Billionaire Eike Batista will only exercise an option to buy $1 billion of OGX Petroleo & Gas Participacoes SA (OGXP3) at a premium relative to the market price to avoid harming minority shareholders, the company’s finance chief said.
OGX, the Rio de Janeiro-based oil explorer Batista controls, would consider a “non-negotiable” rights offering extended to all shareholders if the price exceeds the 6.30 reais set for Batista’s put option, Chief Financial Officer Roberto Monteiro said in an interview. OGX is also considering selling stakes in some of its more developed oil projects or selling future oil production to raise cash if needed, he said.
“It’s not like the main shareholder is going to dilute the smaller shareholders,” Monteiro said by telephone from Rio. “This is not the case.”
OGX soared the most in three months after Batista announced he was granting the put option at a 36 percent premium to yesterday’s close. It rose 4.5 percent to 4.84 reais at 3:21 p.m. in Sao Paulo after climbing as much as 8.2 percent, the most intraday since July 27.
The put option is designed as an “insurance policy” to guarantee OGX has enough money to participate in the government’s upcoming auction for exploration areas next year or other oil assets for sale in Brazil, Monteiro said. The company’s $2.9 billion of cash at the end of June is enough to set up four production vessels and produce enough oil to make cash flow positive, he said.
“We still would have a cash cushion of $400 million,” he said.
The company has ordered three floating, production, storage and offloading vessels from OSX Brasil SA (OSXB3), also controlled by Batista, and will order a fourth after it explores the area where the equipment will be used, he said. OGX needs to know what type of oil is in the area to complete designing the vessel, he said.
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