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Brazil's OGX to issue debentures under $215 million financing deal
By Caroline Salls
Pittsburgh, Feb. 10 - Oleo e Gas Participacoes SA subsidiary OGX Petroleo e Gas reached an agreement with a group of creditors and lenders on the terms of the debtor-in-possession financing under which they will ultimately recapitalize the company, allowing it to continue its operations, according to a news release.
Under a subscription agreement, OGX will issue $215 million in convertible debentures in two separate tranches.
The $125 million first tranche will be released mid-February and subscribed by the parties to the agreement, including bondholders representing a majority of the outstanding bonds issued by OGX Austria GmbH and the lenders of the $50 million, 60-day bridge loan that the company secured on Jan. 13.
The $90 million second tranche will be available for subscription by all OGX creditors and is conditional upon approval of the company's reorganization plan.
Upon fulfillment of conditions, including the issuance of the required antitrust and regulatory approvals and the approval of the plan by OGX creditors, the debentures will be converted into common stock of OGX, representing 65% of the company emerging from the restructuring.
The rest of the capital will be held by other OGX creditors and current shareholders, with other creditors holding 25% and shareholders 10%.
In addition, the company said current shareholders will receive five-year warrants for 15% of fully diluted restructured OGX, at a strike price based on a $1.5 billion enterprise value.
"This agreement is a major vote of confidence in OGX's potential and an important step in our restructuring, which, if approved, will provide the company with a new start," OGX chief executive officer Paulo Narcelio Simoes Amaral said in the release.
OGX is an oil and natural gas company based in Rio de Janeiro.
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