Things are worse for Brazilian billionaire Eike Batista than they ever have been before, and he’s written an open letter in the journal, Valor International, to express his intense regret to the public.
Over the last year Batista’s gone from being the 7th richest man in the world, to hemorrhaging $2 million a day. His fortune comes from his holding company, EBX. Under its umbrella are 6 companies that all deal with Brazil’s natural resources and logistics. They’ve lost a combined $10 billion over the last year, says Bloomberg.
What he wants is to be country’s champion again, and to have investors believe in him. To regain their trust he wrote:
More than anyone, I wonder where I went wrong. What should I have done differently? A first question might be linked to the funding model I chose for the companies. Today, if I could go back in time, I would not have resorted to the stock market. I would have a structured private-equity firm that would allow me to create from scratch and develop over at least 10 years each company. And they would all remain private until I was sure that it was time to go public. In the projects that I conceived, time proved a vital stress factor for the reversal of expectations on companies bearing broadly satisfactory results and valuable assets.
He’s always said that his investments are patriotic — that’s he’s making his fortune on one hand and exporting the riches of Brazil on the other. In the most recent disaster for EBX, it’s oil and gas company, OGX is getting absolutely hammered. It’s stock is down 86%, and the company’s bonds maturing in 2018 have fallen as much as 20%.
Fields have gone untapped, Batista isn’t making production targets, and investors are suing Batista to stop him from selling OGX assets. The lawyer that filed the lawsuit against Batista, Jorge Lobo, is saying that bankruptcy is imminent for OGX at least. He’s restructured a risky $2 billion loan he took from Abu Dhabi’s sovereign wealth fund, the Mubadala Investment Corporation.
In his letter, Batista explains what went wrong with OGX:
What has happened since it became clear that OGX would not be able to deliver the results that once seemed possible to achieve? Have I suddenly become a reckless adventurer who marshals resources for his own benefit and does not care if I will deliver what I had advertised? Today it is hard to remember, but OGX was built by some of the crowned heads by decades of services to reputed companies. I did not invest in the oil industry without surrounding myself of those I and the market understood to be among the most skilled professionals one could find. When winning the fields it got, expectations around OGX were sky high.
I had offers to sell big stakes or even the control of OGX from a valuation of $30 billion. Two years ago, I put more than $1 billion out of my pocket in the company. I lost and have been losing billions of dollars with OGX. Does someone who wishes to mislead the other do so at a cost of billions of dollars? If I wanted, I could have performed a scheduled sale of $100 million every six months over 5 years. I would have pocketed $5 billion and still remain in control of OGX. But I did not. Who lost the most with the collapse in the value of OGX was one shareholder: Eike Batista. No one has lost as much as I did, and it is fitting that it be so.
The nastiest whispers about Batista are that he’s a swindler — the best Power Point Maker in the world, able to convince investors to give him money the same way a magician can pull a rabbit out of a hat.
To those criticisms, Batista asks that observers remember his record. He didn’t come out of nowhere.
I became an entrepreneur still in the early 1980s, when I ventured in gold mining in the Amazon. I learned a lot in border regions, environments hostile to productive activity, with enormous difficulties of all sorts to transport equipment, outbreaks of malaria that forced me to replace entire teams overnight, the challenge of extracting ore in places almost inaccessible and my own questioning about the possibilities of success in the face of adversities that appeared. I ended up becoming mine owner in several countries and decided to settle down in Brazil and ultimately get rid of the stakes I held in the mining business…
In recent months, my business obituary has occupied the pages of blogs, newspapers and magazines. I can only say that I find myself far from this retired Eike. I am 57 years old and have a lot of energy to roll up my sleeves and take new projects off the drawing board. I am a Brazilian entrepreneur, I believe in what I do, love my country. Every day, my head is buzzing with new ideas that spring from nothing and slowly take shape. I feed myself from this ability to dream and achieve. Undertaking is in my blood, in my DNA. It is my inexhaustible source of energy and life.
If that doesn’t take your team running full speed into the fourth quarter, I don’t know what does.
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