OSX Plans to Miss Interest Payment on Dollar Bond Next MonthBoris Korby
OSX Brasil SA, the shipbuilder of former billionaire Eike Batista, doesn’t plan to make next month’s interest payment on $500 million of ship-backed bonds.
OSX notified bond trustee Norsk Tillitsmann AS of its intentions in a letter released today. The $11.56 million payment is due Dec. 20 on the bonds maturing 2015. OSX is seeking to defer the payment to March, according to an Oct. 21 summary of talks between OSX, the trustee, bondholders and their advisers that was provided by Norsk Tillitsmann.
While OSX declared bankruptcy this month, the leasing unit through which the company owns the ship securing the debt wasn’t part of the judicial recovery petition filed in a Rio de Janeiro court. The notes are backed by an $800 million production, storage and offloading vessel, known as OSX-3, that was intended to be leased to bankrupt sister company OGX Petroleo & Gas Participacoes SA to pump offshore oil.
OSX is seeking to remain in business after OGX missed debt payments earlier this year. Batista was Brazil’s richest man, with personal wealth that exceeded $34 billion, before his commodity empire crumbled.
OSX’s press office didn’t respond to calls seeking comment.
“We expect to maintain our good faith discussions in order to reach a mutually acceptable standstill and a comprehensive solution for all issues under the bond agreement,” OSX’s advisers said in the letter to the trustee.
The bonds were little changed at 80 cents on the dollar today, according to data compiled by Bloomberg.
OSX bondholders have already hired law firm Bingham McCutchen LLP to help them navigate the process of taking control of their collateral, two people briefed on the arrangements who asked not to be identified because they’re not authorized to speak publicly said in September.