Creditors agreed to the terms of $215 million in funding for Eike Batista’s Oleo & Gas Participacoes SA that will strip control from the former billionaire, the oil company has revealed.
The arrangement with the company’s bondholders entails subsidiary OGX’s issuance of debentures in two tranches, with the first $125 million expected in mid-February.
Creditors are led by Pacific Investment Management Co. and Deutsche Bank AG will act as an intermediary in the transaction, according to people with knowledge of the deal who asked not to be identified because they aren’t allowed to speak publicly.
The accord, which is subject to regulatory approval, would end more than six weeks of talks to make final a preliminary debt-for-equity swap announced late last year that will give creditors control of the explorer founded by Batista.
The debtor-in-possession financing will help cover costs at its only producing oil field as the company looks to emerge from bankruptcy protection after triggering Latin America’s largest corporate default last year.
“This agreement is an important vote of confidence in OGX’s potential and an important step in our restructuring,” OGP Chief Executive Officer Paulo Narcelio said in the statement. “If approved, it will provide the company with a new start.”
Negotiations were delayed after BlackRock Inc. and GSO, Blackstone Group LP’s credit unit, pulled out of the deal.
The financing forms part of a restructuring plan that the company needs to deliver to a court in Rio de Janeiro. It has until Feb. 17 to present the plan, Caetano Berenguer, a partner at the law firm Sergio Bermudes, which represents the company, said in a telephone interview yesterday.