OGX Petroleo & Gas Participacoes SA (OGXP3), founded by Eike Batista, said Malaysia’s Petroliam Nasional Bhd. has no right to delay buying stakes in two Brazilian oil blocks for $850 million on debt restructuring grounds.
“The company understands that Petronas doesn’t have any right to delay closing the deal with OGX as long as the conditions established in the contract are met, none of which mentions ‘debt restructuring’,” OGX said yesterday in a regulatory filing after markets closed. Shamsul Azhar Abbas, chief executive officer of state-owned Petronas, said Aug. 26 that the deal hinges on OGX undertaking the restructuring.
Rio de Janeiro-based OGX will run out of cash in this quarter if it doesn’t receive an initial $250 million tranche of the Petronas payment, Deutsche Bank AG said in an Aug. 27 report. OGX this month announced that it hired Blackstone Group LP to advise on a study of its capital structure as former billionaire Batista raises cash and sells company stakes after his fortune plummeted on missed production and profit targets.
OGX, which said in July that it may close its only operating oil field next year, said Aug. 27 that it will return nine exploration licenses awarded in May as it tries to cut spending.
Under the terms of the May deal with Petronas, OGX offered an additional 40 percent in the BM-C-39 and BM-C-40 blocks and half of its 40 percent stake in the BS-4 block to Petronas as guarantees of the deal, without disclosing publicly under which circumstances Petronas can exercise those guarantees. Petronas also has an option until April 2015 to acquire a 5 percent stake in OGX at 6.3 reais per share.
While the deal with Petronas isn’t conditioned by a debt restructuring, OGX is “seeking a solution that preserves the interests of both companies,” it said in yesterday’s filing.
The Petronas deal still requires Brazilian regulatory approvals. The country’s anti-trust regulator, known as Cade, yesterday approved OGX’s December acquisition of a 40 percent stake in the BS-4 block, which must now be approved by the oil regulator.
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