| SAO PAULO
SAO PAULO Feb 17 OSX Brasil SA, the bankrupt
shipbuilding company controlled by former billionaire Eike
Batista, is in talks with Cerberus Capital Management LP
and a number of unnamed investors for a potential
debtor-in-possession financing deal.
Currently no agreement has been struck between OSX
and potential sources of the loan, commonly known as
DIP financing, the Rio de Janeiro-based company said in a
securities filing on Monday. OSX's focus at this point is what
to do with three floating production storage and offloading
vessels it owns, according to the filing.
A source with knowledge of the situation said OSX, which
filed for bankruptcy protection late last year, is seeking
between $200 million and $215 million in financing to move ahead
with a restructuring process. The source noted that talks with
Cerberus, a U.S. private equity firm, were at a "more advanced
stage" than with other players.
OSX declined to name potential sources of the DIP loan
beyond Cerberus. Efforts to reach executives at Cerberus to
comment were unsuccessful. U.S. markets were closed on Monday in
observance of a national holiday.
The source, who declined to be identified because of the
sensitivity of the issue, said OSX wants to clinch a DIP
financing deal before presenting creditors and a bankruptcy
court a final restructuring plan. Currently the company is
carrying out a thorough revision of its business and negotiating
with creditors in order to stay afloat.
Batista, who until early last year was Brazil's richest
individual with a fortune close to $30 billion according to
Forbes magazine, saw his empire of commodities and industrial
companies collapse under a mountain of debt after disappointing
output at its oil wells sent investors running for the exits.
OSX's sister company, Óleo e Gás Participações SA, is also in
the middle of a bankruptcy protection process and recently
obtained $215 million in DIP financing.
Óleo e Gás was formerly named OGX Petróleo e Gás
Participações SA and was, until early last year,
Brazil's No. 2 listed oil producer.
In the case of Óleo e Gás, creditors moved slowly with the
loan because they were uneasy about the lack of precedent for
such a structure in Brazil, the second source said. In the
United States, debtor-in-possession loans are the first debts to
As a result, such loans tend to be a regular feature of
bankruptcy cases and are credited with saving companies and
their employees from fire-sale liquidations.