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.
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
There isn't going to be any share cancellation as the parent company is not in BK. The parent company is just using this BK as a means to divest itself of certain of its subsidiaries in an effort to raise cash. The judge approving the DIP motion on a final basis and also approving the sale motion is one step towards the parent not filing BK.
Chances are it won't touch 7, IMO. DIP motion got approved on a final basis today, which translates to a zero chance of the parent company filing BK, at least for now. The rebound is likely to happen sooner than later, so get in if you're interested.
I agree that there most likely would be settlement discussions on these claims and that there's no guarantee that any settlement will be reached or that any money would be paid out to settle the claims... that's what I was trying to convey when I said earlier that the BK judge is under no obligation...
Anyway thanks for sharing your opinion on this topic, and I hope the discussions we've had have helped dissipate the earlier confusions on the board a bit.
And there you have the difference! The IRS and state and local agencies are OWED, and this is all based on law (in case of the IRS) or some legal contract (in case of Hormel for instance). Those are claims that can easily be validated. Civil claims for damages on the other hand, especially when not backed by any legal contract, cannot be deemed valid unless awarded by a court of law. You don't just get paid by a company just because you believe you've suffered a damage. The first question will be: did you have a contract with the company in which the terms of damages were specified? second, even if there was no specific contract, has the claim been recognized, upheld and awarded by a court of competent jurisdiction? As far as the shareholders suit goes, it's a resounding NO on both questions. No way those claims get paid a dime.
All speculation on your part. Point out one BK case where claims were paid out in favor of any unlitigated class action lawsuits? How can a BK judge decide on and award damages in a suit that was not even filed in his court? Come on man, this is beginning to sound outrageous. Anyway this is my last post on this subject. Like I said, we can agree to disagree. I still do and will continue to appreciate and read your contributions to the discussion on this board though.
First off, there's no such thing as federal civil claims for a class action law suit filed by shareholders. If a group of shareholders believe their company's management has breached securities law and file a suit, that suit can hardly be considered a federal suit -- it's a civil suit. For a civil suit, there can be no federal claims. Only a federal suit can result in a federal claim.
Secondly, no claims related to class action suits will be paid unless they're deemed valid.
Thirdly, and most importantly, claims for damages, pain or suffering cannot be deemed valid unless they've been successfully litigated in a law court and damages awarded by a recognized judge PRIOR TO THE COMPANY FILING BK, in which case they become valid pre-BK claims that must be satisfied ahead of distribution to shareholders.
Lastly, these cases cannot be litigated since the company is in BK. All those claims are worthless at best, regardless of how much they amount to.
We can however agree to disagree on these points. I trust the readers will read and come to their own conclusions. Simple research will enlighten those who choose to be enlightened.
The criminal prosecution is moot. Company is in BK. Besides a class action suit does not count as a criminal prosecution, that would be a suit filed by the government.
There are no guarantees, like you rightly mentioned in your posts. There have been numerous cases in which class action suits have been filed against BK companies and the class didn't see a dime of distribution. Once the company enters BK, the suits are automatically stayed. Any claims submitted by the class action plaintiffs are not in any way binding on the BK company and the BK judge is not obligated to ensure that those claims are paid ahead of any other valid claims or distributions to shareholders. If those claims cannot be validated according to the standard validation guidelines, they're worthless and will be thrown out. Like I said earlier, anyone can make a claim for any amount or anything (pain, suffering, damages, etc). Doesn't mean squat unless those claims are valid. And in the case of such things as damages, these have to be awarded by a law court in order to be deemed as valid. However since legal actions against a BK company are automatically stayed once the company files, those cases you cite are as good as dead on arrival.
Those accusations of securities violations were alleged. They were never prosecuted or litigated and there certainly was never any judgment in favor of the plaintiffs. In addition, the defendants never even admitted to any wrong doing or committed to any settlement. On what grounds will any claim in this regard stand? I read the entire claim document and there was not one accusation that has been substantiated in a court of law. So no way that claim will rank ahead of anything, it's frivolous and will be thrown out. Now it would have been a very different story if the class action suit had been litigated and judgement reached in favor of the plaintiffs prior to the company filing BK. Any claim in the latter circumstance will be considered a valid claim and will rank ahead of any distribution to shareholders.
I've read a ton of misinformation about claims and would like to clarify one simple fact. In BK court, anyone can file a claim for anything or any amount. That doesn't mean squat until the claim goes through a vetting process and is approved by the judge. When it comes to claims filed by shareholders in a class action lawsuit, unless that suit had been successfully litigated and a judge had awarded the plaintiffs such claims prior to the company's bankruptcy, those claims can never be deemed as valid claims that the BK company has to pay. I'm sure MADaniels is an intelligent guy, but on this issue he's flat out wrong. All claims relating to class action lawsuits will definitely get thrown out.
Thanks Madaniels, I actually did see something about a post sale review on the 8k filing, but this seemed like it was going to be restricted to working capital, which is reasonable considering that the final purchase price would be adjusted by changes in working capital.
I actually do think that this sale will close. Since, per the 8k filing, all of the pre-petition secured and unsecured creditors and some bk fees will be paid out of the proceeds from the Agfeed USA sale, it seems likely that most of the proceeds from the BVI sale will be distributed to shareholders. I suppose it's too early to tell at this point how much exactly that will be so we just have to wait and see.
Section 6.1 of the most recent 8k filing lists events upon which the purchase agreement will be terminated. Here's what section 6.1.4 says:
"by Purchaser if the Bankruptcy Case is dismissed or converted to one under Chapter 7 of the Bankruptcy Code, if a trustee or an examiner with expanded powers is appointed in the Bankruptcy Case; provided, however, that the Break-up Fee and Expense Reimbursement shall be payable in the event any trustee under Chapter 7 or Chapter 11 closes on an Alternative Transaction"
Per docket 307, the U. S Trustee is petitioning the BK judge for the appointment of an examiner in this case. I'm beginning to wonder if the reason we got this offer is because the fraudulent management of Ivan and company wants to get out of the potential liability that could result from the findings of an examiner being published, especially in light of the Webster declaration (docket 309). Sounds like the perfect setup to get the court to reject the examiner motion. If examiner gets appointed, sales goes down the tubes and if examiner is not appointed Ivan and Co. potentially escape being confounded with damning evidence that could result in serious consequences. Not saying the offer is not real though.
On another note, MADaniels, I don't see anywhere in the purchase agreement where the purchaser is requiring a full audit. On the contrary, it looks like they've already done their own due diligence and are making the offer on that basis.
I wouldn't worry about any class action suit at this point. All of those suits were automatically stayed as a result of the BK filing and cannot be litigated in Bankruptcy court. If the company does not emerge from BK, which is most likely going to be the case, there will be no payout on account of those suits as no damages had been awarded by any court prior to Agfeed filing BK. I think madaniels57 is wrong on this point in stating that shareholders in the class have claims against Agfeed. All common shareholders will get the same payout after all is said and done and those class action suits will die a natural death.