Batista's oil firm says deal reached with creditors
Sao Paulo (AFP) - Brazilian tycoon Eike Batista's debt-laden oil company, currently under bankruptcy protection, has agreed with foreign creditors to renegotiate $5.8 billion in debt into a 90 percent stake in the firm.
Oleo e Gas Participacoes (OGP), formerly known as OGX, said in a statement Wednesday that under the deal, holders of $3.8 billion in bonds issued by its OGX Austria subsidiary are also to invest between $200 million to $215 million to cover the company's operation costs and cash flow needs.
Implementation of the accord, which must be approved by all creditors and by the Rio bankruptcy court, would enable the company to weather its current financial crisis, continue its activities and fully meet its objectives, Rio-based OGP said.
The statement said the company would continue to be traded on the Sao Paulo exchange after the accord is approved.
The company's chief executive Paulo Narcelio Simoes Amaral described the deal as "an important vote of confidence in our future" and said the company "now has solid foundations to take part in promising prospects of the Brazilian oil sector."
OGX filed for bankruptcy protection in late October after debt-restructuring talks with its creditors failed.
The $5.8 billion debt being restructured comprises $3.8 billion held by bondholders, $1.5 billion in compensation for cancelation of contracts with Batista's debt-ridden shipbuilding company OSX and $500 million in payments to other suppliers, the statement said.
Last month, a Rio state judge granted bankruptcy protection to the former OGX but not to its foreign subsidiaries based in The Netherlands and Austria.
A Rio court also extended bankruptcy protection to OSX.
OSX and OGX, now OGP, are part of Batista's crumbling EBX empire of energy, mining and logistics companies.
The decline of EBX began in mid-2012, when OGX announced that its oil output would be a quarter of what it had promised.
In three years, EBX has seen its value plummet from $43.5 billion to less than $3 billion.
