OSX Scales Back Shipyard, Taps $120 Million Put from Batista

Published May 20, 2013 11:20 AM by The Maritime Executive

OSX Brasil SA, the shipyard and ship leasing company controlled by Brazilian billionaire Eike Batista [pictured above], will scale back the construction of its shipyard at Acu, a port the magnate is building north of Rio de Janeiro, the company said in a statement late Friday.

The company's board also decided to exercise part of a put option that will trigger a payment of $120 million by its controlling shareholder, the holding company owned by Batista, and said it had approved a new business plan to boost cash-generating activities by its ship-leasing business.

The moves are the latest in an ongoing process by companies across Batista's energy, logistics and mining empire to retrench after missed profit and production targets and a consequent selloff by shareholders in recent months.

Batista became Brazil's richest man in recent years, raising billions of dollars by listing the companies amid booming appetite for Brazilian commodity and energy projects. He lost his standing and much of his wealth over the past year, though, as the selloff slashed about $20 billion from the market value of his holdings.

In March, he announced a partnership with Brazilian investment bank BTG Pactual Group, run by fellow Brazilian billionaire Andre Esteves. The bank has helped to find buyers for stakes in Batista's companies and improved their access to capital.

In the statement Friday, OSX said it still plans to build the Acu shipyard to its original size and scope, but it would limit ongoing construction to that necessary for current orders. Future construction, it added, will be dictated by future demand.

The put option it will tap, OSX said, leaves an additional $380 million it could exercise through its agreement with Batista's holding company.

Shares in OSX on Friday climbed by over 19 percent, closing at 2.79 Brazilian reais ($1.37).

($1 = 2.03 Brazilian reais)

--Reporting by Sergio Spagnuolo; Editing by Eric Walsh (C) Reuters 2013.