March 13 (Bloomberg) -- Oleo & Gas Participacoes SA, Eike Batista’s oil unit, received the first payment from a $215 million creditor funding plan as the Brazilian producer seeks to emerge from bankruptcy protection.
OGpar, as the Rio de Janeiro-based company is known, obtained $125 million from bondholders after conditions for the cash were met or renounced, the producer said in a regulatory filing today. The money will be used to finance operations and pay a bridge loan maturing tomorrow as well as expenses related to the bankruptcy protection, the company said.
The financing is “another important step in the company’s restructuring contemplated under the agreement reached with certain holders representing the majority of the outstanding bonds,” OGpar said in the filing.
The oil producer, which filed for bankruptcy protection in October, last month reached a $215 million debtor-in-possession agreement with creditors including Pacific Investment Management Co. that will see former billionaire Batista relinquish control of the company formerly known as OGX. Without the cash, OGpar would face closure, it said in a recovery plan presented to a Rio court Feb. 14.
“This transaction generates immediate cash to help the company exit the bankruptcy protection,” said Octavio Fragata de Barros, a litigation and arbitration specialist at law firm TozziniFreire Advogados who advises creditors of sister company OSX Brasil SA. “If everything goes as expected, the next step is the discussion of the recovery plan by creditors,” he said by telephone from Rio on March 6.
Pimco spokeswoman Agnes Crane didn’t respond to an e-mailed request for comment.
Shares of OGpar, which lost 90 percent in the past 12 months, closed unchanged at 24 centavos in Sao Paulo. The company’s dollar-denominated bonds have plunged 93 percent in the past year.
OGpar also said today its Tubarao Martelo oil field produced an average 10,796 barrels of oil per day in the first 11 days of March, or 4.1 percent more than the February average. The company on Feb. 2 started tests at its nearby Tubarao Azul field, obtaining a daily average output of 3,898 barrels through March 11, according to a statement.
OGpar, whose cash position at the start of February was $1 million, needs to pay back a $50 million bridge loan tomorrow and a $15 million short-term credit on March 29, according to its recovery plan. The company initially targeted receiving the first part of the fresh funding in mid February, with a second $90 million payment expected in April.
Batista, once Brazil’s richest person, has been selling stakes in his oil, logistics, utility and shipping ventures since May as missed targets, mounting debt and accumulating losses forced him to cancel projects and cut operations. The tycoon will see his stake in OGpar shrink to about 5 percent from 50 percent as part as the agreement with creditors.
OGpar, which spent more than 10 billion reais ($4.2 billion) since it was founded in 2007, surged in value to as much as 75.2 billion reais in 2010 after reporting discoveries at more than 80 percent of wells drilled, allowing Batista to tap debt markets to finance operations.
Worse-than-expected production and reserves results eroded cash and triggered an investor confidence crisis that ended in Latin America’s largest corporate default after the company missed a $45 million bond interest payment in October. At the time, OGpar declared 11.4 billion reais of debt including $3.6 billion of defaulted dollar bonds.
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