Eike Batista's OGX Prepares Bankruptcy Filing Brazilian Businessman's Flagship Oil Company Is Running Low on Cash
Brazilian businessman Eike Batista's flagship oil company, OGX Petroleo e Gas Participacoes SA, is preparing an imminent bankruptcy-protection filing in Brazil to reorganize as its cash reserves dwindle, people familiar with the matter said. OGX is preparing a so-called judicial recovery plan for reorganization, similar in part to a streamlined U.S. bankruptcy filing, the people said. This approach differs from the traditional Brazilian bankruptcy process that tends to end in liquidation, some of these people said. A filing could come any day now and is expected within about a week, the people said. Spokespeople for OGX and Mr. Batista didn't immediately respond to requests for comment. The cash-strapped company, operating with about $3.6 billion of debt, has tried but so far has yet to reach a restructuring deal with creditors, many of whom traveled to Brazil to meet with advisers and management this week, the people familiar with the matter said. The company asked creditors for a $75 million capital injection but didn't get an immediate answer from creditors, who are concerned they won't recover the money, the people said. OGX, once the backbone of Mr. Batista's falling infrastructure empire, has failed to meet production targets and is desperately low on cash. It missed a $45 million bond interest payment in early October, and it has another payment of roughly $100 million due in December. The company is using its remaining cash to start production at what it considers potentially to be one of its most-productive assets, an oil field called Tubarao Martelo in Rio de Janeiro. One reason a filing is imminent is that suppliers are growing reluctant about doing business with the company as its woes deepen, one of these people said. The company's shares have fallen more than 90% over the last 12 months. The bonds are trading at around 10 cents on the dollar, indicating investors expect to recover little of the original value.