OGX Said to Negotiate $200 Million Injection With Creditors

Eike Batista’s OGX Petroleo e Gas Participacoes SA is close to a deal with creditors to obtain fresh funds and to convert debt into equity, according to two people with direct knowledge of the matter.

Under the proposal, the creditors would inject $200 million in a debt instrument that could be converted into equity, the people said, asking not to be named because the talks are private. Part of the $5.1 billion in bonds and other obligations would be swapped into equity and the unsecured creditors would own from 85 percent to 95 percent of the company’s capital, according to the people. Batista’s stake would fall to 5 percent or 15 percent from more than 50 percent, according to the people.

One condition for the agreement is that ANP, the Brazilian regulator for oil and gas industry, doesn’t terminate OGX’s concessions as a result of the bankruptcy protection filing by the company, the people said.

Rio de Janeiro-based OGX, which filed for bankruptcy protection in October, didn’t respond to e-mails seeking comment.

OGX rose 5 percent to 21 centavos at 2:57 p.m. in Sao Paulo trading. The stock is down 95 percent this year.

OGX and OSX Brasil SA, the shipbuilder controlled by Batista, which also filed for bankruptcy protection, subsequently asked a judge that their two protection requests be treated as a single process.

A judge issued an injunction against this request, a spokeswoman for OSX-creditor Acciona SA, who can’t be named under company policy, said in a telephone interview today.

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