October 4, 2013 / 1:37 PM / 7 years ago

UPDATE 1-Brazil's OGX says considers all options to stay afloat

(Adds details, background on strategy throughout)

By Guillermo Parra-Bernal

SAO PAULO, Oct 4 (Reuters) - OGX Petróleo e Gas Participações SA, the Brazilian energy producer with the worst-performing corporate bonds in emerging markets this year, said late Thursday it was considering all measures to protect assets and stay in business.

In a securities filing, OGX said “even as the process of revising our capital structure has not been finalized, we believe that we must consider each and every measure that helps us protect the company’s interests and continue in business.”

OGX wants to persuade bondholders and shareholders to agree to fund the company until production begins at the Tubarão Martelo offshore field. Sources recently told Reuters the company is seeking to divest assets, exit exploration licenses and reduce capital spending to focus on the most profitable parts of its portfolio.

Controlling shareholder Eike Batista, management at OGX and creditors are currently in talks to stave off the collapse of the company, sources have told Reuters, an event that could also bring down Batista-controlled shipbuilder OSX Brasil SA .

Analysts have said OGX and creditors need to compromise on an urgent capital injection to prevent bondholders from losing everything.

The company said it hired Lazard Ltd, Blackstone Group LP and other firms to help “review its structure of capital.”

Pacific Investment Management Co (PIMCO), which runs the world’s largest bond fund, and BlackRock Inc, the world’s No. 1 money manager, are among bondholders that could be big losers if OGX defaults or declares bankruptcy.

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 loss of investor confidence.

OGX missed a $44.5 million bond interest payment this week, and sources recently told Reuters the company is preparing to file for bankruptcy before the end of the month.

OGX, 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, according to a securities filing earlier in the week.

The missed interest payment was on $1.1 billion in bonds due in 2022, the worst-performing debt securities 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.

Prices on the 8.5 percent bond fell about 2 cents on Thursday to a record-low 14 cents on the dollar, according to Thomson Reuters data.

Shares of OGX, down 95 percent over the past year, were flat at 0.22 reais on Friday. (Editing by Jeffrey Benkoe)

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