BRAZI/FILE: Brazilian oil company OGX files petition for bankruptcy protection as fortunes of Eike Batista, a former billionaire, fade

Record ID: 564707

  • Title: BRAZI/FILE: Brazilian oil company OGX files petition for bankruptcy protection as fortunes of Eike Batista, a former billionaire, fade
  • Date: 30th October 2013
  • Summary: VARIOUS OF OFFICE BUILDING WHERE EBX IS LOCATED, WINDOWS HAVE BEEN DAMAGED FROM PROTEST PEOPLE USING SERVICE ENTRANCE EBX EMPLOYEE SEEN WORKING THROUGH WINDOW
  • Embargoed: 14th November 2013 12:00
  • Keywords:
  • Location: Brazil
  • Country: Brazil
  • Topics: Business,Economy
  • Reuters ID: LVAB8PXQHLZ4SCPK7BA6KCGSAMSQ
  • Story Text: OGX Petr�eo e Gas Participa�es, the cash-strapped Brazilian oil company controlled by former billionaire Eike Batista, on Tuesday (October 29) filed a petition for bankruptcy protection, according to the court's press office.
    The bankruptcy protection request came after OGX failed to reach an agreement with creditors to renegotiate part of its 5.1 billion U.S. dollars debt load.
    It is another chapter in the unravelling of Batista's once high-flying industrial empire, which he has been dismantling in recent months.
    If approved, OGX will have 60 days to come up with a corporate restructuring plan.
    Brazilian businessman Adriano Pires suggested that Batista's current woes could be blamed on an excess of projects.
    "He was involved in too many projects and he would wrap up on project and was starting another one without solidifying the previous one. Later, he started getting involved in projects that really didn't have any synergy. He purchased a ship, he became an associate in Rock in Rio, of Maracana (Stadium). Those things do not have any synergy with the businesses having to do with infrastructure," Pires told Reuters.
    OGX needs about $250 million of new funding to keep operating through April 2014, the company said in a presentation to bond holders during negotiations and in a posting on its website. Without new funding, the Rio de Janeiro-based company said it expects to run out of cash in the last week of December.
    One minority shareholder said that bankruptcy was inevitable, hours before the company filed its petition.
    "The judicial involvement was inevitable and I think that bankruptcy the next, natural step. That was the biggest fraud in the world market in the 21st century and it demonstrated that Brazil is not a serious place for business. The omission by the CVM and the stock exchange in that case was very serious. If those institutions would not have been omitted, there would not be this scandal and we would not have ended up in this position," Aurelio Valporto said.
    OGX's shares and bonds slumped in the wake of the announcement. Its stock closed down more than 20 percent in S� Paulo on Tuesday, adding to a 90 percent-plus plunge this year.
    Once the flagship company of Batista's sprawling industrial and commodities empire, OGX's failure to meet expected oil output targets caused investors to doubt its ability to come up with enough revenue to service its debts and finance new exploration. That, in turn, sparked a domino effect that forced Batista to start dismantling his Grupo EBX conglomerate to raise cash to pay debt.
    Just 18 months ago, the 56-year-old Batista ranked as the world's seventh-wealthiest person. His rapid decline has also become a symbol of Brazil's own economic woes after the end of a decade-long boom that made it one of the world's hottest emerging economies.
    Talks with a creditors' committee formed by half a dozen investment funds kicked off in August, as dwindling confidence in Batista's ability to shore up OGX caused its bonds to slump.
    "That plan (referring to the judicial plan) after being presented is submitted to the creditors and the creditors - in an assembly - will either approve or not approve the recovery plan. If the creditors do not approve, the company will file for bankruptcy," lawyer Ronaldo Cramer said.
    An OGX bankruptcy would be the largest-ever corporate bankruptcy filing in Latin America, according to Thomson Reuters data.
  • Copyright Holder: REUTERS
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