To suggest that Eike Batista has had a tough year financially risks the height of understatement. The man has lost over $30 billion in a single year’s time, going from Brazil’s richest billionaire to a lowly hundred millionaire. However, Batista’s fortune may be turning towards the better as his flagship company OGX Petroleo e Gas Participacoes SA (BVMF:OGXP3) (OTCMKTS:OGXPY)’s stocked gained over 50 percent yesterday and another 20 percent today, as the company announced that it had fired its chief executive as part of a restructuring plan.
OGX fires chief executive
Late yesterday, the Rio de Janeiro-based company said that it had rid itself of chief executive Luiz Eduardo Guimaraes Carneiro, and replaced him with the company’s chief financial officer, Paulo Narcelio Simoes Amaral.
The company also sacked its legal director and promised its shareholders that it would hire an international auditing firm to review the company’s statement, dating back to when it first went public in 2008.
OGX regulatory filing
“The reason for the board’s decision is to strengthen the management of the company during the revaluation of its strategy and the elaboration and implementation of a restructuring project that serves the collective interests of its shareholders, employees, and creditors,” OGX said in a regulatory filing. The move, however, may prove to be too little to late. Analysts expect that the company could be forced to file for bankruptcy protection this month. The company recently announced that it would not be able to make a $44.5 million payment for bond interest. If OGX Petroleo e Gas Participacoes SA (BVMF:OGXP3) (OTCMKTS:OGXPY) does not reach an agreement with bondholders within 30 days from the missed payment, it will be declared in default, ranking as the largest ever corporate default in Latin America, according to Thomson Reuters.
One of the options being considered by creditors is a debt-for-equity exchange that would force Batista to cede his control of the company for, presumably, someone more hands-on, who doesn’t double oil exploration bids for fun.
I get angry when a twenty dollar bill slips out of my pocket; I can’t imagine the feeling of watching your net worth lose over $3 billion based on production failures at OGX Petroleo e Gas Participacoes SA (BVMF:OGXP3) (OTCMKTS:OGXPY). Those failures caused a crisis of confidence to spread across the entirety of Batista’s businesses.
