OSX Brasil SA, Latin America’s worst-performing stock this year, will use part of a put option pledged by controlling shareholder Eike Batista as the entrepreneur’s oil company returns exploration licenses to cut costs.
OSX’s board “approved the exercising of the put option for the equivalent in reais of as much as $50 million,” the shipbuilding company said in a Brazilian regulatory filing today. Batista will continue to hold at least 50 percent of the company, OSX said in the filing. Batista gave OSX the right to sell to him as much as $1 billion of its stock at 40.14 reais apiece until March 2014. OSX previously exercised $620 million of the option.
Minutes after the shipbuilder’s announcement today, Batista’s oil company, OGX Petroleo & Gas Participacoes SA, released a separate regulatory filing saying it will return nine oil block licenses it was awarded by the government in an auction in May. OGX, which is seeking to cut costs, will keep stakes in licenses it has in partnerships with other companies.
“The bad news about OGX contaminates the other companies” controlled by Batista, Pedro Galdi, chief strategist at Sao Paulo-based brokerage SLW Corretora, said in a telephone interview today. “OSX’s news is good but not good enough to impact the shares.”
OSX dropped 21 percent to close at 99 centavos in Sao Paulo trading. The stock has declined 90 percent this year, the most among 710 Latin American companies worth at least $100 million, according to data collected by Bloomberg. OGX slid 15 percent to 69 centavos.
The shipbuilder, based in Rio de Janeiro, said Aug. 23 that it had canceled a contract with one of its largest suppliers as part of a corporate restructuring. It also said that Marcelo Gomes, who was previously an external adviser to the company on the restructuring, would take over as chief executive officer and that its second floating production, storage and off-loading vessel, or FPSO, had arrived in Brazil. The platform arrived in Rio on Aug. 24 from Singapore, according to Bloomberg vessel tracking data.
The vessel will be used at the Tubarao Martelo field, in which Petroliam Nasional Bhd. acquired a stake this year. OGX said July 1 that it wouldn’t develop three other fields as planned and would redefine its business strategy. OGX also said then that it may shut its only oil-producing asset, the Tubarao Azul field, next year.
On Aug. 14 OGX said it hired Blackstone Group LP for “ongoing efforts to assess its capital structure.”
In the May auction, OGX picked up the nine blocks plus four licenses with partners Exxon Mobil Corp. of the U.S., France’s Total SA and Brazil’s QGEP Participacoes SA.
In today’s filing, OGX said it “concluded that it’s not recommendable, at the current time, to assume exploratory risk in new areas where it hasn’t formed ventures with other companies.”