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Eike Batista's OGX Said To File For Bankruptcy Tomorrow

Tyler Durden's picture





 

Earlier this afternoon, it was Steve Cohen's final fall from grace. Now, Bloomberg reports that Brazil's one time super billionaire, and now negativeworthaire, Eike Batista, whose sprawling petroleum empire was once valued in the tens of billions, is set to file for bankruptcy tomorrow.

  • BRAZIL'S OGX SAID TO PLAN BANKRUPTCY PROTECTION FILING TOMORROW

We are confident that just like in Europe, there is no bank with any exposure to either OGX, Brazil, or whatever potential intercreditor avalanche will tear down many more Brazilian companies once this first insolvent domino finally tips over.

Those who missed the preface to this story, we repost it below.

When on October 1, fallen billionaire Eike Batista's OGX Petroleo & Gas, missed a $45 million bond coupon payment, some were surprised but most  had seen the writing on the wall. After all, Brazil's second largest oil company after Petrobras, and the crowning jewel of Batista's EBX Group, had been under the microscope of investors and certainly creditors (and if it wasn't it certainly should have been) after oil deposits that Batista had valued at $1 trillion turned out to be commercial failures. And so the countdown to the inevitable bankruptcy filing began. Overnight, Bloomberg reports that the wait should not be long (in fact it may coincide with the default of that other insolvent mega-creditor: the United States), and will mostly certainly take place before the end of the month, following the retention of bankruptcy specialist law firm Quinn Emanuel.

From Bloomberg:

Quinn Emanuel was hired to work on restructuring and potential litigation matters in the U.S. for Batista, said the people, who asked not to be named because they weren’t authorized to speak publicly.

 

OGX Petroleo & Gas Participacoes SA (OGXP3) is considering filing for bankruptcy protection by the end of this month, two people with direct knowledge of the matter said last week. The filing would be done in Rio de Janeiro where OGX is based, said the people, asking not to be identified as discussions are private. While Batista is negotiating with creditors to avoid the same process for shipbuilder OSX Brasil SA (OSXB3), the most likely outcome is that both companies will seek legal protection, they said.

Prior stakeholder representations by Quinn Emmanuel have been the bankruptcies of energy trader Enron Corp., futures trader Refco Inc. and oil-trader SemGroup LP, according to the firm’s website, so they are quite proficient at representing what is about to be Latin America's largest energy-related bankruptcy in a long time.

And while it is unclear if the company will file concurrently in the US under Chapter 15, Batista's creditors, awoken from their "all is well" slumber and scrambling, have decided to pull an Elliott management, and take possession of at least two ships used as collateral by another Batista company, shipbuilder OSX and sister company to OGX, whose assets may also be impaired as unknown cross-default provisions are triggered and a vicious intercreditor fight ensues.

Bloomberg reports that OSX Brasil bank creditors considering taking possession of 2 vessels used as collateral on loans to Batista’s shipbuilder, say 6 people with knowledge. The banks are talking to advisers and company officials to see if they should execute guarantees if OSX’s oil sister co. goes into  default, which would trigger cross-default clauses on OSX. Bloomberg adds that OSX already hired Credit Suisse to help sell OSX-1, OSX-2 platforms that guarantee loans.

One question is what the waterfall effects on local banks would be in the case of a bankruptcy filing, due to massive exposure to the company by both local and foreign financial firms - case in point OSX borrowed $1.27 billion from banks including Santander, DVB and others.  Naturally officials at neither DVB nor Santander commented.

Either way, the seemingly endless period of financial stability in Latin America, and particularly Brazil (where record consumer debt is a far greater issue), long seen as a derivative of China, is ending. Luckily, the next steps in the global overlevered soap opera are about to be unveiled. So sit back, grab the popcorn and watch as the world receives yet another Donald Trump, i.e., fallen billionaire angel, this time in Latin America, and all the associated entertainment, even if it is not quite as entertaining for the thousands of Brazilians who are about to lose their jobs as the debt tsunami finally rolls over.

 


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Tue, 10/29/2013 - 18:00 | Link to Comment Seasmoke
Seasmoke's picture

Gray Swan ?

Tue, 10/29/2013 - 18:04 | Link to Comment NotApplicable
NotApplicable's picture

Jokes on them if they think those ships are in demand.

Tue, 10/29/2013 - 18:08 | Link to Comment kaiserhoff
kaiserhoff's picture

How in the cornbread hell, can you lose money with $100/barrel oil?

Tue, 10/29/2013 - 18:10 | Link to Comment Stoploss
Stoploss's picture

Mmm, cornbread, jalapeno blackeyed peas, butter.  = Heaven.

Tue, 10/29/2013 - 18:14 | Link to Comment kaiserhoff
kaiserhoff's picture

Burrish,

  for the central banker circle jerk.  Thou shalt not let markets go down.

Tue, 10/29/2013 - 18:46 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

 

 

"The bigger they are, the harder they fall."

