The first Brazilian oil producer to seek protection from creditors reached an accord to sell its stake in OGX Maranhao Petroleo e Gas SA yesterday, according to a copy of the petition obtained by Bloomberg News. Brazilian private equity fund Cambuhy Investimentos Ltda and Germany’s EON SE will buy the OGX stake in a two-stage deal worth 594 million reais ($270 million), the company said today in a regulatory filing.
The sale reduces the amount of money OGX bondholders and other creditors could recover if the company’s assets are liquidated, Omar Zeolla, a corporate credit analyst at Oppenheimer & Co. in New York, said by phone. OGX has about 11.2 billion reais in total debts, according to the filing.
Cambuhy, based in Sao Paulo, will buy 200 million reais of new Maranhao stock in a 250 million-real capital increase, with EON, Germany’s largest utility, purchasing the rest. Cambuhy will then buy OGX’s remaining stake for 200 million reais. OGX will also receive a 144 million-real payment from the natural gas producer to settle outstanding debt, it said.
Eneva SA (ENEV3), the Brazilian utility controlled by EON and Batista, said Oct. 28 it had offered to buy out the natural gas company shared with OGX from its three bank creditors if the venture defaults. Eneva had agreed to pay 200 million reais for the 66.7 percent stake it doesn’t own in the unit, it said at the time. Cambuhy has now agreed to take over this agreement in the case it doesn’t complete the purchase of OGX’s stake and lenders execute guarantees, Eneva said today.
When the transaction is completed, Cambuhy will have a 73 percent stake in Maranhao, while Eneva will have 18 percent and EON the remaining 9 percent, the Rio de Janeiro-based utility said. The companies will run the venture via a new shareholders agreement.
EON became Eneva’s largest holder on May 29 and increased its stake in a private placement on July 4, three days after OGX said it would probably have to shut its only producing oil field, and Batista was replaced as Eneva chairman.
Maranhao, in which Eneva currently has a 33.3 percent stake, operates eight blocks in Brazil’s Parnaiba basin, producing gas for the utility’s thermoelectric plants in the region. Its Gaviao Real natural gas field is Brazil’s eighth largest by production, according to the country’s oil regulator.
OGX’s share of natural gas output from Maranhao was 2.1 million cubic meters a day in September, equivalent to 13,200 barrels of oil a day, the company said in a Oct. 10 statement
The entry of Cambuhy will stabilize the natural gas venture and support the operations of Eneva’s power generation in the Parnaiba complex, EON said in an e-mailed statement.
“Its investment will increase the gas supply security and support the expansion plans of the Parnaiba gas fields,” the company said today.
The filing by OGX puts $3.6 billion of dollar bonds into default in the largest corporate debt debacle on record in Latin America and culminates a 16-month decline that wiped out more than $30 billion of Batista’s personal fortune.
“OGX has operating problems as its assets don’t generate revenue, and the company couldn’t survive without creditor support,” Caetano Berenguer, a partner at law firm Sergio Bermudes that represents OGX, said in a telephone interview from Rio. “OGX has potential to generate revenue soon.”
Batista founded OGX in 2007 and it became the pillar of his group of commodities and logistics companies. OGX’s initial success finding oil in shallow waters off the coast of Rio sparked a stock market rally that made it more valuable than other established producers including Repsol SA.
When OGX moved from exploration to production it encountered more complicated and compartmentalized geology than expected and started abandoning projects it had previously declared commercial.
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