Oct 30

Batista’s OGX Files Bankruptcy: Largest Ever In Latin American History (ZeroHedge, Oct 30, 2013):

In line with what we discussed last night, once cajillionaire Eike Batista’s net wealth has now collapsed to less than -$746.5 Million according to Bloomberg as Veja notes, his “take over the world” company OGX has declared bankruptcy following the breakdown of restructuring talks with bondholders:

  • *OGX FILES FOR BANKRUPTCY PROTECTION IN RIO, BATISTA LAWYER SAYS
  • *BATISTA’S OGX EXTENDS DECLINE TO 30% AFTER BANKRUPTCY FILING
  • *BATISTA LAWYER BERMUDES COMMENTS ON FILING BY PHONE FROM RIO

The filing puts $3.6 billion of bonds into default – the largest corporate debt debacle on record for Latin America.

As of this morning his net worth was already -$745 million..

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Oct 29

Eike Batista’s OGX Said To File For Bankruptcy Tomorrow (ZeroHedge, Oct 29, 2013):

Earlier this afternoon, it was Steve Cohen’s final fall from grace. Now, Bloomberg reports that Brazil’s one time super billionaire, and now negativeworthaire, Eike Batista, whose sprawling petroleum empire was once valued in the tens of billions, is set to file for bankruptcy tomorrow.

  • BRAZIL’S OGX SAID TO PLAN BANKRUPTCY PROTECTION FILING TOMORROW

We are confident that just like in Europe, there is no bank with any exposure to either OGX, Brazil, or whatever potential intercreditor avalanche will tear down many more Brazilian companies once this first insolvent domino finally tips over.

Those who missed the preface to this story, we repost it below.

When on October 1, fallen billionaire Eike Batista’s OGX Petroleo & Gas, missed a $45 million bond coupon payment, some were surprised but most  had seen the writing on the wall. After all, Brazil’s second largest oil company after Petrobras, and the crowning jewel of Batista’s EBX Group, had been under the microscope of investors and certainly creditors (and if it wasn’t it certainly should have been) after oil deposits that Batista had valued at $1 trillion turned out to be commercial failures. And so the countdown to the inevitable bankruptcy filing began. Overnight, Bloomberg reports that the wait should not be long (in fact it may coincide with the default of that other insolvent mega-creditor: the United States), and will mostly certainly take place before the end of the month, following the retention of bankruptcy specialist law firm Quinn Emanuel.

From Bloomberg:

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Feb 15

Brazilian Billionaire Eike Batista is reaffirming his $1 billion bid for Ventana Gold. This values Ventana’s gold in the ground at a staggering $434 an ounce or 8.3 times Ventana’s assets. This makes Batista’s bid the most expensive all-cash bid in the past ten years.

Gold mining acquisitions are becoming more expensive as we move through this bull market. There were 91 deals last year, and average takeover premiums rose to 50%, the highest level in more than 13 years.

There is absolutely no question that senior and mid-cap producers are going to have to purchase junior explorers in order to replace depleting reserves. Although they will deny it, pressure is definitely mounting for majors to do something to replace reserves.

This is typical of secular bull markets to see this type of acquisition fever sweep a sector and generally this takeover phase lasts for many years. While some may look at Batista’s bid as expensive, he is incredibly shrewd and I am sure he is basing this acquisition on the fact that he knows gold will trade much higher in the long run.

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