Batista Turns to Creditors in Bid to Avoid Bankruptcy

09/05/2013 - 08h51

The entrepreneur Eike Batista is to turn once again to creditors in a bid to avoid the bankruptcy of the oil and gas company OGX. Bankruptcy has been considered by the group, Folha has learned, as OGX has almost completely run out of capital.

Declaring bankruptcy would permit the company to suspend payment of its debts until a restructuring plan is approved. However, the board has decided to try and convince the owners of bonds to become shareholders and put new money into the business.

Ricardo Moraes/Reuters

Brazilian millionaire Eike Batista, CEO of EBX Group, gestures to the audience during a ceremony in celebration of the start of oil production of OGX, his oil and gas company.

Despite previously promising a cash injection worth US$ 1 billion, Batista has now indicated to creditors that he is no longer willing to do so, and a new plan is due to be presented in New York next Tuesday.

The proposal is that the bond holders provide between US$250 million and US$ 500 million for the business, as well as converting the US$3.6 billion held in bonds into shares. However, the final outcome of the meeting may not be known for another three weeks.

As Folha has learnt from sources close to the creditors, a decision has still not been taken. Such an injection of new capital is considered 'something unusual, which may be difficult.'

Nearly 40% of OGX's debt belongs to six large international groupings, while the rest is in the hands of dozens of investors. OGX, Batista's conglomerate EBX, and their creditors have yet to make any official statement on the issue.

Translated by TOM GATEHOUSE

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