360° Coverage : Eike Batista Says Failed Co Debt Will Take 25 Years To Pay Back

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Eike Batista Says Failed Co Debt Will Take 25 Years To Pay Back

May 17 2014, 12:34pm CDT | by

Brazil’s fallen billionaire Eike Batista finally presented to the court his plan to revive at least on of his failed companies, this one a merchant marine builder known as OSX.  Bond holders shouldn...

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19 weeks ago

Eike Batista Says Failed Co Debt Will Take 25 Years To Pay Back

May 17 2014, 12:34pm CDT | by

Brazil’s fallen billionaire Eike Batista finally presented to the court his plan to revive at least on of his failed companies, this one a merchant marine builder known as OSX.  Bond holders shouldn’t expect being paid anytime soon.  According to Brazil’s largest daily, Folha de São Paulo, Batista said it will take 25 years to pay investors back.  By then, most of the holders of OSX debt will be dead and buried.

Batista fell from grace last year, when his family of mostly commodity and logistics firms lost nearly all of their share value and filed for bankruptcy.  Batista, who was absent from the FORBES billionaire list this year, became one of the most beloved businessmen in Brazil.  He rose to stardom in 2008 when his OGX Petroleo & Gas, the nation’s first privately held oil exploration and production company, listed on the BM&F Bovespa exchange and became one of the largest IPOs in the world.  Investors believed the Batista hype, that his OGX was swimming in oil far off the coast of Rio de Janeiro.

The courts have been asking Batista to provide plans to revive the companies in the Batista family, and OSX became the first to do so on Friday. OGX, for its part, has managed to strike a deal with its main lenders before presenting its survival scheme to the courts.

Like OGX, OSX was a good idea at the time.  Brazilian exporters have been complaining for years that the country did not have its own ship building capacity, and Batista was seen as a possible hero to their cause. Moreover, OSX was seen as a builder of floating oil drillers at a time when deep sea oil production was on the rise in Brazil.  It had a captured market.  But mismanagement and a weaker economy pulled the rug out from under the company.

The plan does not include any immediate haircuts on bond prices, but over the years will result in at least a 50% reduction from the original value.  OSX’s plan includes a three year grace period before it begins paying back around R$4.5 billion ($2.2 billion) to its biggest lenders, including privately held Banco Votorantim (R$555 million) and state owned lender Caixa Economica Federal (R$463 million). However, over the next 12 months, OSX said it will pay a “minimum” to smaller creditors in an attempt to pay off those loans first.

The plan has yet to be approved by OSX lenders.  If lenders fail to approve the recuperation plan set forth by Batista, then OSX will be forced to liquidate.  The company hopes to strike a deal with Caixa and Votorantim next week to keep the company intact.

See: Brazilian Mogul Starts To Fight Insider Trading Claims – The New York Times

Batista Fights $55 Mln Court Asset Freeze – WSJ

 
Update
2

4 weeks ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new company (NewCo) and slashing the workforce of 20,000 by ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

4 weeks ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double t ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

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