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Brazilian OGX, Latin America's biggest bankruptcy, to reorganize by April: CEO
October 20, 2014 / 9:22 PM / 3 years ago

Brazilian OGX, Latin America's biggest bankruptcy, to reorganize by April: CEO

RIO DE JANEIRO (Reuters) - The restructuring of Oleo e Gas Participacoes SA, which filed Latin America’s largest-ever bankruptcy-protection petition nearly a year ago, should be complete by April, the company’s chief executive told reporters in a wide-ranging interview.

The headquarters of OGX Petroleo e Gas Participacoes SA, the cash-strapped Brazilian oil company controlled by former billionaire Eike Batista, is pictured in downtown Rio de Janeiro October 29, 2013. REUTERS/Sergio Moraes

Oleo e Gas (OGXP3.SA), formerly known as OGX Petroleo e Gas Participacoes SA, should be folded into a new OGX within six months, Chief Executive Officer Paulo Narcelio told reporters at company headquarters in Rio de Janeiro.

The company is in the process of registering the new OGX to trade in New York as American Depository Receipts. Current shareholders and creditors of Oleo e Gas and creditors will fold their holdings into that company which will be controlled by investors who put up new money after the filing, the so-called DIP lenders, to keep Oleo e Gas operating.

The DIP lenders will own 65 percent of the new OGX, pre-bankruptcy creditors 25 percent and pre-bankruptcy shareholders 10 percent, with about 5 percent, or half the original shareholders amount, belonging to Brazilian tycoon Eike Batista.

“We will emerge from this as one of the biggest independent oil companies in Brazil,” Narcelio said. “It will be almost debt free and will be a producing oil company.”

Final emergence from bankruptcy protection and the supervision of a judge will likely take until September, he added. During part of the next six months, both the new OGX and Oleo e Gas shares will likely trade side by side.

Narcelio also said he expects the company to restart oil output at the company’s Tubarao Azul oil field by April and that it should be capable of producing 2,900 to 3,000 barrels of oil a day.

Peak production of 25,000 to 30,000 barrels of oil a day at the company’s other producing oil field, Tubarao Martelo should happen some time in 2016 after he company drills 6 more production wells and three injection wells, he added.

Securing the budget of $200 million to $500 million to drill those wells and other activities in the company’s expansion plans will have to await the completion of the restructuring and the appointment of a new board and executives, Narcelio said.

Reporting by Jeb Blount and Marta Nogueira; Editing by Cynthia Osterman

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