Nov. 1 (Bloomberg) -- OGX Petroleo & Gas Participacoes SA’s agreement to sell its only producing asset for $154 million hours before a bankruptcy filing will need to be approved by creditors, said a lawyer advising OGX.
The deal requires approval under a judicial recovery plan that OGX filed Oct. 30, Eduardo Munhoz, a partner at Mattos Filho Veiga Filho Marrey Jr. & Quiroga Advogados that is an adviser to OGX, said in a text message from Sao Paulo.
The first Brazilian oil producer to seek protection from creditors reached an accord to sell its stake in OGX Maranhao Petroleo e Gas SA Oct. 30, according to a copy of the bankruptcy protection petition. Brazilian private equity fund Cambuhy Investimentos Ltda and Germany’s EON SE will buy the OGX stake in two stages in a transaction worth 594 million reais ($264 million), the company said yesterday in a regulatory filing.
“Creditors can just not approve it and it won’t happen,” Munhoz said.
OGX, controlled by former billionaire Eike Batista, has about 11.2 billion reais in total debt, according to its filing.
The $154 million OGX would get from the sale is less than the $173 million the company said in a document Oct. 7 it expected to get by selling the unit to Eneva SA, the Brazilian utility controlled by EON and Batista.
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.
Cambuhy has agreed to buy out the natural gas company from OGX’s three bank creditors if it doesn’t complete the purchase of OGX’s stake and lenders execute guarantees, Eneva said yesterday. The private equity firm was established in 2011 by the billionaire chairman of Itau Unibanco Holding SA, Pedro Moreira Salles. The company didn’t reply to an e-mail seeking comment on the acquisition.
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 through a new shareholders agreement.
OGX rose 7.7 percent to 14 centavos in Sao Paulo at the close today, rebounding from yesterday’s record-low. Eneva fell 5.8 percent to 4.24 reais.
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 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 gas field is Brazil’s eighth largest by production, according to the country’s oil regulator.
OGX’s share of 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 Oct. 10.
The entry of Cambuhy will stabilize the venture and support Eneva’s power generation operations in the Parnaiba complex, EON said in an e-mailed statement yesterday. “Its investment will increase the gas supply security and support the expansion plans of the Parnaiba gas fields,” the company said.
OGX’s divestment is subject to conditions including the approval by Brazilian antitrust authorities, the oil regulators and the company’s creditors, the Batista unit said. OGX’s press office in Rio declined to comment further than yesterday’s statement.
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 the 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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