RIO DE JANEIRO: A judge approved a restructuring plan for Oleo e Gas Participacoes SA, the oil company controlled by Brazilian tycoon Eike Batista, according to a statement by the Rio de Janeiro court that heard the bankruptcy proceedings.
The court’s approval grants a quick and expected resolution to the largest bankruptcy in Latin America’s history.
Creditors of the company, formerly known as OGX Petroleo e Gas Participacoes SA, approved the plan on June 3. Holders of 90 percent of the Rio de Janeiro-based company’s nearly 12bn reais ($5.4bn) in debt agreed to the plan.
In the statement released Friday, Judge Gilberto Clovis Faria Mattos said quick resolution to the case was vital because thousands of jobs at the company were at stake. Under the terms of the plan, creditors will swap debts for about 90 percent of Oleo e Gas stock. Creditors include Newport Beach, California-based Pacific Investment Management Co, or PIMCO, one of the world’s largest bond investment companies; Batista’s shipbuilding company, OSX Brasil SA, and suppliers such as oil services company Schlumberger NV. The approval comes seven months after Oleo e Gas filed for bankruptcy court protection.
The stake controlled by Batista, at present about 51 percent of Oleo e Gas stock, will drop to about 5 percent. Ownership transfer from Batista and other shareholders to creditors is expected to occur by September or October.
Batista and other shareholders will get warrants to buy about 15 percent of new Oleo e Gas stock.
The plan makes Oleo e Gas debt free, easing efforts to increase output from offshore oil wells near Rio. Reuters
