Petronas says no deal with Brazil's OGX until debt restructured

RIO DE JANEIRO/KUALA LUMPUR Tue Aug 27, 2013 11:03am EDT

RIO DE JANEIRO/KUALA LUMPUR Aug 27 (Reuters) - Petroliam Nasional Bhd, the Malaysian state oil company, said a final agreement to buy a stake in an oil field owned by Brazil's OGX Petróleo e Gas Participações SA is being held up by the completion of OGX's debt restructuring plan.

Petronas, as the Malaysian company is known, agreed in May to pay $850 million for a 40 percent stake in two blocks of OGX's Tubarão Martello field. Regulator ANP has not approved the deal because Petronas has yet to present the necessary financial guarantees to back up the purchase, a government source told Reuters late on Monday.

A successful sale could help OGX avoid collapse. But Petronas Chief Executive Shamsul Azhar Abbas said OGX's "debt restructuring has to happen first" for the deal to be finalized.

The acquisition of the stake "is still pending clarity with regard to the restructuring exercise," Abbas told reporters in Kuala Lumpur.

The Tubarão Martelo field straddles the two blocks in which Petronas bought a 40 percent stake and is about 95 km (59 miles) off the coast of Rio de Janeiro state.

Its estimated 285 million barrels of recoverable oil and natural gas equivalent resources could supply all of Malaysia's oil needs for about 15 months.

Eike Batista, OGX's controlling shareholder, is grappling with a big debt pile and dwindling confidence in his crumbling Grupo EBX conglomerate of mining and energy firms.

OGX faces bond interest payments of about $40 million in October and $100 million in December, and analysts such as Marcus Sequeira of Deutsche Bank Securities have warned the company might run out of cash by September.

Shares of OGX tumbled 6.2 percent on Tuesday, the first decline in eight sessions. OGX's 8.375 percent bond due in 2022 traded at 17 cents on the dollar on Tuesday, slightly below Monday's price and deep into distressed territory.

According to CEO Abbas, Petronas is not involved in OGX's debt restructuring plan.

Holders of OGX's $3.6 billion in bonds hired investment banking firm Rothschild to advise on a potential restructuring, two sources told Reuters last week. Pacific Investment Management Co, the world's largest bond investor known as Pimco, is one firm leading the so-called creditors' committee, which own more than one-half OGX's outstanding bonds.

The selection of Rothschild followed a recent move by OGX to hire Blackstone Group LP to help "review its capital structure."

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