Eike Batista, formerly Brazil’s richest man, has agreed to buy $100m of new shares in OGX, raising investors’ hopes about the future of his flagship oil company.
OGX said on Friday it had exercised a long-awaited put option on Mr Batista, who promised in October to buy up to $1bn worth of the company’s shares by the end of April next year as a form of insurance for investors.
Shares in OGX jumped as much as 49 per cent following the announcement, but were up only about 24 per cent at R$0.51 by early afternoon as suspicion grew over how Mr Batista would be able to afford the remaining $900m he promised to pay.
In July, Bloomberg calculated that Mr Batista’s net worth had shrivelled to $200m from a peak of $34.5bn about 18 months ago. This week, Forbes magazine estimated his net worth at less than $900m.
OGX has requested the payment of $100m up front from Mr Batista, and “the balance in instalments depending on the further cash requirements of the company, as to be decided by its management”, the company said in a regulatory filing.
Under the terms of the first instalment, Mr Batista will buy OGX shares at R$6.30 each – more than 10 times their value on Friday.
“We weren’t expecting this at all,” said Aurélio Valporto, one of a group of around 60 minority investors who are planning legal action against Mr Batista and OGX’s independent directors.
The group had been preparing a lawsuit to force OGX to exercise the $1bn put option. It is still pursuing another lawsuit, accusing Mr Batista of insider trading after he sold 56m of his OGX shares a fortnight before the company announced it was suspending development of its only three producing oil wells. OGX has declined to comment on the lawsuit and Mr Batista could not be reached for comment.
“We were expecting the $1bn to be paid up front but it’s still a very good sign as it shows that at least Eike thinks there is still some salvation for the company,” Mr Valporto said.
However, he said concerns were rising over a report by the Brazilian newspaper Valor Econômico later on Friday, saying that the $100m would not be paid and the remainder of the $1bn put option would not be honoured.
“If this is really true then the situation is worse than we thought and shows a total disintegration of the executive body of the company, suggesting a chaotic end,” said Mr Valporto.
OGX’s announcement comes a day after Brazil’s market regulator, CVM, launched a formal investigation into the dealings of Mr Batista and executives at OGX over rules governing the disclosure of information.