E.ON in additional $677m investment to rescue Batista firm

Germany’s biggest utility is seeking to rescue its Brazilian venture, Eneva, with former billionaire Eike Batista by leading a second round of private investment in less than a year.

E.ON (FWB:à‚ EOAN) is to contribute an additional $257m of the $677m Eneva plans to raise in a two-stage capital increase, the Rio-based Eneva announced in an email statement.
Eneva, which was listed by Batista as a startup in 2007, dropped to a record low on May 2 amid project delays that increased costs and forced it to buy higher-cost energy on the spot market, deepening its losses, according to Bloomberg.

The utility also said in today’s statement it will sell at least 50 per cent of its Pecem II project in the northeast, with EON offering to buy up to 50 per cent of the power plant. The company also will receive a bridge loan from four banks, it said.

“Over the past several months Eneva has delivered a good operational performance,” EON board member Jorgen Kildahl said today in a separate statement. “We’re pleased that “- together with the other main shareholders and banks providing financing – ” we’re able to support Eneva’s management to realize the company’s significant potential.”

While Eneva has become the biggest private thermoelectric generator in the country, it posted a record loss last year and its debt-to-market value ratio is the highest after state-owned Centrais Eletricas Brasileiras SA among 150 major utilities in the Americas tracked by Bloomberg.

The capital injection announced today is the second for Eneva in less than a year. Once the world’s eighth-richest man, Batista has been selling assets or stakes in his energy ventures for the past year as missed targets and mounting debt forced him to cancel projects.

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