Brazilian billionaire Eike Batista's OGX files for bankruptcy protection

OGX Petroleo & Gas Participacoes SA (OGX), the oil company that made Eike Batista the richest man in Brazil and the seventh-richest man in the world, today filed for bankruptcy protection, in one of the largest corporate bankruptcies in Latin America.

After months of trying to save his flagship oil company by trying to renegotiate about $5 billion of OGX bond and bank debts with creditors, Batista filed for bankruptcy protection in a Rio de Janeiro court after defaulting on a $45-million payment due on 1 October.

OGX shares, which were at a high at 23.27 reais in October 2010, plunged by 96 per cent over the past 12 months to close yesterday at 0.17 reais.

The company's shares will be suspended from trading on the São Paulo stock exchange, until a restructuring is completed.

If its bankruptcy petition is approved by court, OGX would have six months to continue operating while it tries to renegotiate its debts and present a debt restructuring plan to creditors, who in turn will have 180 days to approve or reject.

Founded by Batista in 2007, OGX raised $4.1 billion in an initial public stock offering in 2008 in what was then the country's largest-ever IPO.

Although it had reported many oil finds since 2010, in early 2013 it announced that its operating wells in the Tubarao Martelo area would stop producing in 2014 and production in other areas would not begin at all.

Its averaged output is just 8,500 barrels a day and has run up losses to more than $2.5 billion.

Its market cap is a mere $252 million today compared to high of $34 billion in 2010. 

The company owes $3.6 billion to bondholders, while the rest of the $5 billion to suppliers and banks.

To save his empire, Batista started selling stakes in some of his companies, but his troubles at OGX have seen his personal fortune, estimated at $30 billion by Forbes magazine in 2012,  being nearly wiped out.