Brazil's OGX gets up to $50 million bridge loan ahead of DIP financing

By Lisa Kerner

Charlotte, N.C., Jan. 16 - Oleo e Gas Participacoes announced that it entered into an export prepayment agreement, extending a loan up to $50 million to its controlled company, OGX Petroleo e Gas SA, as part of its proposed restructuring.

The loan will be subscribed at a discount of 20% and has a maturity of 60 days from the initial disbursement.

Prepayment is required should OGX enter into debtor-in-possession financing.

The loan is a post-petition super-priority claim, in accordance with article 67 of the Brazilian Bankruptcy Law.

OGX will use the proceeds to finance exports and to pay related fees and expenses, according to a company news release.

As previously reported, OGX reached agreement with a majority of its bondholders on the terms of a financial restructuring.

Under the agreement, if the supported reorganization plan is approved, creditors will convert $5.8 billion of pre-bankruptcy debt into equity in the company.

Additionally, as part of the restructuring, OGX said it may obtain a commitment for $200 million to $215 million of debtor-in-possession financing, which will allow the company to meet its ongoing commitments and continue its activities.

OGX said these funds would come through a debenture to be issued in January, convertible into equity, subject to specified conditions. OGX will still be a listed company after approval of the agreement.

Of the $5.8 billion of debt that is being restructured, $3.8 billion is held by bondholders, $1.5 billion represents claims for termination fees from OSX Brasil SA and $500 million is held by other suppliers.

OGX said its debt will be extinguished as a result of the restructuring plan and the company will be able to focus on continuing its exploration and production activities.

The restructuring proposal requires approval from the majority of creditors and from the judge who is in charge of OGX's judicial recovery process.

The transaction is subject to the execution of the DIP financing documents by Jan. 24 and the filing of the company's judicial reorganization plan.

OGX is an oil and natural gas company based in Rio de Janeiro.

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