Creditors Approve Restructuring Of Batista's Oleo E Gas - Update

Posted by Joseph R. Fonseca
Tuesday, June 03, 2014

Creditors of Brazilian tycoon Eike Batista's Oleo e Gas Participacoes SA approved a restructuring plan for the oil company that could lead to a quick resolution of the largest bankruptcy in Latin America's history, lawyers said on Tuesday.

The plan was approved by creditors holding 90 percent of the Rio de Janeiro-based company's nearly 12 billion reais ($5 billion) of unpaid obligations.

If a judge approves, creditors will swap debts for about 90 percent of Oleo e Gas stock, said Ricardo Knoepfelmacher of Angra Partners, the consultancy that handled talks with creditors. The judge's approval is expected within days, he said.

Creditors include Newport Beach, California-based Pacific Investment Management Co, or PIMCO, one of the world's largest bond investment companies; Batista's shipbuilding company, OSX Brasil SA, and suppliers such as oil services company Schlumberger NV.

"This is one of the first Brazilian cases to be solved in a coherent way, using solutions that are common in developed countries," said Eduardo Munhoz, a lawyer with Mattos Filho Advogados, one of the law firms representing the company.

Munhoz said the restructuring deal is important because it shows that Brazil's 2001 corporate law rewrite has properly tilted power away from shareholders to creditors such as suppliers, lenders, employees and bondholders.

Coming only seven months after Oleo e Gas, then known as OGX Petroleo e Gas Participacoes SA, filed for bankruptcy, the approval may boost confidence in Brazil's corporate bankruptcy legislation, he added.

In the past, Munhoz said, Brazilian shareholders often gained a bigger share of a restructured company than they deserved.

Many economists support bankruptcy protection because it helps investors take risks while limiting the losses if they fail. They also warn that favoring shareholders too much will make lenders less likely to lend at reasonable rates and suppliers less likely to offer goods and services.

Batista, who controls 51 percent of the company's stock, will see his stake drop to about 5 percent. Last year, Batista lost almost all of his estimated $30 billion fortune after shares of EBX's listed companies plunged.

Ownership transfer from Batista and other shareholders to creditors is likely to occur by September or October, Knoepfelmacher said. Batista and other shareholders will get warrants to buy about 15 percent of new Oleo e Gas stock.

Some creditors were unhappy with the deal. Luiz Filipe Tavares, a manager of the Itava Inc investment fund, a British Virgin Islands company that bought 9 million reais of Oleo e Gas' bonds, says bigger creditors such as Pimco prevented smaller creditors from taking part in new loans to the company during the bankruptcy, a move that will limit their share in the restructured company. He plans a court challenge.

"The big creditors forced this deal and cut us out," he said. "We wanted to invest more. Batista got warrants, but we can't invest more."

Oleo e Gas shares closed on Tuesday at 0.20 real, unchanged from Monday, before the vote took place.

The plan makes Oleo e Gas debt free, easing efforts to increase output from offshore oil wells near Rio. Since the bankruptcy, creditors have pledged $215 million of new debt to keep the company afloat. About $90 million of that will be made available if the judge approves, Knoepfelmacher said.

The company may also sell part of its 40 percent stake in the Atlanta and Oliva oil field in the BS-4 exploration block in the Santos Basin south of Rio de Janeiro and part of its 100 percent stake in the Tubarão Martelo offshore field east of Rio, Knoepfelmacher said.

(Reporting by Jeb Blount; Writing by Reese Ewing; Editing by Andre Grenon, Eric Walsh and Jan Paschal)

Maritime Today


The Maritime Industry's original and most viewed E-News Service

Maritime Reporter June 2016 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Contracts

ABP orders Two Gottwald cranes

Terex Port Solutions (TPS) has received an order from Associated British Ports (ABP) for two electric Terex Gottwald Model 8 portal harbour cranes in the G HSK 8424 B four-rope grab variant.

POSH Bags Shell FLNG Contract

Singapore’s offshore marine services provider PACC Offshore Services Holdings Ltd. (POSH) has been awarded a contract to support Shell’s Prelude floating liquefied

Baltic Index up for Third Straight Session

The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry bulk commodities, rose on Friday, for a third straight session, on rising demand across all vessel segments.

Legal

Will Maersk Line acquire HMM

There are rumours among observers that the  market leader Maersk Line is planning to acquire South Korea’s shipping major Hyundai Merchant Marine (HMM).   Neither

Winners of International Seafarers' Welfare Awards

The winners of ISWAN's International Seafarers' Welfare Awards 2016 were announced on 24th June at a high-profile ceremony held in Manila, the Philippines. The

Traffic Separation Schemes off Western Australia

On 1 December 2016 two new Traffic Separation Schemes (TSS) will come into effect off the south-west coast of Western Australia. Australia’s proposal to establish

Finance

Will Maersk Line acquire HMM

There are rumours among observers that the  market leader Maersk Line is planning to acquire South Korea’s shipping major Hyundai Merchant Marine (HMM).   Neither

VEB Guarantees $3 Bln of Yamal LNG Debt

Russian development bank VEB said on Friday it had provided a guarantee for $3 billion of debt to the Yamal liquefied natural gas (LNG) project, led by Russian gas firm Novatek.

US Oil Drillers Cut Rigs after 3 Weeks of Additions

U.S. oil drillers cut rigs this week for a 20th week this year after three weeks of additions, according to a closely followed report on Friday, as crude prices

News

MPA to Enhance Collaboration with Rotterdam Port

Chief Executive of the Maritime and Port Authority of Singapore (MPA), Andrew Tan, attended the second Port Authorities Roundtable (PAR) in Rotterdam.    Hosted

Day of the Seafarer: Ban Spotlights Sustainable Agenda Targets

Marking the Day of the Seafarer, United Nations Secretary-General Ban Ki-moon highlighted the role of the shipping industry in moving forward the international

“Twiggy” Baker Wins BWT Puerto Escondido Challenge

Grant “Twiggy” Baker (ZAF) claimed victory today at the Puerto Escondido Challenge, besting a field of 24 of the world’s best big wave surfers in towering 20-to-35

Mergers & Acquisitions

Will Maersk Line acquire HMM

There are rumours among observers that the  market leader Maersk Line is planning to acquire South Korea’s shipping major Hyundai Merchant Marine (HMM).   Neither

HCI Capital Renamed Ernst Russ AG

A vote was passed at the ordinary shareholders’ meeting of HCI Capital AG yesterday to change the company’s name to Ernst Russ AG. The Executive Board and Supervisory

OSG Joins NYSE "Big Board"

Overseas Shipholding Group, Inc. (NYSE:OSG) (the “Company” or “OSG”) announced today that it has been approved by the New York Stock Exchange (“NYSE”) to transfer

 
 
Maritime Contracts Maritime Security Naval Architecture Navigation Offshore Oil Pipelines Salvage Ship Electronics Shipbuilding / Vessel Construction Sonar
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1119 sec (9 req/sec)