OGP Falls Most in Three Months as Restructuring Plan DelayedJulia Leite and Peter Millard
Oleo & Gas Participacoes SA, the oil producer founded by former billionaire Eike Batista, fell the most in three months after the company’s lawyer said it will postpone filing a debt restructuring plan that was due today.
Shares of the company, formerly named OGX Petroleo & Gas Participacoes SA, fell as much as 14 percent to 30 centavos in Sao Paulo, the biggest one-day decline since Oct. 31. They closed at 31 centavos, an 11 percent drop.
The restructuring agreement calls for a group of creditors holding most of the $3.77 billion in bonds outstanding to inject at least $200 million into the company and swap their debt for equity. OGP needs more time to finish the plan before delivering it to a Rio de Janeiro court, said Sergio Bermudes, a lawyer representing the company. OGP agreed with bondholders to extend the deadline to sign the financing agreement and present the plan until Jan. 31, it said in a regulatory filing.
“It wasn’t ready,” Bermudes said by phone from Rio. “It’s a very complex plan, a new date will be set. Judicial deadlines are manageable.”
The deal, which must be approved a Brazilian court, would push Batista out of the company’s control, giving creditors that inject new cash a 65 percent share while the outstanding bonds would be converted into a 16.3 percent stake.
McDermott Will & Emery LLP is organizing a group to represent minority creditors after the investors were left out of the Brazilian oil producer’s reorganization talks. McDermott didn’t respond to a request for comment when contacted by telephone.
Varun Gosain, a partner at Constellation Capital Management, and OGP creditor, said Jan. 16 that the agreement was unfair to investors who weren’t part of the discussions to provide financing.
Pacific Investment Management Co. and BlackRock Inc. led negotiations for a so-called ad hoc committee members group of bondholders who have exclusive rights to provide the first tranche of debtor-in-possession financing of about $118 million.
“The ad hoc group was giving themselves an opportunity to buy a bigger share of the company,” Russel Dallen, the head trader at Caracas Capital Markets, said by phone from Miami. “They shouldn’t be better situated than the smaller bondholders.”