Brazilian Billionaire Eike Batista's 'X' Problems Keep Getting Worse

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Billionaire Eike Batista: bad news just keeps coming

More bad news for Eike Batista. The Brazilian media is reporting Sunday that the struggling billionaire's shipyard and ship leasing company, OSX, by far the most troubled of Batista's startups, is on the block. According to Veja, Brazil's highly-read weekly newsmagazine, talks have been held with Jurong Aracruz, a Brazilian shipbuilding company which is putting in place an aggressive business plan and market strategy for the next 10 years, as well as Odebrecht, one of Brazil's largest industrial conglomerates, and Singapore's Keppel Corporation. BTG Pactual, the high-flying Brazilian investment bank founded and led by billionaire Andre Esteves, is in charge of the negotiations, Veja reports.

However, there is some risk involved as the newspaper Folha de S. Paulo is also reporting that OSX recently defaulted on an R$500 million (US$221 million) payment due to Spain's Acciona Infraestructuras, which is in charge of building OSX's pier berthing in the Açu Superport, the largest port infrastructure investment in Latin America, and a subsidiary of Batista's logistics company, LLX.

The Spanish are considering filing for the company's liquidation, Folha says, adding that Batista hired the US-based Alvarez & Marsal, a restructuring company that managed Lehman Brothers Holdings Inc.'s operations during the investment bank's bankruptcy proceedings, to assist him on the issue. OSX reportedly has short-term debt of R$2 billion (US$884 million), roughly half of it with state-controlled banks such as the Brazilian Development Bank (BNDES) and Caixa Economica Federal.

Roberta Brandao, a spokeperson for OSX, told FORBES that the company had not defaulted and stated that the company’s long-term debt is compatible to its projects. As for its short-term debt, Brandao said those are being paid or renegotiated.

Already in cash flow trouble, OSX -- and all six of Batista's other publicly "X" traded companies, for that matter -- also face the possibility of seeing the generosity of the Brazilian government towards his businesses reaching an end. According to the Financial Times, given the protests that took place in Brazil during the past few weeks over politicians' ethics and the high cost and over-budgeting related to the 2014 FIFA World Cup, it could be very difficult now for the state-controlled banks to throw a lifeline at Batista, whose companies have reportedly received more than R$10 billion (US$4.4 billion) from BNDES alone since 2005.

To make things even worse, last week three members of Batista's oil and gas company OGX left its board as the company battles increasing debt and missed corporate goals. The move came amid multiple setbacks after Batista sold off 70.4 million company shares (for a reported US$57 million) in what some analysts called a desperate attempt to free up cash for operations.

In Sao Paulo stock exchange trading Friday, OSX closed at R$ 1.57 a share, down 10.79% from the previous session. In 2013 alone, the company saw its market capitalization fall a staggering 77.5%, the second worst performance in all of Latin America and the United States, according to Brazilian consultancy firm Economatica. The worst-performing company during the period was Batista's oil and gas company  OGX ,whose shares have fallen 83% since January 2.

 UPDATE: Citing an unnamed source close to the situation, the Wall Street Journal reports on Monday that Acciona "doesn't intend to pursue any legal action against OSX."
