Economy

OGX and creditors reach agreement to recapitalize the company

Company agreed to issue debentures in the amount of USD 215 million.

OGX
10/02/2014 12:07
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Óleo e Gás Participações S.A. – Em Recuperação Judicial (the “Company”) (BM&FBOVESPA: OGXP3; OTC: OGXPY.PK), in compliance with article 157, paragraph 4 of Brazilian Law No. 6.404/76 and CVM Rule No. 358/02, announces that, consistent with the Plan Support Agreement entered into on December 24, 2013 with certain bondholders representing a majority of the bonds issued by its subsidiary OGX Austria GmbH, it has entered, on the date hereof, into a Subscription Agreement with certain subscribers party thereto (the “Subscribers”) by means of which its controlled company OGX Petróleo e Gás S.A. – Em Recuperação Judicial (“OGX”) has agreed to issue debentures in the aggregate amount of USD 215,000,000.00 (“Debentures”).  The Subscription Agreement is a debtor-in-possession financing (“DIP Financing”) and the Debentures are senior secured super-priority claim, in accordance with article 67 of the Brazilian Bankruptcy Law.  
 
The Debentures will be issued in 2 tranches, being the first in the amount of USD 125,000,000.00 and the second in the amount of USD 90,000,000.00.  The Subscribers committed to subscribe and fund, directly or through an intermediary bank, for the entire first tranche of the Debentures and any portion of the second tranche of the Debentures that remains unsubscribed. The Debentures of the second tranche will be available for subscription by all creditors of OGX, on a pro rata basis, pursuant to the terms and conditions of the Reorganization Plan, that will be filed with the Bankruptcy Court overseeing the Company’s judicial reorganization within the applicable legal term as a condition precedent to the funding of the first tranche of the Debentures, as agreed between the Company and the parties to the Plan Support Agreements entered into on December 24, 2013, which remain effective and in place.  
 
The funding of each tranche of the Debentures will be subject to a set of conditions precedent.  The conditions precedent of the first tranche of the Debentures include, among others, the execution and registration of the Debentures indenture, the execution and registration of the collateral documents and the filing of the Reorganization Plan with the Bankruptcy Court overseeing the Company’s judicial reorganization.  The conditions precedent of the second tranche of the Debentures include, among others, the approval by OGX creditors of the Reorganization Plan, the Bankruptcy Court confirmation of such approval and all required regulatory approvals.
 
As a condition for, and to induce the Subscribers to enter into the DIP, the Company, OGX and other entities pertaining to the OGX Group established certain collaterals in favor of the Subscribers and the other creditors that subscribe for the Debentures to secure OGX’s obligations under the DIP.  Certain collaterals include permanent assets of the Company or OGX and therefore require approvals by the Bankruptcy Court overseeing the Company’s judicial reorganization, which approvals either have already been obtained or will be requested and obtained as a condition precedent to the perfection of the respective collateral.  The collaterals also respect third party existing liens.
 
Upon fulfillment of certain conditions precedent, including the issuance of the required antitrust and regulatory approvals and the approval of the Reorganization Plan by OGX creditors, the Debentures shall be converted into common stock of OGX, representing 65% of the company emerging from the restructuring, on a fully diluted basis, after giving effect to the conversion of all pre-petition debt into common stock of OGX, which will then represent 25% of the company emerging from the restructuring and the remaining 10% will be held by the current shareholders of the Company that will also receive 5-year warrants for 15% of fully diluted restructured OGX equity, at a strike price based on a $1.5 billion enterprise value, as announced by the Company on the Material Fact Notice of December 24, 2013.
 
The proceeds of the DIP shall be utilized, inter alia, to repay in full the Bridge Loan announced in the Material Fact Notice disclosed by the Company on January 13, 2014  and to finance certain capital and corporate expenditures of the Company and its subsidiaries, as well as expenditures related to the Judicial Reorganization of the Company and certain of its subsidiaries.
 
The DIP is an important step towards and part of the Company’s restructuring contemplated under the agreement reached with certain holders of bonds representing the majority of the outstanding bonds issued by its subsidiary OGX Austria GmbH, as announced by the Company on the Material Fact Notice of December 24, 2013.
 
