Law firms Cleary Gottlieb Steen & Hamilton LLP and Bingham McCutchen LLP are arranging separate meetings with bondholders of billionaire Eike Batista’s OGX Petroleo & Gas Participacoes SA and OSX Brasil SA (OSXB3) to discuss Brazilian insolvency law.
Oil producer OGX’s $2.56 billion of 8.5 percent notes due in 2018 have plunged 76.1 cents from their January high to 22 cents on the dollar, according to data compiled by Bloomberg. Shipbuilder OSX’s $500 million of 9.25 percent asset-backed bonds due in 2015 have slipped 18.5 cents this year to 85 cents on the dollar, the data show.
While OGX said today in an e-mailed response to questions that it isn’t restructuring its dollar debt, investors are losing confidence Batista can honor his obligations. OGX announced earlier this month that it is considering halting output at its only producing field and said it was scrapping three other offshore projects. Barclays Plc estimates OGX may finish the quarter with about $150 million in cash, while Credit Suisse Group AG said in a report last week the oil producer may be left with about $13 million by year-end.
“We’re getting a lot of inquires about OGX and OSX, and presentations like this can be helpful to our clients as they assess strategy,” Bingham McCutchen’s Timothy DeSieno, a partner at the firm, said in a phone interview. The law firm is holding a presentation for clients in New York on July 15.
An OSX press official declined to comment.
Cleary Gottlieb is hosting a conference call tomorrow to discuss challenges and risks faced by OGX and OSX creditors, according Richard Cooper, a partner at the firm. FTI Consulting Inc. (FCN:US) and Pinheiro Neto Advogados are participating in both the Cleary Gottlieb call and the Bingham McCutchen meeting.
Standard & Poor’s cut OGX’s credit rating to CCC last week, eight steps below investment grade, and maintained its negative outlook. Bonds rated CCC are currently vulnerable to nonpayment, according to the rating company.
Batista announced last month that OGX and OSX parent company EBX Group Co. restructured debt and only has long-dated maturities. The restructuring “is clear evidence of EBX’s high level of commitment toward its obligations with stakeholders,” he said, without providing further details.
EBX said today in an e-mailed statement that it restructured a “significant portion” of Abu Dhabi-based Mubadala Development Co.’s $2 billion investment in the company.
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