Reuters reports that OSX Brasil SA will take a 7% stake in sister company Óleo e Gás Participações SA after agreeing to convert $1.5 billion of debt into stock, in order to help the ailing oil producer exit bankruptcy.
The debt stems from the termination of several contracts to lease oil production ships to Óleo e Gás, which filed for court protection on Oct. 30 and was formerly known as OGX Petróleo e Gás Participações SA, OSX said in a securities filing late on Wednesday. Both companies are controlled by tycoon Eike Batista's Grupo EBX.
Óleo e Gás has reached a deal with a majority of bondholders owed about $3.8 billion that allows that debt to be converted into shares of the restructured company. Óleo e Gás's debt with OSX and bondholders will bear the same terms, the filing added.
OSX will receive a credit of $414 million related to the termination of a leasing and operation contract for its floating, production, storage and offloading (FPSO) OSX-1 unit, and another $557.3 million for the contract termination of its FPSO OSX-2. Óleo e Gás will also pay $528.6 million for the termination of a leasing contract for its oil platform WHP-2.
OSX, which operates a shipyard north of Rio de Janeiro, had to file for protection from creditors on liabilities of 5.34 billion reais ($2.30 billion) days after OGX's bankruptcy protection filing.
According to the Reuters report, Óleo e Gás’s failure to produce as much oil as expected at its first offshore oilfield, Tubarão Azul, led to the meltdown of EBX and nearly wiped out Batista's fortune, once worth about $30 billion. That undermined Batista’s ability to finance other companies in his group with capital needs as they tried to transform from startups into revenue producing firms.