the sale of the papers would take place in a private process, after the public auction in August was not successful. For this auction, the judge established R$ 1.25 billion as the minimum price for the papers.
The investment bank BR Partners has been appointed since the beginning of the sales process, at the end of last year, to find a buyer for Eike’s debentures. But the possibility of a private sale eliminated interest in this last auction, as offers could be made well below that value.
The sale through a private process was heavily contested by several interested parties in Eike’s debentures. The dispute heated up last week, with the judicial administrator’s decision to accept, on the last day 6, a proposal of R$ 360 million from BTG Pactual, following the guidelines of the notice from July 18.
Although the guidelines had been public since July, the judge made it clear in the records that the private sale was underway, when the judicial administrator also communicated the conditions for other interested parties to submit proposals by last Monday, the 12th.
XP and Banco Modal then submitted a proposal of R$ 390 million. In the direct sale, the judicial administrator also considered that it was no longer necessary for BR Partners to participate in the process.
Eike’s lawyers appealed the decisions of the judge and the judicial administrator, through motions for clarification, asking the judge for clarification on the timelines of the direct sale process and the minimum value established.
Later, they appealed to the second instance, with a writ of security, which was granted a favorable injunction by Judge Newton Teixeira Carvalho of the TJ-MG, on Saturday, suspending the direct sale process. This decision was reiterated yesterday by a second judge from the court.
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