I shed no tears...  In fact, were Jamie Dimon to go bankrupt, I would be positively delighted!

Tue, 10/29/2013 - 19:46 | Link to Comment NoTTD
NoTTD's picture

One and all.

Tue, 10/29/2013 - 18:16 | Link to Comment Theta_Burn
Theta_Burn's picture

Didn't you see that guys yachts, boats, helicopters, cooze, and shit?

Tue, 10/29/2013 - 19:02 | Link to Comment ebworthen
ebworthen's picture

kaiserhoff said: 

"How in the cornbread hell, can you lose money with $100/barrel oil?"

You tell people you have vast amounts of oil off the coast of Brazil that isn't there.

Kind of like MBS's and CDS's.

mmm...cornbread.

Tue, 10/29/2013 - 19:08 | Link to Comment Deathrips
Deathrips's picture

The tape painters (riggers) cant make the scheme to control inflation work, unless the "govern-ment" has funds to subsidise costs of real things like food, metals, oil...and others. I think they are running low on funds...which means they are not able to subsidise. I know its rediculous to be low on funds when you have a high speed printer like they do...not to mention the digital numbers can go up trillions in seconds (no paper needed).

Maybe low on funds is the wrong expression...we could call it low on CONFIDENCE?

 

TIMBER!!!!!

 

Fuckers.

 

Rips

Tue, 10/29/2013 - 19:10 | Link to Comment jballz
jballz's picture

 

Simple. Find a giant patch of dirt with no oil in it, have your engineers declare a trillion or two in recoverable reserves, issue stock against that valuation, sell enough stock to snort blow off the ass of every hooker in Rio five times a day, buy a few drill rigs for show, syphon a few hundred billion to the cayman's, reassess your trillion dollar fields and realize there's no oil, and poof... chapter 7 bitchez.

caveat emptor.

 

I have some oilfields under development, so I know. I'm only taking investors up to the one billion level though. The rest I'm keeping, it's all mine bitchez. 

Tue, 10/29/2013 - 19:43 | Link to Comment NoTTD
NoTTD's picture

Medium Brown.

Tue, 10/29/2013 - 18:02 | Link to Comment Black Forest
Black Forest's picture

No big deal, just a neutral event.

Tue, 10/29/2013 - 18:30 | Link to Comment prains
prains's picture

....so is having a pair of donkey balls in your mouth, breathing through your nose is never more important

Tue, 10/29/2013 - 20:19 | Link to Comment Jumbotron
Jumbotron's picture

Buy the fucking dip at 9:41 a.m.

Then buy the All Time Fucking High at 3:15pm......because....after all.  By the time tomorrow rolls around the Fucking All Time High will be the new dip.

Kabuki Bukkake Circle Jerk.

Tue, 10/29/2013 - 18:05 | Link to Comment Dr. No
Dr. No's picture

What, no bail-out?  No TBTF???  I didnt think that was possible these days.  Nice to see some non-moral-hazard these days.

Tue, 10/29/2013 - 18:11 | Link to Comment kaiserhoff
kaiserhoff's picture

Not the grammar police, but I think you mean unpossible;)

As in shoulda, coulda, woulda been a BANKER.

Tue, 10/29/2013 - 19:48 | Link to Comment NoTTD
NoTTD's picture

To the Possimpable.

Tue, 10/29/2013 - 18:06 | Link to Comment Paracelsus
Paracelsus's picture

Uhm,wasn't there something in the news about Argentina repossessing oil leases that weren't being developed?Wasn't that a Portugese company? Not the same deal surely... (Don't ever call me Shirley...) 

Tue, 10/29/2013 - 18:11 | Link to Comment Theta_Burn
Theta_Burn's picture

Fuck..

Sovereign bank (mine) is owned by Santander....

Tue, 10/29/2013 - 18:20 | Link to Comment IndyPat
IndyPat's picture

Cocaine is a hell of a drug....

Tue, 10/29/2013 - 18:22 | Link to Comment Theta_Burn
Theta_Burn's picture

From billionaire to painting houses, that must really blow..

Tue, 10/29/2013 - 18:23 | Link to Comment prains
prains's picture

....roll

 

painters roll, not blow

Tue, 10/29/2013 - 18:58 | Link to Comment ebworthen
ebworthen's picture

I hear Blackrock, Goldman Sachs, and J.P. Morgan Chase are major shareholders.

Bailout, part deux.

Tue, 10/29/2013 - 19:15 | Link to Comment Make_Mine_A_Double
Make_Mine_A_Double's picture

This will be the test case for the new Brazilian bankruptcy laws. Bet it'll be tied up in the courts 10 years from today.

As noted it's amazing the roster of blue chips that invested in this guy. Pimpco, JPM, GS, etc. all based on a smooth talking bullshit artist. Definitely another omen that this is the topper of the commodities super cycle.

 

 

Tue, 10/29/2013 - 19:44 | Link to Comment NoTTD
NoTTD's picture

Is there somewhere we could find a listing of who exactly is holding the company's debt?  

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