* OGX misses $45 million interest payment
* Pimco, BlackRock among bondholders that face losses
* OGX says it is revising its capital structure
(Adds information on bond, asset sales, price performance,
By Guillermo Parra-Bernal and Cesar Bianconi
SAO PAULO, Oct 1 OGX Petróleo e Gas
Participações SA missed a $45 million bond interest
payment due on Tuesday, putting the debt-laden company closer to
what could be the largest-ever Latin American corporate default.
The missed payment is the latest chapter in the unraveling
of Batista's once high-flying conglomerate of energy, logistics
and mining companies. It also nudges OGX closer to a bankruptcy
protection filing, which analysts and sources with direct
knowledge of the situation have said could come later this
The company, which Batista founded in 2007 and at its peak
was valued at around $30 billion, failed to deposit the money
for the interest payment in bondholder accounts and plans not to
do so during a 30-day grace period it has to remain current on
its debt, according to a securities filing.
Pacific Investment Management Co, the world's largest bond
fund known, and BlackRock Inc, the world's biggest money
manager, are among bondholders that stand to lose millions if
OGX defaults. Investors also worry that a lengthy legal battle
is on the horizon in Brazil, where recent debt restructuring and
bankruptcy proceedings have turned out badly for them.
"Those are all concerns that may keep investors away from
Brazil and perhaps prevent OGX from fixing its own problems,"
said David Epstein, a managing director with CRT Capital Group
LLC in Greenwich, Connecticut.
URGENT CAPITAL INJECTION
Batista, OGX and creditors are currently in talks to stave
off the collapse of the company, an event that could also bring
down Batista-controlled shipbuilder OSX Brasil SA.
Analysts have said that OGX and creditors need to compromise on
an urgent capital injection to prevent bondholders from losing
"Negotiations must ensure that neither side ends up with
nothing," Epstein said.
The interest payment was on $1.1 billion in bonds due in
2022, the worst-performing debt among emerging
market companies, according to Thomson Reuters data. OGX faces
another coupon payment in December of approximately $100 million
on debt due in 2018.
"The company is in a process of simultaneously revising its
capital structure and its business plan," OGX said in the
regulatory filing. "In light of this fact, the company decided
not to pay" the coupon on the bonds.
Prices on the 8.5 percent bond were around 15.5 cents on the
dollar, near an all-time low of 15 cents, according to Thomson
Reuters data. Shares of OGX, which are down 95 percent over the
past year, reversed early losses on Tuesday and were up 14
percent at 0.24 reais in São Paulo.
Batista, who just a year ago was Brazil's richest man and
the world's seventh wealthiest with a fortune close to $35
billion, is dismantling his Grupo EBX conglomerate because of a
dearth of cash, surging debt and a plunge in investor
His handling of negotiations with OGX creditors has been
rocky. Batista forced the ouster of his chief financial officer,
Roberto Monteiro, on Sept. 20, despite the opposition of Chief
Executive Luiz Carneiro. Monteiro, who had led negotiations with
creditors, also worked with Brazilian investment advisory firm
Angra Partners, Lazard Ltd. and Blackstone Group LP in the
A group of bondholders, preparing for contentious
negotiations, hired financial advisory firm Rothschild to advise
them on a potential debt restructuring. Combined, that group -
which is known in markets as the creditors' committee - owns
more than half of OGX's $3.6 billion in outstanding bonds.
OGX wants to persuade bond and shareholders to agree to fund
the company until production begins at the Tubarão Martelo
offshore field. Sources recently told Reuters that the company
is seeking to divest assets, exit exploration licenses and
reduce capital spending to focus on the most profitable part of
OGX, which exercised an option that obliges Batista to
inject $1 billion in new capital into the company, is trying to
get Malaysian state oil company Petroliam Nasional Bhd
to begin payments on its $850 million purchase of a 40 percent
stake in an OGX field before the Brazilian company's debt
restructuring is finalized.
Still, given its track record, OGX might struggle to raise
cash through asset sales.
EIG Global Energy Partners, which bought a $560 million
stake in LLX Logística SA from Batista, passed on
purchasing any OGX assets, according to a source familiar with
the investment firm's thinking.
EIG passed on OGX because of the company's over
indebtedness, underperformance and lack of production as their
drilling wells are frozen, the source said. Other oil companies
are now circling OGX to see if any pieces are salvageable. "I
think it ends badly" for investors, the source said.
Brazil's industry, trade and commerce minister, Fernando
Pimentel, speaking of Batista to reporters in Brasilia, said,
"We believe the entrepreneur will surpass the difficulties that
he is facing at the moment."
(Reporting by Guillermo Parra-Bernal and Cesar Bianconi;
Additional reporting by Jennifer Ablan, Asher Levine and Maria
Carolina Marcello; Editing by Todd Benson, Jeffrey Benkoe and