OREANDA-NEWS. MPX, the EBX Group energy arm, controlled by Eike Batista, and the global player E.ON SE, headquartered in Germany, announced an agreement to increase E.ON’s stake in MPX. As part of the deal, E.ON should reach a 36.1% stake at MPX, further contributing to accelerate the development of the company’s portfolio as well as to originate new growth opportunities in the Brazilian energy market. MPX currently has 1.082 MW in operation and will reach 2.838 MW until the end of 2013. Additionally, the company owns a 10.000-MW greenfield pipeline composed mainly by thermal power projects, which should play an increasingly important role in the Brazilian energy system in the coming years.

Initially, E.ON, which already has a 11.7% stake, will acquire additional 24.5% of MPX from EBX for a minimum price of BRL 10.00 per share plus up to a further BRL 1.00 per share depending upon the final settlement price of the planned capital increase and the share price performance of MPX in the six months following the closing of the transaction.

The second step is a public capital increase in MPX in the approximate amount of BRL 1.2 billion, in which E.ON has committed to invest BRL 0.4 billion at a price of BRL 10.00 per share. Investment bank BTG Pactual was retained by the Company as a global bookrunner of the public offering with firm underwriting commitment to distribute and subscribe for the remaining shares not subscribed by E.ON and other investors.

Joint Venture will be reintegrated into MPX

Finally, the existing MPX-E.ON 50/50 Joint Venture company, created in April 2012, will be reintegrated into MPX at book value, increasing E.ON’s stake in the company to around 36.1%.

As part of the agreement, E.ON will contribute actively with its expertise in the day to day management of the company and will be entitled to increase its representation on MPX’s Board of Directors. In the new structure Eduardo Karrer remains as MPX CEO. In addition, the reintegration of the Joint Venture into MPX will simplify governance and operative structures. Combining MPX local expertise and access to natural resources with E.ON’s considerable international experience will strength the company's management and execution of projects.

“MPX begins today yet a new phase, in which E.ON will play a central role. Our agreement reflects not only the substantial value of MPX’s portfolio but also the company’s proven origination capabilities. We strongly believe that the company’s assets are strategic to the growth and reliability of Brazil’s energy supply. As our partnership is strengthened, E.ON will now have a fundamental role in the management of MPX and, consequently, the development and operation of its projects. By the end of 2013, MPX will have over 2.8 GW in operation or 15% of the thermal capacity of the Brazilian system. With additional 10 GW in thermo and renewable greenfield projects licensed, MPX is set to become one of the largest private energy firms in Brazil. Together, EBX and E.ON are ready to work towards building the generation capacity Brazil needs”, said EBX Group Chairman, Eike Batista.

E.ON CEO Johannes Teyssen said of the deal: “Today’s announcement is a confirmation of E.ON’s strategic belief in the growth opportunities the Brazilian market offers with its positive outlook on long term power demand and economic growth prospects. The transaction and subsequent JV reintegration increase our exposure to the fundamentally attractive Brazilian power market at a fair market value. This move will also accelerate the earnings flow to E.ON and will put MPX on a sound financial footing to fully exploit the extensive, high-quality project pipeline. From our experience of working together over the past year with MPX we have learnt that the combination of their local expertise and access to natural resources with E.ON’s global scale and capabilities will create significant value enhancement for both, MPX and E.ON. Increasing our stake to become a partner on eye-level and our active participation in the day-to-day management creates clear and distinct structures in MPX which will make us even more effective and powerful. We are happy that we were offered this unique opportunity to grow further in one of the world’s fastest growing power markets whilst keeping the expertise and skills of Eike and his team”.

MPX and E.ON expect to close the first step of the transaction by the end of April 2013, after the Board of Economic Defense (CADE) approval, with the capital increase taking place in the followings months.