By Paulo Trevisani


Brazilian officials are auctioning a 25-year bond in an effort to raise at least $500 million to pay creditors of fallen entrepreneur Eike Batista.

The bond, issued by London-based miner Anglo American PLC, was part of a payment for an iron-ore operation in the Brazilian state of Minas Gerais, said Ricardo Lacerda, chief executive of Brazilian investment bank BR Partners Banco de Investimento SA.

A judge at the first business court in the state capital of Belo Horizonte who handles the bankruptcy process ordered the auction and hired BR Partners to manage the auction.

Mr. Lacerda said the bond doesn't have a face value. Instead, it pays a 2.4% royalty over the production of the mining operation, called Minas-Rio, between 2025 and 2049. He said the bond was part of the payment when Anglo American acquired the operation.

"Our goal is to obtain the highest payoff for the creditors," Mr. Lacerda said. He referred to some estimates that the bondholder stands to receive up to $6 million a month under the bond's covenant, depending on the mine's production. "It is a mine that already has a steady output," he added.

Anglo American acquired control of two iron projects from MMX Sudeste Mineração S.A. in 2008 for around $3.4 billion at the time. One of the projects was Minas-Rio, which produced 22.9 million metric tons of iron ore in 2021, according to the company.

MMX was part of Mr. Batista's conglomerate, the EBX Group.

The entrepreneur, who rode the commodities boom in the early 2000s to build an industrial empire and amass a fortune once estimated at more than $30 billion, went bankrupt after a series of business setbacks.

Mr. Baptista was also accused of paying bribes to top Brazilian government officials to advance his business interests.

Some of the charges were part of the sprawling corruption investigation known as Carwash, which landed several prominent Brazilian politicians and businessmen in jail. Mr. Batista himself served a little more than three months and cut a plea deal with federal prosecutors.

Part of the proceeds from the Anglo American bond sale will go toward a payment Mr. Batista agreed to in the plea deal, according to a person familiar with his business.

Mr. Batista now spends his days dealing with the bankruptcy process and aims at paying off his debts to resume normal activities, the person said.

Mr. Lacerda said he expects to receive offers from 30 to 40 local and international investors and whoever offers the highest price for the bond will win the auction. He expressed hopes the sale will raise at least $500 million. He said although the sale will go to a single offer, participants may group together and split the costs and proceeds.

Offers will be collected for the next 30 days and then submitted to the judge handling Mr. Batista's bankruptcy process, Mr. Lacerda said.


Write to Paulo Trevisani at


(END) Dow Jones Newswires

June 01, 2022 18:14 ET (22:14 GMT)

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