From today's Brazilian press (auto translated from Veja):
"ANP: reorganization of OGX does not protect concessions
The Director of the regulatory agency Olaf Bentes said the reorganization of the oil company of Eike, protecting the company's assets for two years, does not apply to concessions [licenses]"
OGX's main value is licenses, which it expects to retain
It will start becoming operational profitable with martelo
it should save over 300 million interest payments annually after debt equity conversion
some reports have creditors taking about 50% of new equity, with some warrants or convertible debt. that leaves up to 50%: to existing shareholders
Even with shareholders diluted to 20%, that leaves about $1 Billion equity for shareholders or 30 cents per share.
I'm taking my million adr to da bank while the looser bashers watch and weep!
Sentiment: Strong Buy
Shareholders will get nothing. Batista was evicted for not paying rent, Diamond Offshore left because they were not paid. The list of creditors goes on and on. it is not only bondholders on the receiving lines.
Sentiment: Strong Sell
Examine any of the materials that OGX posted to their web site in October regarding negotiations with bond holders. You will see that the outlines of all possible deals in that package involved similar terms to what is being reported in the press now. IN ALL OF THOSE SCENARIOS AND IN THE ONE BEING CURRENTLY REPORTED EXISTING SHAREHOLDERS WILL BE DILUTED BY 90-95%. Batista holds commons shares so if he is being diluted all existing shareholders will be diluted. Wild cards on how much dilution include a) how much money is due OSX as a creditor b) how much of original debt is repurposed into new debt rather than equity c) whether Batista puts money in from the infamous and nearly criminal false promise of the PUT. It appears from the documents released in October that Batista's near sole goal is to wriggle out of that PUT.
To say it appears that dilution will be small is FALSE. Dilution will be massive and the only asset of value today is Tubarao Martelo and that isn't worth anything near the outstanding debt and creditor claims. The other assets that may yield income in the future, but are also going tor require capital, are the block owned with QGEP and further down the road the few, completely speculative, blocks they have license to with Exxon, Total and others.
In short, there are many moving pieces that need to come together ASAP since the company had $86 million in cash on September 30, massive creditor claims, and runs out of cash by the end of this month. Personally, while I hold a residual bit of shares I wouldn't touch new shares at all until the company resolved all claims, exits bankruptcy and has many months of real production under way at TM and then only if share price is extraordinarily appealing and Eike Batista is a tiny minority shareholder with no one on the board. (disclosure, I am not short and have a small residual long position)
Sentiment: Strong Sell
The Bloomberg article says creditors may get between 85 and 95% of the company while Batista gets between 5 and 15%. I guess the question is what happens to other shareholders?
Eike Batista’s OGX Petroleo e Gas Participacoes SA is close to a deal with creditors to obtain fresh funds and to convert debt into equity, according to two people with direct knowledge of the matter.
Under the proposal, the creditors would inject $200 million in a debt instrument that could be converted into equity, the people said, asking not to be named because the talks are private. Part of the $5.1 billion in bonds and other obligations would be swapped into equity and the unsecured creditors would own from 85 percent to 95 percent of the company’s capital, according to the people. Batista’s stake would fall to 5 percent or 15 percent from more than 50 percent, according to the people.
One condition for the agreement is that ANP, the Brazilian regulator for oil and gas industry, doesn’t terminate OGX’s concessions as a result of the bankruptcy protection filing by the company, the people said.
Rio de Janeiro-based OGX, which filed for bankruptcy protection in October, didn’t respond to e-mails seeking comment.
OGX rose 5 percent to 21 centavos at 2:57 p.m. in Sao Paulo trading. The stock is down 95 percent this year.
OGX and OSX Brasil SA, the shipbuilder controlled by Batista, which also filed for bankruptcy protection, subsequently asked a judge that their two protection requests be treated as a single process.
A judge issued an injunction against this request, a spokeswoman for OSX-creditor Acciona SA, who can’t be named under company policy, said in a telephone interview today.
Did anyone know about the 60 workers that were laid off...?? Did anyone see that??? kinda difficult to make money drilling for oil, if you have NO drillers..????
The real issue is to take money out of PIMCO, Blackrock and other morons who were conned by Batista and now may give him millions more for a piece of #$%$.
Looks like they found oil. Something's definitely up with ogxp3.sa on the sao paulo exchange. Per bloomberg article , they're expected to start production soon.
OGX Petroleo & Gas Participacoes SA (OGXP3) plans to begin production this week at its most promising field as controller Eike Batista seeks revenues to keep his Brazilian oil company afloat, said a person briefed on the matter.
OGX, which filed for bankruptcy protection in October, has all the licenses needed to start operating the Tubarao Martelo offshore field after receiving an permits from government environmental agency Ibama on Nov. 29, the person said, asking not to be identified because the plan hasn’t been made public. Ibama confirmed in a statement to Bloomberg News today that the remaining license was issued to OGX last week.
Martelo, which may hold as much as 108.5 million barrels, including proven, probable and possible reserves, is OGX’s latest attempt to produce crude after abandoning projects it had previously declared commercial. OGX became the first Brazilian oil producer to seek creditor protection when it filed for a so-called judicial recovery in a Rio court.
In an e-mailed response to questions today, OGX reiterated its target of starting production at the field in the fourth quarter. Last month, Malaysia’s Petroliam Nasional Bhd. canceled a contract to buy a 40 percent stake in two offshore exploration blocks that include Martelo.
OGX was counting on $850 million from the Petronas sale to develop the field. The company, which expects to run out of cash in the last week of December, needs about $250 million to sustain operations through April, it said in an Oct. 23 presentation to Rothschild, the adviser hired by its bondholders.
Batista founded OGX in 2007 and it became the pillar of his group of commodities and logistics companies. OGX’s initial success finding oil in shallow waters off the coast of Rio sparked a stock
Does the offshore Centennial ring a bell? Any money left is in offshore LLCs where creditors will have a hard time seizing anything. Shares are worthless.
Depends, I think there is some resuscitation value in this , Im in for 10k shares and will hold till Kingdom come.
Only reason being, the guy is probably beyond the Pale but his company does have assets especially Oil blocks and they are worth something to someone. He has an unfinished port still worth something.
So though this might never hit pinnacle level prices, it may hold some value in 2-3 years if not dismantled.
Ahem reading issues! It says in the headline - Oil Blocks. Blocks of oil.
When countries open up their reserves to private oil companies they usually section them off in blocks, the hope for the oil companies buying them is that there's enough oil in there to make up for the purchase.
One important lesson from the Batista saga is that financial players like PIMCO and Blackrock were conned by him which makes one wonder if they deserve to be trusted managing money on our behalf.
The money was never his money. It was Brazilian taxpayers' money syphoned from BNDES and other government controlled banks. Offshore LLCs, like Centennial, likely hide the money and corrupt politicians and should be targeted by creditors if they hope to get anything.
If he run out of cash, he may be kicked out of bed. Money buys anyone, and his wallet is going dry.
Who knows? Fake Batista was evicted for not paying rent longer than 6 months. He owes everybody, including internet service providers and caterers. However, Brazil is an extremely corrupt country and he is in bed with the president.