September 28, 2013 / 9:31 PM / in 4 years

Brazil OGX, OSX to file for bankruptcy protection - report

RIO DE JANEIRO, Sept 28 (Reuters) - OGX Petróleo e Gás SA and OSX Brasil SA, the oil company and the shipbuilder controlled by Brazilian tycoon Eike Batista, will seek court protection within a couple of weeks, Veja magazine reported on Saturday without saying how it obtained the information.

Efforts to reach spokeswomen at OGX and EBX, the parent company of Batista’s crumbling empire, were unsuccessful. A spokeswoman at OSX did not have an immediate comment on the report.

Shares of OGX and OSX sank to their lowest level on Friday as the company, unable to produce as much oil as initially forecast, rapidly burns cash.

Investors fear that OGX will fail to pay OSX for the use of a vessel that guarantees a OSX bond. If OGX defaults, OSX creditors might be forced to seize the vessel to recoup their money.

OGX owes $3.6 billion to foreign bondholders and $900 million to OSX. In a separate report on Saturday, Folha de S.Paulo newspaper said the company has already decided not to pay $45 million in debt interest due next week.

The plunge in the share prices of Batista’s companies has caused his fortune, once Brazil’s largest, to shrink dramatically, limiting his ability to keep financing OGX, a startup with more investment expenses than revenue. (Reporting by Walter Brandimarte and Guillermo Parra-Bernal; editing by Gunna Dickson)

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