OAS Files for Bankruptcy as Petrobras Probe Embroils BuilderChristiana Sciaudone and Paula Sambo
Brazilian builder OAS SA filed for bankruptcy, making it the largest company to seek protection as a bribery scandal involving state-controlled oil producer Petroleo Brasileiro SA engulfs the construction industry.
OAS, which missed a local debt payment in January, said in a statement that it submitted documents Tuesday in Sao Paulo to restructure 7.03 billion reais ($2.18 billion) of debt in a process known locally as judicial recovery.
Brazil’s biggest builders have been struggling to make payments to creditors as they defend themselves from allegations that they bribed the oil company for contracts. As investigations proceed, OAS and more than 20 other companies have been banned from bidding on new projects with Petrobras.
“The company saw its credit lines offered in Brazil and abroad dry up for its operations,” OAS said in the statement.
The Sao Paulo-based company’s $875 million of notes due in 2019 have plummeted 55 percent this year to 14.5 cents on the dollar, data compiled by Bloomberg show.
OAS said in the statement that it plans to sell stakes in the Invepar airport concession, the Enseada shipyard, OAS Empreendimentos SA, OAS Solucoes Ambientais, OAS Oleo & Gas and OAS Defesa, as well as the Dunas and Fonte Nova stadiums, to pay debt.
Potential buyers of assets wanted the company to file for bankruptcy protection before they would close any deals, said Fabio Yonamine, president of OAS Investimentos, the investment arm of OAS.
“We are no longer in investments, we’re going back to basics,” Yonamine said in an interview in Sao Paulo. “We are going to be focused on construction, which is less dependent on credit and less capital-intensive.”
After the request for bankruptcy protection is approved, the company will have 60 days to present its restructuring plan to creditors while existing debt will be frozen and renegotiated, Diego Barreto, corporate development director at OAS, said in an interview in Sao Paulo.
OAS expects revenue of 7 billion reais to 8 billion reais this year.
Galvao Engenharia SA, another construction company, filed for bankruptcy protection in Rio de Janeiro on March 25. The company said in an e-mailed statement that its finances deteriorated as clients including Petrobras stopped payments. The builder also filed a request for protection for a related company, Galvao Participacoes.