OGX warns: default is coming.
The president of Eike Batista's oil company, Luiz Eduardo Carneiro, confirmed that judicial reorganization is an alternative being considered, as previously reported by 247; OGX executives are trying to convince debt holders to become shareholders and invest new money; however, a lack of credibility makes the task almost impossible, since the company's owner himself is trying to avoid the requirement to invest US$1 billion in the company, as he promised in 2012.
247 - The president of OGX, Luiz Eduardo Carneiro, confirmed that judicial reorganization is an alternative being considered. The imminent default was anticipated by 247 (read here).
"It's a possibility. I'm not saying we're going to file [the request]. Whatever is possible and impossible to do to achieve financial restructuring will be done," he stated.
The Fitch ratings agency downgraded the debt rating of Eike Batista's oil company OGX, indicating an "exceptionally high" credit risk, with imminent or inevitable default.
Faced with financial difficulties, the oil company hired the law firm Davis Polk & Wardwell to represent it in talks with creditors regarding a possible restructuring of its debt.
A Folha report last week showed that OGX executives are trying to convince bondholders to become shareholders and invest new money.
The proposal is for them to inject between US$250 million and US$500 million into the oil company, in addition to converting the US$3,6 billion in debt securities into shares.
"The attempt is to show that it's better for him to invest money and get a greater return than to let the company actually go bankrupt."
But it is difficult to convince the market if the company's owner himself tries to evade the requirement to invest US$1 billion in OGX, as he had promised in 2012 (lhey here).