* Plan was supposed to be filed in January
* Court approval needed to put plan in effect
* Oleo e Gas gives up 7 offshore oil prospects
By Jeb Blount
RIO DE JANEIRO, Feb 15 Brazilian tycoon Eike
Batista and his oil company Oleo e Gas Participações SA
presented a plan to a Rio de Janeiro judge on Friday
to restructure the bankrupt enterprise and cede control to
creditors owed $5.8 billion.
The plan, based on agreements made in December and February
with bondholders owed $3.8 billion, will give creditors 90
percent of Oleo e Gas and leave existing shareholders, including
Batista, with 10 percent, Oleo e Gas said in a statement.
Bondholders and other creditors will also provide the company
with up to $215 million in new loans to finance the
On Oct. 30, Oleo e Gas, then known as OGX Petróleo e Gás
Participações SA, made Latin America's largest-ever
bankruptcy-protection filing. The filing marked the nadir of
Batista's EBX energy, mining, shipbuilding and port-operation
group. OGX, the group's flagship, has lost more than 99 percent
of its value since 2010.
The restructuring plan was originally scheduled for delivery
to the court in late January, but talks with creditors and
advisors forced at least two delays.
Once worth about $60 billion, EBX soared as investors bet
Brazil was one of the best-placed commodities markets to benefit
from China's economic boom. EBX and its companies, though,
missed production targets, and project and regulatory delays put
off revenue needed to pay for debt and capital investments. A
global slowdown sealed EBX's fate.
Oleo e Gas was worth about $402 million on Friday, according
to Thomson Reuters data, less than 1 percent of its peak of more
than $43 billion in 2010.
On Friday, EBX group companies were worth only about $2.5
billion, 4 percent of their peak. Batista, once Brazil's richest
man, has seen his fortune evaporate. To keep the companies
alive, he has traded the bulk of his holdings for existing debts
or sold them at a deep discount to investors willing to complete
investment promises he can no longer keep.
The plan submitted to the 4th Commercial Section of the Rio
de Janeiro-state Justice Tribunal will leave creditors in charge
and Batista with about 5 percent of Oleo e Gas.
Under the plan, which requires a judge's approval and the
meeting of a series of oil production, regulatory and financial
goals, Oleo e Gas will exchange shares worth 25 percent of the
restructured company for $3.8 billion of debt owed to
bondholders, 500 million owed to suppliers and $1.5 billion owed
to OSX Brasil SA, an EBX company that owns the production
platforms that produce Oleo e Gas's offshore oil and gas.
Bondholders and other creditors willing to provide up to
$215 million of new loans known as debtor-in-possession (DIP)
finance to keep Oleo e Gas operating during the restructuring
will receive 65 percent of the new company.
The existing shareholders of the bankrupt company will be
left with 10 percent of Oleo e Gas. Batista will have about half
of that. Batista and the other legacy shareholders will, though,
have the right to buy stock equal to 15 percent of a reformed
Oleo e Gas' shares within five years. The value of that stock
will be determined later but based on a current valuation of the
company of $1.5 billion.
Under the plan, creditors owed less than 30,000 reais
($12,500) will be repaid in cash, the Folha de S. Paulo
newspaper reported on Friday without citing a source.
OIL PROSPECTS ABANDONED
On Friday Oleo e Gas also agreed to give up seven offshore
oil prospects after the country's oil regulator denied a
petition to extend its exploration and production
rights to six of the areas.
Oleo e Gas will relinquish rights to its Itacoatiara,
Viedma, Tulum and Vesúvio offshore discoveries in the Campos
Basin east of Rio de Janeiro. It bought those rights at auction
in 2007 from the Brazilian government.
Brazil's oil regulator, the ANP, has said that companies
unable to meet their contractual obligations to explore for oil,
drill wells and produce oil from commercial discoveries will
lose their rights.
Oleo e Gas's only producing field, Tubarão Martelo, is in
the same Campos Basin region as the bulk of the fields being
returned to Brazil. The company on Thursday said average daily
output from Tubarão Martelo, which began producing in December,
was 13 percent lower in the first week of February than it was
on average in January.
Average daily output in Tubarão Martelo in January was 1.7
percent lower than in December.
Tubarão Martelo is considered one of the only chances the
company has to create enough revenue to keep the company viable
if a judge approves its reorganization.
Oleo e Gas also said it would give up its Natal and Belem
prospects in the Santos Basin south of Rio de Janeiro. It had
asked to extend its rights in the six areas but was denied an
extension by the ANP, the statement said.
The company said it would give up its rights to the
Curitiba prospect in the Santos Basin after tests on the
reservoir showed lower-than-expected potential.
On Friday, before the restructuring and prospect-return
announcements were made, Oleo e Gas shares fell 6.5 percent to
0.29 real in Sao Paulo, the lowest close this month.