May 17, 2014 4:11 pm

Batista’s OSX presents restructuring plan

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Batista, CEO of EBX Group, gestures to the audience during a ceremony in celebration of the start of oil production of OGX in Rio de Janeiro©Reuters

Batista, CEO of EBX Group, gestures to the audience during a ceremony in celebration of the start of oil production of OGX in Rio de Janeiro

Eike Batista’s bankrupt shipbuilder, OSX, has presented its long-awaited restructuring plan, seeking approval to pay back its $2.6bn of debt over 25 years.

Under the proposal, Brazil’s former richest man plans to ensure the company’s survival by leasing the areas OSX owns in the vast Açu Port complex in Rio de Janeiro. It may also seek to raise additional funds, possibly through the sale of stakes in the company, OSX said in the plan it presented to a Rio court late on Friday.

The shipbuilder was forced to file for bankruptcy in November last year, just over a week after Mr Batista’s oil company and its main customer requested judicial recovery after its only producing wells proved to duds.

If the plan is approved, OSX will only start paying off the bulk of its debts after three years. In the meantime, it will divide R$25,000 among all creditors within a year of the plan’s approval. It will pay another R$80,000 within a year to creditors of its subsidiary OSX Construção Naval.

“The objective of the plan is to allow OSX to overcome its economic-financial crisis, to implement the available measures of operational reorganisation to serve the interests and preserve the rights of its creditors and shareholders,” the company said.

For the first time, the company also gave a full account of the events that led to the collapse of OSX and Óleo e Gás Participações, Mr Batista’s oil company formerly known as OGX, putting some blame on the risky nature of the sector itself.

“OSX faces the direct consequences of the occurrence of a series of adverse facts related to the risks of the activity that it is involved in, some of which were foreseen in the prospectus for the initial public offering of OSX,” it said.

“The businesses developed by OSX depend significantly on the level of activity of the oil and gas sector in Brazil, particularly the willingness of oil and gas companies to invest in offshore exploration, development and production,” it said.

However, many investors blame Mr Batista himself for the group’s downfall. The entrepreneur, who once ranked as the world’s seventh-richest individual, is being investigated by Brazil’s market regulators over insider trading claims.

Regulators at CVM, Brazil’s version of the US SEC, claim the tycoon hid problems at his oil company from investors for 10 months and used Twitter to manipulate the company’s share price. Mr Batista has denied the allegations.

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