RIO DE JANEIRO–Brazilian businessman Eike Batista will buy $500 million in shares of shipbuilding and oilfield services company OSX Brasil S/A (OSXB3.BR) by March 2013, half of the company’s existing put option with the billionaire that was part of OSX’s initial public offering.
OSX will issue new shares as part of the capital increase, OSX said in a regulatory filing Wednesday. The announcement led OSX shares to trade 8.6% higher at 13.02 Brazilian reais ($6.41) as of 1500 GMT. The capital increase will be carried out in two operations, with the first $250 million taking place by Oct. 26, OSX said.
The $1 billion put option was part of OSX’s March 2010 IPO, helping to ensure that OSX would have the capital necessary to carry out its investment plans. Mr. Batista will pay the IPO price plus an adjustment based on a local inflation index, which could push the full exercise price of the option to nearly triple the shares’ current value.
In March, Mr. Batista said that the exercise of the option would likely result in a $500 million cash loss for him–a statement made before shares in his companies plummeted at mid-year on disappointing production results at his oil company, OGX Petroleo e Gas Participacoes SA (OGXP3.BR, OGXPY).
After Mr. Batista announced a since-canceled plan to delist logistics unit LLX Logistica SA (LLXL3.BR), there were market concerns that Mr. Batista would also opt to take OSX private rather than pay for the $1 billion capital increase.
The full $1 billion was expected to be exercised by March 2013, but OSX said that the remaining $500 million put will be pushed out to March 2014. OSX officials previously said that the put would put OSX in violation of listing rules for the Sao Paulo Stock Exchange’s Novo Mercado, which requires a free-float of 25%. Mr. Batista currently holds a stake of about 78% in OSX. The $1 billion put was expected to push his holding in the company to between 83% and 84%.
The capital increase ensures that the company has the funds “necessary to move forward with OSX’s business plan,” Chief Executive Carlos Bellot said.
-By Jeff Fick. (c) 2012 Dow Jones & Company, Inc.