| SAO PAULO/RIO DE JANEIRO
SAO PAULO/RIO DE JANEIRO Dec 3 OGX Petróleo e
Gas Participações SA and its creditors are close to a
deal to transform some of OGX's $5.1 billion debt into stock,
stripping Brazilian businessman Eike Batista of a controlling
stake in the oil company, two sources with direct knowledge of
the situation said on Tuesday.
The parties might announce the terms of a deal as early as
next week, one of the sources said. Under the terms still under
discussion, bondholders would get a 55 percent stake in OGX,
while founder and controlling shareholder Eike Batista's
holding would fall to 5 percent from about 51 percent, both
Bondholders are also considering a proposal to inject $150
million into the company to bolster capital spending, ramp up
output at offshore fields and continue operations, said the
second source, who declined to be identified because the talks
An agreement between the company and creditors might help
successfully kick off OGX's bankruptcy protection process, the
largest-ever filed in a Latin American nation. The company on
Oct. 30 sought court protection from creditors after failing to
win relief on its $5.1 billion debt.
The price on OGX's 8.375 percent bond due April 2022
rose slightly on Tuesday to almost 10 cents on
the dollar from about 9 cents on Monday.
The bankruptcy filing marked another step in the unraveling
of former billionaire Batista's industrial empire, which he has
been dismantling after disappointing output from offshore OGX
wells set off a crisis confidence by investors.
If the court approves the request, OGX will have 60 days to
come up with a corporate restructuring plan. The company's
creditors, which include Pacific Investment Management Co, the
world's largest bond fund commonly known as Pimco, and other
U.S.-based investment funds, will then have 30 days to endorse
or reject the plan.
A spokeswoman for OGX in Rio de Janeiro declined to comment,
although she acknowledged talks with creditors are underway.
Efforts to reach bankers at Rothschild, the investment bank
advising OGX bondholders, as well as a spokesman for Pimco in
Newport Beach, California, were unsuccessful.
(Reporting by Guillermo Parra-Bernal and Sabrina Lorenzi;
Additional reporting by Jeb Blount in Rio de Janeiro. Editing by