Brazil's BNDES refuses to extend loan to OSX

RIO DE JANEIRO/NEW YORK Tue Nov 19, 2013 6:46pm EST

A worker is pictured at the construction site of Port of Acu in Sao Joao da Barra March 11, 2013. REUTERS/Ricardo Moraes

A worker is pictured at the construction site of Port of Acu in Sao Joao da Barra March 11, 2013.

Credit: Reuters/Ricardo Moraes

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RIO DE JANEIRO/NEW YORK (Reuters) - Brazil state development bank BNDES refused to extend a loan to OSX Brasil SA (OSXB3.SA) after the ailing shipbuilder's decision to file for bankruptcy protection, according to a securities filing on Tuesday.

The financing line that BNDES declined to renew was worth 428 million reais ($189 million), according to the OSX filing, smaller than the 550 million reais principle-and-interest figure provided to Reuters earlier by two sources with direct knowledge of the situation.

The loan, made by BNDES at the start of 2012, bore a guarantee from Banco Votorantim SA, and no vessel from the shipbuilder was set aside as collateral, according to a source who asked not to be identified due to banking secrecy rules in Brazil. Votorantim assumed full credit risk on the OSX loan and repaid the loan on Monday, another source said.

BNDES decided not to roll over the loan when it matured on Friday, a week after OSX, controlled by former billionaire Eike Batista, filed for bankruptcy protection, the two sources said.

The loan had been extended by 30 days in mid-October, sources told Reuters at the time.

Votorantim will write down the loan in its fourth-quarter results, the first source said. State-controlled Banco do Brasil SA (BBAS3.SA), which holds a 49.9 percent stake in Votorantim, expects the São Paulo-based lender to return to profit this quarter following more than a year of losses.

A spokesman for Banco do Brasil told Reuters the bank maintains its profit forecast for Votorantim even after repaying the OSX loan.

Shares of Banco do Brasil fell 3 percent to a nearly six-week low amid a broad selloff on the benchmark Bovespa stock index .BVSP.

OSX shares closed 13 percent lower at 0.57 reais on Tuesday, their biggest drop in nearly two weeks.

A spokeswoman for Votorantim said the bank would not comment on the matter, citing banking secrecy rules. BNDES officials declined comment.

OSX originally contracted the loan in 2011 to finance construction of its shipyard at the Açu port in Rio de Janeiro state run by sister company LLX Logistica SA LLXL3.SA.

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OSX had a similar financing line with state-run Caixa Econômica Federal, guaranteed by Banco Santander Brasil SA (SANB11.SA). Earlier this month the banks agreed to refinance that 400 million real loan, which had come due in mid-October, for an additional 12 months.

Rio de Janeiro-based OSX had debts of 5.3 billion reais as of June, with about 1.1 billion reais of that amount coming from Caixa.

BNDES agreed to another credit line for OSX last year of 1.3 billion reais, but no funds from that line have been released, said the second source, who also requested anonymity due to secrecy rules. The source added that the credit line would likely be canceled due to OSX's bankruptcy filing.

In 2012 OSX obtained long-term financing through Brazil's Merchant Marine Fund for shipyard construction, but no money from that loan has been disbursed.

OSX was the second company controlled by Batista to seek court protection from creditors in just over a week. Oil company OGX Petróleo e Gas Participações SA (OGXP3.SA) filed for bankruptcy on October 30.

Before the OGX and OSX filings, Batista had already agreed to sell stakes and key assets of the other four publicly traded companies in his ailing EBX conglomerate. Over the past year, his empire collapsed under a mountain of debt after missing production and profit targets.

($1 = 2.26 Brazilian reais)

(Reporting by Sabrina Lorenzi and Guillermo Parra-Bernal; Writing by Asher Levine and Silvio Cascione; Editing by Jim Marshall, John Wallace, Alden Bentley and Diane Craft)

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