The Company will keep its shareholders and the market informed of any further developments on this matter and any other material fact related to its judicial restructuring proceeding.

Óleo e Gás Participações S.A. – Em Recuperação Judicial (the “Company”) (BM&FBOVESPA: OGXP3; OTC: OGXPY.PK), in compliance with article 157, paragraph 4 of Brazilian Law No. 6.404/76 and CVM Rule No. 358/02, announces that, consistent with the Plan Support Agreement entered into on December 24, 2013 with certain bondholders representing a majority of the bonds issued by its subsidiary OGX Austria GmbH, it has entered, on the date hereof, into a Subscription Agreement with certain subscribers party thereto (the “Subscribers”) by means of which its controlled company OGX Petróleo e Gás S.A. – Em Recuperação Judicial (“OGX”) has agreed to issue debentures in the aggregate amount of USD 215,000,000.00 (“Debentures”).  The Subscription Agreement is a debtor-in-possession financing (“DIP Financing”) and the Debentures are senior secured super-priority claim, in accordance with article 67 of the Brazilian Bankruptcy Law.   


The Debentures will be issued in 2 tranches, being the first in the amount of USD 125,000,000.00 and the second in the amount of USD 90,000,000.00.  The Subscribers committed to subscribe and fund, directly or through an intermediary bank, for the entire first tranche of the Debentures and any portion of the second tranche of the Debentures that remains unsubscribed. The Debentures of the second tranche will be available for subscription by all creditors of OGX, on a pro rata basis, pursuant to the terms and conditions of the Reorganization Plan, that will be filed with the Bankruptcy Court overseeing the Company’s judicial reorganization within the applicable legal term as a condition precedent to the funding of the first tranche of the Debentures, as agreed between the Company and the parties to the Plan Support Agreements entered into on December 24, 2013, which remain effective and in place.   


The funding of each tranche of the Debentures will be subject to a set of conditions precedent.  The conditions precedent of the first tranche of the Debentures include, among others, the execution and registration of the Debentures indenture, the execution and registration of the collateral documents and the filing of the Reorganization Plan with the Bankruptcy Court overseeing the Company’s judicial reorganization.  The conditions precedent of the second tranche of the Debentures include, among others, the approval by OGX creditors of the Reorganization Plan, the Bankruptcy Court confirmation of such approval and all required regulatory approvals. 


As a condition for, and to induce the Subscribers to enter into the DIP, the Company, OGX and other entities pertaining to the OGX Group established certain collaterals in favor of the Subscribers and the other creditors that subscribe for the Debentures to secure OGX’s obligations under the DIP.  Certain collaterals include permanent assets of the Company or OGX and therefore require approvals by the Bankruptcy Court overseeing the Company’s judicial reorganization, which approvals either have already been obtained or will be requested and obtained as a condition precedent to the perfection of the respective collateral. The collaterals also respect third party existing liens. 


Upon fulfillment of certain conditions precedent, including the issuance of the required antitrust and regulatory approvals and the approval of the Reorganization Plan by OGX creditors, the Debentures shall be converted into common stock of OGX, representing 65% of the company emerging from the restructuring, on a fully diluted basis, after giving effect to the conversion of all pre-petition debt into common stock of OGX, which will then represent 25% of the company emerging from the restructuring and the remaining 10% will be held by the current shareholders of the Company that will also receive 5-year warrants for 15% of fully diluted restructured OGX equity, at a strike price based on a $1.5 billion enterprise value, as announced by the Company on the Material Fact Notice of December 24, 2013. 


The proceeds of the DIP shall be utilized, inter alia, to repay in full the Bridge Loan announced in the Material Fact Notice disclosed by the Company on January 13, 2014  and to finance certain capital and corporate expenditures of the Company and its subsidiaries, as well as expenditures related to the Judicial Reorganization of the Company and certain of its subsidiaries. The DIP is an important step towards and part of the Company’s restructuring contemplated under the agreement reached with certain holders of bonds representing the majority of the outstanding bonds issued by its subsidiary OGX Austria GmbH, as announced by the Company on the Material Fact Notice of December 24, 2013. 


The Company will keep its shareholders and the market informed of any further developments on this matter and any other material fact related to its judicial restructuring proceeding.

 

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