Batista oil firm OGX files for bankruptcy

OGX has filed for bankruptcy protection in a Rio de Janeiro court. OGX is a Brazilian oil and gas company controlled by the billionaire Eike Batista. The filing came as OGX admitted that long-running talks with creditors to restructure some of its $5.1 billion debt broke down earlier this week.

According to BBC News, OGX has struggled with large debt and a crisis in investor confidence. OGX has had big problems with a fall in output from its oil fields in Brazil

It is thought to be Brazil’s biggest corporate bankruptcy. BBC News also provided this analysis:

The failure of OGX is seen as a significant chapter in the demise of the vast business empire controlled by Mr Batista, a colourful and well-known business figure in Brazil who once boasted of ambitions to become the world’s richest man.

Estimates by Forbes put Batista’s fortune at $30 billion in 2012, but analyst suggest that troubles at OGX have wiped out his wealth.

There were signs that problems were on the horizon earlier this month when OGX missed a $44.5 million interest payment owed to bondholders. Analysts say the business model was based on securing loans to be paid back with oil that had not yet been produced.

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2 thoughts on “Batista oil firm OGX files for bankruptcy

    • The Economist has written a very interesting overview of Batista’s problems. As it points out, it is more disappointing for Brazil than anything else – not only losing a big private player in the oil industry, but Batista’s rapid rise and fall makes the country look a bit unstable from a business point of view.

      Anyhow, here’s the article’s scathing view of Batista:

      But it was Mr Batista’s personal flaws — a belief in his own infallibility and a fondness for yes-men — that brought him to grief. An insistence on going it alone meant OGX bore the full losses from its dud fields. From a fortune once estimated at $34 billion he retains little more than shrunken stakes in the rescuable bits of his empire. Three private jets and a helicopter have been sold. His luxury yacht, Pink Fleet, will probably be broken up for scrap.

      Well worth a read of the rest.

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