OREANDA-NEWS. Oleo e Gas Participacoes SA, OGPar, the Brazilian oil exploration and prodution company announces that its subsidiary OGX Petroleo e Gas has reached agreement with a group of creditors and lenders on the terms of the debtor-in-possession financing under which they will ultimately recapitalize the company, which is under judicial recovery, allowing it to continue its operations.

Under the Subscription Agreement announced today, OGX will issue convertible debentures in the amount of USD 215 million in two separate tranches:

A first tranche in the amount of USD 125 million to be released mid-February and subscribed by the parties to the Subscription Agreement, which include certain bondholders representing a majority of the outstanding bonds issued by its subsidiary OGX Austria GmbH and the lenders of the USD 50 million, 60-day Bridge Loan that the company secured on January 13, 2014.

A second tranche in the amount of USD 90 million, available for subscription by all OGX creditors, on a pro rata basis and conditional upon approval of the Reorganization Plan submitted for approval by the Bankruptcy Court.

Upon fulfillment of certain conditions precedent, including the issuance of the required antitrust and regulatory approvals and the approval of the Reorganization Plan by OGX creditors, the Debentures shall be converted into common stock of OGX, representing 65% of the company emerging from the restructuring, on a fully diluted basis. The remainder of the capital will be held by other OGX creditors (25%) and current shareholders (10%). In addition, current shareholders will receive 5-year warrants for 15% of fully diluted restructured OGX, at a strike price based on a USD 1.5 billion enterprise value.

This debtor-in-possession financing is a key component of the company's restructuring contemplated under the agreement (“Plan Support Agreements - PSA”) reached with certain bondholders representing the majority of the outstanding bonds issued by OGX Austria GmbH, as announced by the Company in its Material Fact Notice of December 24, 2013.

Paulo Narcelio Simoes Amaral, Chief Executive Officer of OGX, declared: “We are very pleased to have reached agreement on the terms of the debtor-in-posession financing, which will allow us to repay the Bridge Loan and fund continuing operations and commitments. This agreement is a major vote of confidence in OGX's potential and an important step in our restructuring which, if approved, will provide the company with a new start.”

The Ad Hoc group of bondholders said: “We are pleased that this important milestone has been reached and that the company's controlling shareholder has accepted the outlines of this restructuring plan that ensures continuation of its operations. We look forward to working with the Company and all other stakeholders to try to complete the reorganization of the company as expeditiously as possible.”

As previously announced, the restructuring plan, if approved, will leave OGX free of debt and the company will be able to focus on continuing its exploration and production activities. OGX has a diversified portfolio comprised of exploratory blocks in the Campos, Santos, Espirito Santo, Para-Maranhao and Parnaiba basins in Brazil and exploratory blocks in Colombia. OGX announced in December 2013 that it has started production at the Tubarao Martelo field in Campos Basin.

The restructuring proposal requires approval from the majority of creditors and from the judge who is in charge of OGX's judicial recovery process. The company filed for judicial recovery on October 30, 2013.