By Sabrina Lorenzi
RIO DE JANEIRO, Nov 8 (Reuters) - Brazilian shipbuilder OSXBrasil SA said on Friday it will file for bankruptcyprotection, another step in the decline of former billionaireEike Batista's empire.
The company said in a securities filing its shareholdersapproved the bankruptcy filing, which is expected to take placenext week in a Rio de Janeiro court. The company also announcedthe ouster of Chief Executive Marcelo Gomes.
OSX has 5.34 billion reais ($2.29 billion) in debt and couldseek to restructure part or all of that, becoming the secondcompany of Batista's to file for bankruptcy. Batista's oilproducer company, OGX Petróleo e Gas Participações SA, sought protection from creditors on Oct. 30.
The OGX petition, citing 11.2 billion reais in debt, was thelargest corporate bankruptcy filing in Latin America.
The OSX bankruptcy decision follows more than a year duringwhich Batista's EBX Group - a sprawling empire of energy,minerals and logistics companies, including OGX and OSX -collapsed under a mountain of debt after missing productiontargets.
EBX was once valued at more than $60 billion, and Batistawas a swaggering symbol of Brazil's rise as an emerging-marketpowerhouse over the past decade.
Yet, as problems mounted, they fulfilled predictions made byskeptics of Batista's breakneck expansion in recent years.Critics warned that interdependence between EBX companies wouldmake them vulnerable to each other's problems, the opposite ofBatista's contention that the links would generate businesshelping the companies flourish.
Once OGX filed for court protection, an OSX filing becamemore likely and thus did not come as a surprise. The shipbuilderdepends on its sister company, to which it leases oil productionvessels, for all its revenue.
OSX depends on OGX, to which it leases oil production ships,for all its revenue. OSX is 10 percent owned by South Korea'sHyundai Heavy Industry.
Parent company OSX and two subsidiaries OSX Construção NavalS.A. and OSX Serviços Operacionais Ltda. will jointly file forprotection from creditors, the filing said.
The company did not mention a third unit, OSX Leasing, whichowns three platforms that are leased for oil explorationpurposes. OSX's $500 million in secured dollar-denominated bondshave rallied in recent days on speculation that OSX Brasil wouldkeep OSX Leasing off the filing so that the company can freelydecide what to do with the leasing company's assets.
If the court approves the bankruptcy request OSX plans tofile, the company will have 60 days to present a restructuringplan. OSX creditors will then have 30 days to endorse or rejectthe plan, though legal experts warn the proceedings could dragon for much longer than that.
Brazilian Development Bank BNDES said in a statement that itgranted OSX a $228 million bridge loan, but added that the loanis backed by bank guarantees and presents no risk to the BNDES.
OSX, whose assets include an unfinished shipyard on thenorthern coast of Rio de Janeiro state, is also one of OGX'sbiggest creditors. OGX owes OSX at least 2.45 billion reais,according to documents filed with the bankruptcy court.
Before the OGX and OSX filings, Batista had already agreedto sell stakes and assets of the other four publicly tradedcompanies in the ailing EBX conglomerate.
Like other Batista companies, OSX's troubles stem from thefailure of OGX to meet any of its ambitious oil productiontargets. After starting output at its first field in early 2012,OGX repeatedly missed goals despite reassuring investors thatcopious amounts of oil would soon flow.
Having once said OGX would produce 1.4 million barrels ofoil and natural gas equivalent a day by 2018, or more than halfBrazil's current output, the company never produced more than 1percent of that.
According to Batista's plan, the oil was supposed to haveprovided tens of billions of dollars to build several dozen oilplatforms and other vessels at the OSX shipyard. The facilitywas modeled on shipyards operated by Hyundai Heavy Industry and was designed to be the largest shipyard in theSouthern Hemisphere.
Bankruptcy protection could help OSX salvage its shipyardunit, part of which is almost ready to begin operations at theport of Açu complex on the Rio de Janeiro coast.
The port's operator LLX Logística SA, anothercompany founded by Batista, has agreed to renegotiate itscontracts with OSX for the use of the port, reducing OSX'sinvestment obligations, Friday's filing said.