The stocks and bonds of billionaire Eike Batista’s oil and shipbuilding companies tumbled as concern mounted that they’re losing access to the financing needed to carry out investment plans.
Shares of OSX Brasil SA, Batista’s shipbuilding and oil services unit, plunged 17 percent to a record-low 4.88 reais at the close of trading in Sao Paulo. Oil company OGX Petroleo & Gas Participacoes SA fell 9.2 percent, contributing most to the Bovespa index’s 0.6 percent drop.
Disappointing production results at OGX, where output at its first three wells fell in February, has put pressure on Batista’s companies and will make it more difficult for them to get financing, Oswaldo Telles, an equity analyst at Banco Espirito Santo SA, said by phone from Sao Paulo. OSX’s main business is selling production vessels to OGX.
Dollar bonds issued by OGX fell below 80 cents on the dollar for the first time. The bonds due in 2018 declined 2.88 cents to 77.64 cents on the dollar today, pushing the yield up 94 basis points, or 0.94 percentage point, to 14.83 percent, according to data compiled by Bloomberg. Yields on OSX bonds due in 2015 rose 82 basis points to 10.34 percent.
“This is really a bad sign,” Telles said. “They need to keep the door open to financial markets.”
Batista, who lost $25 billion of personal wealth tied to his companies in the past year, faces demands from creditors to boost collateral as confidence fades in his ability to generate cash, people familiar with the matter said earlier this week. OSX is planning to sell $265 million in secured bonds due in June 2014, a person familiar with the plans said March 15.
OGX shares have fallen 48 percent this year and OSX is down 54 percent.