* 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 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
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
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
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)