July 3 (Bloomberg) -- Grupo BTG Pactual, the investment bank controlled by billionaire Andre Esteves, canceled a $1 billion line of credit to Eike Batista’s companies that was part of a strategic agreement announced in March, said a person with direct knowledge of the transaction.
BTG, based in Sao Paulo, made the decision after a review of the arrangement, the person said, asking not to be identified because details haven’t been made public. The person didn’t say when BTG made the decision.
Under the initial agreement, BTG would provide financial advice and Esteves would co-run a strategic and financial management committee for Batista’s six publicly traded companies. BTG provided Batista’s holding company, EBX Group Co., with a $1 billion line of credit as part of the deal, a person with direct knowledge of the accord said on March 7.
The press departments of EBX and BTG declined to comment.
Since the BTG-EBX agreement was announced, shares in Batista’s flagship company OGX Petroleo & Gas Participacoes SA have tumbled 87 percent to a record low 39 centavos after the oil producer failed to meet operational targets. The sell-off intensified this week after OGX scrapped offshore projects and warned it may stop producing oil next year.
Batista has seen his fortune plummet by more than $30 billion since March 2012. Standard & Poor’s cut its rating on OGX to CCC from B- yesterday, citing concern that the company won’t be able to meet its debt commitments.
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