WRAPUP 1-Brazil's EBX shrinks: OGX down 17 pct; Batista leaves LLX
* OGX may swap debt for stock, Folha de S. Paulo reports
* Debt swap would dilute investors, end Batista control
* Batista leaves LLX board
* D'Araújo Senna is new port operator's chairman
By Jeb Blount and Guillermo Parra-Bernal
RIO DE JANEIRO, Aug 28 (Reuters) - Shares of Brazilian energy company OGX Petróleo e Gás Participações SA fell 17 percent on Wednesday after a newspaper report said its beleaguered controlling shareholder, Eike Batista, was considering a plan to swap $3.6 billion of the company's bonds for shares.
The share decline was another blow for Batista, who also resigned his seat on the board of port operator LLX Logística SA on Wednesday. Batista, who was ranked No. 7 on Forbes magazine's list of billionaires last year, has seen his fortune shrink by more than $25 billion over the past 18 months.
Batista had already left the board of MPX Energia SA , an electric utility that he formerly controlled. MPX is now controlled by German utility E.ON SE which plans to move the company out of the EBX headquarters and change its name by year end.
After falling as much as 22 percent in early trading on Wednesday, OGX trimmed losses to close down 17.4 percent at 57 centavos, a three-week low.
The bonds-for-shares swap, as reported by Brazilian newspaper Folha de S.Paulo, would reduce the value of existing shareholders' stakes and end Batista's control of the oil company, once Brazil's second-largest by market value.
"An operation like this would dilute the existing shareholders base," said Felipe Rocha, stock analyst at Omar Camargo Corretora, a Curitiba, Brazil brokerage.
Grupo EBX, whose companies were once worth as much as $60 billion, has suffered project delays, mounting debt and dwindling confidence in some of its main companies, which has caused much of its market value to evaporate over the past year.
WORST BOND PERFORMERS
Prices on OGX's 2018 and 2022 bonds have tumbled more than 80 percent this year alone, making them the worst-performing emerging-market bonds in the period, according to Thomson Reuters data. The bonds fell after OGX's first oil field failed to meet output expectations, reducing the revenue needed for planned expansion and to pay debt.
The company's cash has declined so much that its bonds are considered by credit agencies to be at high risk of default.
Expectation of debt-for-stock swap comes after a dozen investment funds formed a creditors' committee and picked investment bank Rothschild to advise on a potential debt restructuring.
OGX recently hired Blackstone Group LP to help the ailing oil producer review its capital structure.
Batista will be replaced as chairman of port operator LLX by Roberto D'Araújo Senna, who was already in his second term as a board member, according to a securities filing.
Batista's departure from LLX comes after EIG Global Energy Partners agreed on Aug. 14 to invest 1.3 billion reais ($548 million) in LLX, providing enough cash to help finish LLX's Port of Açu north of Rio de Janeiro. Batista will keep his stock in LLX, but the new stock purchased by EIG under the deal will give the Washington, D.C.-based energy investment fund control of LLX.
After rising as much as 3.66 percent in early trading in São Paulo on Wednesday, LLX stock reversed gains to fall 2.44 percent to 1.60 reais, its lowest close in a week. ($1 = 2.37 Brazilian reais) (Reporting by Guillermo Parra-Bernal and Roberto Villas Boas; additional reporting by Algerto Alerigi Jr.; writing by Jeb Blount; editing by Matthew Lewis)
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