| SAO PAULO/RIO DE JANEIRO, Sept 30
SAO PAULO/RIO DE JANEIRO, Sept 30 Brazilian oil
producer OGX Petróleo e Gas Participações SA is on
track to forego a $44.5 million interest payment due on Tuesday,
two sources with knowledge of the plans said, moving the company
closer to the largest Latin American corporate debt default
Should the company decide to miss the coupon payment, an
announcement will be made within a few days, said one of the
sources. The other said OGX wants to use a 30-day grace period
that starts when the company misses the payment to conclude debt
restructuring talks with bondholders.
The most likely path for OGX, controlled by former
billionaire Eike Batista, is to file for bankruptcy protection
in late October following the decision to forego the payment,
the second source added.
The sources spoke on condition of anonymity because they
were not authorized to speak publicly about the situation.
A spokeswoman for OGX declined to comment.
OGX hired Blackstone Group LP and investment banking
firm Lazard Ltd to help the ailing oil producer "review
its capital structure." A group of bondholders, preparing for a
contentious negotiation with the cash-strapped oil company,
hired financial advisory firm Rothschild to advise them on a
potential debt restructuring.
Pacific Investment Management Co, the world's largest bond
fund known as Pimco, and BlackRock Inc, the world's
largest money manager, are part of the group. Combined,
bondholders on that group own more than half of OGX's $3.6
billion in outstanding bonds.
Tuesday's payment is on $1.1 billion of bonds due in 2022
. OGX faces an approximately $100 million coupon
payment on its debt due in 2018 this December.
Bondholders were irked after Brazil's biggest banks
refinanced maturing debt and stretched out debt repayments for
Batista's cash-strapped mining, logistics and energy
conglomerate, Grupo EBX. Banks have also been repaid some of the
debt with proceeds from asset sales.
The pressure exerted by state and private-sector banks on
EBX could enable them to virtually eliminate any significant
loss on their exposure to the struggling group. But bondholders
are set to face hefty losses on their investments with Batista,
who less than two years ago had the world's seventh-largest
fortune worth about $35 billion.
Prices on the bonds have tumbled more than 80 percent this
year, making them the worst performing emerging-market bonds,
according to Thomson Reuters data. Shares of OGX slumped 25
percent on Monday.