Eike Batista, formerly Brazil’s richest man, is struggling to keep his oil company OGX afloat as fears grow that an $850m lifeline from Malaysia’s Petronas will be scrapped.
Shares in OGX, once Brazil’s second-biggest oil company by market value, slumped as much as 21 per cent on Thursday. The stock has lost about 90 per cent this year.
A crisis of confidence across Mr Batista’s mining and energy empire has forced the former speedboat champion into a race against the clock to divest parts of his companies before they run out of cash.
Analysts have largely pinned OGX’s survival on a deal it struck in May with Petronas to sell the Malaysian state oil company a 40 per cent stake in the Tubarão Martelo field for $850m. Deutsche Bank warned this week that OGX might run out of cash as early as this quarter if it does not receive the initial $250m tranche of Petronas’s payment.
However, late on Wednesday OGX cast further doubt over the deal, acknowledging reports that Petronas has refused to close the sale until OGX restructures its debt.
“Petronas does not have the right to postpone the closing of the transaction,” OGX said in a statement, adding that the companies had not yet reached an agreement on the issue.
Brazil’s Folha de S.Paulo newspaper reported on Wednesday that OGX is already offering some holders of the company’s $3.6bn in bonds the chance to exchange their securities for shares. However, a person close to the situation told the Financial Times the process was still at an early stage.
Aurélio Valporto, one of a group of minority investors who are planning legal action against Mr Batista and OGX’s independent directors, said delays over the Petronas deal also cast doubt over the quality of the Tubarão Martelo field, one of OGX’s only remaining assets.
“Did Petronas leave the deal to put more pressure on OGX to resolve [its debt restructuring] more quickly or because after months of studying the oilfield it decided it wasn’t good and used the [debt restructuring] as an excuse?” said Mr Valporto.
On Thursday OGX said Mr Batista had sold another 1.54 per cent of the oil company’s stock to pay the debts of his EBX holding group, bringing his total sale of OGX shares to 5.67 per cent since March.
