Brazil's BNDES refuses to extend loan to OSX

Reuters

By Sabrina Lorenzi and Guillermo Parra-Bernal

RIO DE JANEIRO/NEW YORK, Nov 19 (Reuters) - Brazil statedevelopment bank BNDES refused to extend a loan to OSX Brasil SA after the ailing shipbuilder's decision to file forbankruptcy protection, according to a securities filing onTuesday.

The financing line that BNDES declined to renew was worth428 million reais ($189 million), according to the OSX filing,smaller than the 550 million reais principle-and-interest figureprovided to Reuters earlier by two sources with direct knowledgeof the situation.

The loan, made by BNDES at the start of 2012, bore aguarantee from Banco Votorantim SA, and no vessel from theshipbuilder was set aside as collateral, according to a sourcewho asked not to be identified due to banking secrecy rules inBrazil. Votorantim assumed full credit risk on the OSX loan andrepaid the loan on Monday, another source said.

BNDES decided not to roll over the loan when it matured onFriday, a week after OSX, controlled by former billionaire EikeBatista, filed for bankruptcy protection, the two sources said.

The loan had been extended by 30 days in mid-October,sources told Reuters at the time.

Votorantim will write down the loan in its fourth-quarterresults, the first source said. State-controlled Banco do BrasilSA, which holds a 49.9 percent stake in Votorantim,expects the São Paulo-based lender to return to profit thisquarter following more than a year of losses.

A spokesman for Banco do Brasil told Reuters the bankmaintains its profit forecast for Votorantim even after repayingthe OSX loan.

Shares of Banco do Brasil fell 3 percent to a nearlysix-week low amid a broad selloff on the benchmark Bovespa stockindex.

OSX shares closed 13 percent lower at 0.57 reais on Tuesday,their biggest drop in nearly two weeks.

A spokeswoman for Votorantim said the bank would not commenton the matter, citing banking secrecy rules. BNDES officialsdeclined comment.

OSX originally contracted the loan in 2011 to financeconstruction of its shipyard at the Açu port in Rio de Janeirostate run by sister company LLX Logistica SA.

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OSX had a similar financing line with state-run CaixaEconômica Federal, guaranteed by Banco Santander Brasil SA. Earlier this month the banks agreed to refinancethat 400 million real loan, which had come due in mid-October,for an additional 12 months.

Rio de Janeiro-based OSX had debts of 5.3 billion reais asof June, with about 1.1 billion reais of that amount coming fromCaixa.

BNDES agreed to another credit line for OSX last year of 1.3billion reais, but no funds from that line have been released,said the second source, who also requested anonymity due tosecrecy rules. The source added that the credit line wouldlikely be canceled due to OSX's bankruptcy filing.

In 2012 OSX obtained long-term financing through Brazil'sMerchant Marine Fund for shipyard construction, but no moneyfrom that loan has been disbursed.

OSX was the second company controlled by Batista to seekcourt protection from creditors in just over a week. Oil companyOGX Petróleo e Gas Participações SA filed forbankruptcy on Oct. 30.

Before the OGX and OSX filings, Batista had already agreedto sell stakes and key assets of the other four publicly tradedcompanies in his ailing EBX conglomerate. Over the past year,his empire collapsed under a mountain of debt after missingproduction and profit targets.

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