Santander and Minority Shareholder Seek to Block Eike Batista’s OSX Return Plans

RIO DE JANEIRO, BRAZIL – Eike Batista will struggle to regain the management of OSX shipyard as he intends. His willingness to return to “entrepreneurship” is not pleasing the company’s shareholders and creditors.

The entrepreneur is trying to retake the management of the business and asked for the replacement of the entire board, about two months after his election in an ordinary shareholders’ meeting (OGM). Eike has already succeeded in taking the reins of the MMX mining company. Both companies are under a legally-backed financial restructuring plan.

On Friday, Judge Maria Christina Berardo Rucker, of the Rio de Janeiro 2nd Corporate Court, granted a request from the company’s current independent board member, Rogério Freitas, to suspend the shareholders’ meeting scheduled by Eike for October 14th, to replace the board members. Eike is the company’s controlling shareholder and was the one who personally requested the change. Consequently, he would have no difficulty in passing his own proposal.

Eike has been convicted of market manipulation by the courts and Brazil’s Securities and Exchange Commission (CVM) and is banned from holding management positions in publicly traded companies for the next seven years. Therefore, to be in control of the companies, he wants to replace directors and executives, filling the positions with people who are already under his control.

The petitioner of the injunction, in addition to being an independent member of OSX’s board of directors, is also a minority shareholder. As it is a New Market company, the judge ordered the suspension of the meeting until there is a decision from an arbitration proceeding on the issue. In the B3 special governance segment, corporate disputes must be resolved in the Market Arbitration Chamber (CAM).

Eike’s sudden interest in the subsidiaries – from which he has tried to prove his distance to ensure the restructuring plan’s success – is due to the entrepreneur’s enthusiasm with the prospect of signing his plea bargaining agreement, as part of the investigation into the corruption case against the ex-governor of Rio de Janeiro Sérgio Cabral. He believes he can turn the page after serving a four year sentence, the first year in jail, and pay a R$800 million (US$160 million) fine. The agreement awaits ratification by the Federal Supreme Court (STF).

OSX has debts of R$6.5 billion and net revenues of R$10 million per year. Creditors are also concerned about Eike’s moves, after what they have already seen happening at MMX in the few days since he indirectly took charge again.

Last week, Santander, a creditor of R$800 million in OSX’s restructuring plan, asked the Rio Court to suspend the meeting called to implement the changes Eike intended. The bank claims that it asked for clarification on what the justifications for such changes were and did not receive them.

At MMX, right after changing the presidency, held by Joaquim Martino who has led the company in the past, the mining company is trying to intervene in the restructuring plan process. It requested the cancellation of an agreement in which it granted the exploitation rights of one of its main mines, which it claims to be worth over US$300 million, based on a site with approximately a decade of life. The suggested asset value exceeds the company’s commitments, which total R$600 million.

These moves are driving speculation in the mining company’s shares, which on Thursday and Friday’s trading sessions recorded appreciations of over 200 percent. The share, which had been trading between R$4 and R$4.50 over the past few months, closed the last trading sessions over R$5 (R$5.39 on Friday).

Source: Exame