NEW YORK (TheStreet) -- OGX Petroleo e Gas Participacoes SA OGXPY has set an unwanted record after asking a Rio de Janeiro court for protection from creditors and becoming South America's largest ever corporate bankruptcy.
The filing was lodged late Wednesday, Oct. 30, hours ahead of a Thursday deadline for OGX to make a $44.5 million payment on its dollar debt that it missed on Oct. 1 and two days after the company pulled out of talks with the holders of about $3.6 billion of bonds.
OGX, which is controlled by former billionaire Eike Batista, has about $5.1 billion of liabilities, according to its filing, including money owed to suppliers, banks and bondholders. The company, and its long list of advisers, have been scrambling for months to come to an agreement with bondholders and find new investors to boost capital drained by the exploration of oilfields, most of which proved to be uneconomical. OGX needs $250 million of new cash in order to continue operating until April next year, the company noted in documents released on Tuesday.
The corporate default by OGX is Brazil's largest ever and the largest in Latin America, topping the $1.9 billion default in 2002 by Argentina'sBanco de Galicia y Buenos Aires SA.
If the Court of Justice of Rio de Janeiro accepts OGX's petition for protection, the company will have 60 days to present a restructuring plan.Creditorswill then have a further 30 days to endorse the plan or reject it, a move that would likely force OGX into liquidation.
OGX struck an optimistic tone in its filing. "Once we restructure our debt and make our capital structure adequate, OGX will have a prosperous future, able to generate wealth for its shareholders, workers, creditors and for Brazilian society," according to the document.