OSX Brasil announced it will take a 7 percent stake in failing sister company Óleo e Gás Participações SA (formerly known as OGX Petróleo e Gás Participações SA) after agreeing to convert $1.5 billion of debt into stock, a step key to help the ailing oil producer exit bankruptcy.

The debt’s genesis was the termination of several contracts to lease oil production ships to Óleo e Gás, OSX said in a securities filing.

The former OGX filed for bankruptcy court protection on October 30, 2013.

Both companies are controlled by tycoon Eike Batista’s Grupo EBX.

Óleo e Gás on Tuesday reached a deal with a majority of bondholders owed about $3.8 billion that allows that debt to be converted into shares of the restructured company.

“The deal is crucial for the continuity of our activities as our largest client OGX seeks to reestablish its financial conditions, allowing it to fulfill its obligations with OSX,” the shipbuilder said in the filing.

OSX said it will receive a credit of $414 million related to the termination of a leasing and operation contract for its floating, production, storage and offloading (FPSO) OSX-1 unit, and another $557.3 million for the contract termination of its FPSO OSX-2.

Oleo e Gas’ failure to meet oil production estimates from offshore activity in the Tubarão Azul field led to the meltdown of EBX and nearly wiped out Batista’s fortune, once worth about $30 billion.


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