Oct 18 - Eike Batista, once Brazil's richest man, has been forced to downsize his business empire and could be part of the biggest corporate bond default ever to hit Latin America. Conway G. Gittens reports.
PLEASE NOTE: THIS EDIT CONTAINS CONVERTED 4:3 MATERIAL Eike Batista's star is fading fast. In just one year he's gone from the richest man in Brazil and the seventh in the world to falling off the Billionaire's list and the leader of a crumbling empire. His conglomerate EBX, sinking under the weight of high debt, low cash, and rising investor dissatisfaction, is being broken up. It all started when an oil exploration unit overstated an energy find, explains Aurelio Valporto, a fed up shareholder in OGX, one of Batista's many three-lettered companies. SOUNDBITE: AURELIO VALPORTO, OGX SHAREHOLDER (PORTUGUESE WITH ENGLISH TRANSLATION) SAYING: "When the market realized that he (Batista) hadn't been telling the truth - a crisis of credibility spread. The companies couldn't manage to secure more financing for their preparations and operations. They couldn't secure more capital resources through shares or creditors. They were generating little cash and now the situation now, LLX has been sold, the controlling interest of MMX was sold. It's being dismembered. MPX was sold to E.ON of Germany. He is having to scrap his businesses for a lack of credibility provoked by him." And in another major blow - one of Batista's companies missed a $45 million bond interest payment, which could set the stage for the largest corporate bond default Latin America has ever seen. Brazilian economist Gilbert Braga worries this road is heading in one direction. SOUNDBITE: GILBERTO BRAGA, ECONOMIST (PORTUGUESE WITH ENGLISH TRANSLATION) SAYING: "If this recovery plan doesn't go right, the company will likely go into bankruptcy. There is, in a way, a very concrete possibility that the companies don't succeed in reorganizing, especially those that don't garner interest from strategic investors that have the resources and ability to rejuvenate these companies." Batista's companies all have X in their name because he says it represents the multiplication of wealth, but given what is happening X marks the spot where his wealth used to be.