* Fitch downgrades OGX debt to C on default risk
* Batista questions validity of OGX's cash request (Adds Fitch bond downgrade, comment from lawyer; updates stock price)
By Jeb Blount and Caroline Stauffer
RIO DE JANEIRO/SAO PAULO, Sept 9 (Reuters) - Brazilian tycoon Eike Batista will challenge a demand by OGX Petróleo e Gas SA, the oil company that he controls, that he honor a pledge to pump as much as $1 billion of new capital into the cash-strapped company, OGX said on Monday in a securities filing
Batista, in a letter dated Sept. 6 and released by OGX , notified the company of his objections to the cash request, which was made under a put option that he granted the company in 2012.
Without new investment, the company could run out of cash to pay debt and finance expansion before year end. Fitch rating service downgraded OGX bonds to C, signifying high risk of an imminent default, from CCC on Monday.
OGX on Friday called for Batista to start exercising the option while the company renegotiates its debt, saying it would take $100 million immediately in exchange for new OGX stock.
Under the put option, Batista, who has seen his fortune nearly evaporate in the past year, must buy the stock at 6.30 reais a share, more than 10 times OGX's current share price.
"I must stress my rights under the contract and under the law in order to question the circumstances, the form, the content, the validity and other legal aspects of the desired option exercise," Batista wrote in his letter to OGX.
He plans to take his case to Brazil's Market Arbitration Panel, a group set up to settle disputes for companies traded on the BM&FBovespa exchange if an agreement with OGX cannot be reached within 60 days.
A put option is a contract that gives the buyer or holder the option to sell the underlying asset at an agreed price within a specified period in the future.
OGX shares slumped 17.3 percent to 0.43 reais in São Paulo trading on Monday.
Batista, who was once worth more than $30 billion and ranked as Brazil's richest man, is now worth about $900 million and is no longer on the list of the world billionaires, according to Forbes Magazine.
OGX's top executives, who are running out of cash to both develop new revenue-producing oil fields and pay debt, voted unanimously to exercise the put option after the final member of a minority-shareholders subcommittee of the board of directors resigned last week, OGX's press office said.
In the minority subcommittee's absence, the executives have the right to exercise the option, the press office said.
"Absent a material capital infusion, OGX is likely to default on its debt in the near future," Fitch said in a release announcing its downgrade.
Batista's own financial difficulties have forced him to sell OGX stock five times in recent weeks, trimming his controlling stake in OGX to 50.16 percent to generate cash and avert bankruptcy.
While the capital injection from Batista, if it comes through, would improve the company's short-term liquidity, analysts say it would not address OGX's fundamental problems.
OGX is not producing oil at levels sufficient to cover its debt obligations and finance new production. The stock has tumbled by 97 percent since February 2012.
The decision to question the validity of the put option could become an issue in a lawsuit against OGX, Batista and company executives being planned by lawyers at Bornholdt Advogados, a Joinville, Brazil, legal firm.
"Batista's questioning the put has already led to losses for minority shareholders," said Rodrigo Bornholdt, a partner at Bornholdt. "It could become part of our case even if he manages to legally get out of having to pay the put." (Reporting by Caroline Stauffer and Jeb Blount; Editing by Leslie Adler)