Bondholders hire firm to advise on possible OGX restructuring
SAO PAULO Aug 22 (Reuters) - Bondholders of Brazil's OGX Petróleo & Gas Participações SA hired investment banking firm Rothschild to advise on a potential debt restructuring, two sources told Reuters, as bondholders prepare for a contentious negotiation with the cash-strapped oil producer controlled by Eike Batista.
A creditors' committee formed by "a dozen or so" investment funds picked Rothschild because of its experience in Brazil, said one of the sources, who declined to be identified because the process is private. Law firms Cleary Gottlieb Steen & Hamilton LLP and Pinheiro Neto Advogados were also hired, both sources added.
Pacific Investment Management Co, the world's largest bond fund, known as Pimco, is one of the investment firms on the committee, both sources said. Combined, bondholders on the committee own more than half OGX's $3.6 billion in outstanding bonds, the second source added.
The selection process followed a recent move by OGX to hire Blackstone Group LP to help the ailing oil producer "review its capital structure." OGX faces bond interest payments of about $40 million in October and over $100 million in December, and analysts, including Marcus Sequeira of Deutsche Bank Securities, have warned that the company might run out of cash before the end of September.
The prices for OGX's 2018 and 2022 debt have tumbled more than 80 percent this year, making them the worst performing emerging-market bonds, according to Thomson Reuters data.
Efforts to reach the media offices of Pimco and Rothschild were unsuccessful. Pinheiro Neto, which is based in São Paulo, declined to comment. Calls made to lawyers at Cleary's New York offices were not immediately returned.
Some bondholders were irked after Brazil's biggest banks refinanced maturing debt and stretched out debt repayments for Batista's cash-strapped mining, logistics and energy conglomerate, Grupo EBX. Banks have also been repaid some of the debt with proceeds from asset sales.
The pressure exerted by state and private-sector banks on EBX could enable them to virtually eliminate any significant loss on their exposure to the struggling group. But bondholders could face hefty losses on their investments with Batista, who less than two years ago had the world's seventh-largest fortune.
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