Batista to relinquish OGX control in debt deal
Former Brazilian billionaire Eike Batista is to relinquish control of his flagship oil company as part of a deal with creditors to exchange about $5.8bn in debt for shares. Under the deal, which comes less than two months since the company filed for bankruptcy and will complete its disintegration, bondholders may also inject about $200m-$215m into the restructured entity. "The existing shareholders of the company, after the dilution stemming from the creditors’ debt-for shares swap . . . will be left with equity representing 10 per cent of the capital of the restructured company," said the group, formerly known as OGX, renamed Óleo e Gas Participações under the new arrangements. The deal was unexpected, and come just two months after the then-OGX filed for bankruptcy protection, blaming differences with creditors during the restructuring talks. The implosion of the oil, energy, mining and logistics magnate’s empire saw him tumble from the top ten of the Forbes rich list to eviction from its ranks altogether this year, seen by many as emblematic of the fall from grace of Brazil the eyes of investors in the past few years. Others argue the brash businessman’s success was a product of the surge of global liquidity, as foreign investors sought out any venture that would deliver a yield, and was atypical of the generally cautious approach of the Brazilian business community. OGX and Mr Batista’s woes came to public attention when the oil company admitted earlier this year that its only producing field was not performing as expected and would be shut down next year. Since then, however, it has fought hard to convince financial markets that it remains a going concern, and recently began production at a new field. Faced with the prospect of even greater losses if the company was liquidated, OGX bondholders will hope that value can be saved by allowing the group to continue operations. Bondholders will receive additional shares in exchange for investing the additional $200m-$215m, under the plan. Óleo e Gás said it will present the restructuring plan to the bankruptcy court in Rio de Janeiro by January 24. The restructuring will be dependent on the approval of another Batista unit, oil services group OSX, which supplies equipment to Óleo e Gas, the oil company said. The two companies together owe a total of $5.8bn.