Feb 8 (Reuters) - Creditors led by Pacific Investment Management Co and other bond investors agreed late on Friday to provide $215 million of financing to Óleo e Gás Participacoes SA, the oil producer of Brazilian tycoon Eike Batista, in a move that will strip from him control of the bankrupt company.
The so-called debtor-in-possession (DIP) financing will consist of a two-portion bond sale that will be entirely subscribed by the creditors, Óleo e Gás said in a securities filing. Initially, the company will issue $125 million worth of notes, with the remaining $90 million in notes being issued afterwards.
Terms of the arrangement, such as maturities and the cost of borrowing for the notes, were not disclosed in the filing. The media office of Pimco, as the Newport Beach, California-based Pacific Investment Management is known, and the Rio de Janeiro-based Óleo e Gás, formerly known as OGX Petroleo e Gás Participacoes SA, did not respond to requests for comment.
The financing accord between Óleo e Gás and its creditors was a necessary step to carry out a debt-for-equity swap that will relieve Batista of control. The swap will give creditors about 90 percent of the company, with Batista keeping about 10 percent of Óleo e Gás, as Reuters reported in December.
The delay in the conclusion of the DIP financing drove bonds of the company maturing in 2018 and 2022 down to nearly 4 cents last week, a record low. Óleo e Gás had initially set Jan 24 as a deadline for the presentation of a restructuring plan to exit bankruptcy.
One source told Reuters early on Saturday that Oleo e Gas is likely to file the plan in a Rio de Janeiro court as early as next week.
OGX filed for the largest ever bankruptcy in Latin America on Oct. 30 after its first oil wells produced disappointing results and investors lost confidence in the company’s ability to keep up with its debt payments.
According to the filing, proceeds from the DIP financing will be used to repay a $50 million bridge loan extended to the company late last year, and for general corporate purposes. Currently, Óleo e Gás is struggling to pay for the costs of developing its most promising fields while it restructures operations to emerge from bankruptcy protection.
The Brazilian company was expected to submit a debt restructuring plan this month after having delayed the plan in January.
Óleo e Gás owes about $5.1 billion to investors such as Pimco, suppliers including Schlumberger NV, and to its sister company, Batista’s shipbuilder OSX Brasil SA, which is also in bankruptcy.