Brazil's OGX says will be able to meet medium term obligations
BY MATTHEW COWLEY AND LUCIANA MAGALHAES
SAO PAULO -- OGX said it will be able to meet its debt payments in the medium term with proceeds from the recent sale of a stake in two of its oil fields.
OGX's failure to deliver on production and exploration commitments has raised questions about its ability to continue to meet debt payments. Credit-ratings firm Fitch Ratings said a default by OGX was "a real possibility."
OGX sold 40% stakes in two fields to Malaysian state oil and gas firm Petroliam Nasional for $850 million. At the time, one person familiar with the deal said OGX would receive $250 million upfront, $500 million once the field starts production, currently expected by end-2013, and the remaining $100 million to be paid based on operational goals.
Those revenues will "assure the necessary resources so that can honor its medium term commitments" OGX said in a statement. The company also said that if it needed extra cash, it can turn to its main shareholder, Eike Batista.
Mr. Batista has promised to invest an extra $1 billion himself in the firm if needed. The recent woes of his nascent industrial empire, however, have sparked concerns that he may not be in a position to fulfill all of that promise.
According to a report by Morgan Stanley, the next payment on OGX's publicly traded bonds would be October first week, when a coupon payment is due on the company's bonds due 2022, of which there is $1.1 billion outstanding. The firm made a payment on the 2018 bonds in June. There are some $2.6 billion of those bonds outstanding.
Dow Jones Newswires