Brazil's Batista To Challenge OGX Call on $1B Pledge
RIO DE JANEIRO/SAO PAULO, Sept 9 (Reuters) - Brazilian tycoon Eike Batista will challenge a demand by OGX Petróleo e Gas SA, the oil company that he controls, that he honor a pledge to pump as much as $1 billion of new capital into the cash-strapped company, OGX said on Monday in a securities filing.
Batista, in a letter dated Sept. 6 and released by OGX , notified the company of his objections to the cash request, which was made under a put option that he granted the company in 2012.
Without new investment, the company could run out of cash to pay debt and finance expansion before year end. Fitch rating service downgraded OGX bonds to C, signifying high risk of an imminent default, from CCC on Monday.
OGX on Friday called for Batista to start exercising the option while the company renegotiates its debt, saying it would take $100 million immediately in exchange for new OGX stock.
Under the put option, Batista, who has seen his fortune nearly evaporate in the past year, must buy the stock at 6.30 reais a share, more than 10 times OGX's current share price.
"I must stress my rights under the contract and under the law in order to question the circumstances, the form, the content, the validity and other legal aspects of the desired option exercise," Batista wrote in his letter to OGX.
He plans to take his case to Brazil's Market Arbitration Panel, a group set up to settle disputes for companies traded on the BM&FBovespa exchange if an agreement with OGX cannot be reached within 60 days.
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