CADE | Agency Evolves Into Cartel Hell?

Source: Valor Econômico

CADE, the Brazilian anti-trust regulator, and the federal police are working together on a mega-operation, serving search and seizure warrants on the headquarters of 13 companies suspected of organizing cartels in the São Paulo and Federal District subway and railroad systems.

The companies are accused of defrauding public tenders for concessions dealing with the construction and maintenance of metro rail lines in São Paulo and the federal capital. The companies are accused of defrauding auctions for the maintenance of metro rail systems in São Paulo and the federal district.  

Eike Batista | Sink or Swim

Tracking news on what looks like the impending hard landing of the EBX group.

Source: EXAME.

Translation: C. Brayton

The oil and gas company OGX has been listed as one of the companies most likely to declare bankruptcy in the world, according to the U.S. consultancy  Kamakura Corporation; its shares fell to R$ 0.39 in Wednesday’s session, and Eike’s personal fortune, valued at US$ 30 billion in the past, is now worth less than US$ 3 billion, according to a ranking by Bloomberg. …

… The new OGX is unlikely to be able to support payments on $3.63 billion of bonds, the source said. OGX debt due in 2018 and 2022 is already trading at less than 20 percent of face value, a sign that investors expect a default.

In the face of so much bad news, there are those who say Eike has reached bottom.  Others, however, say that many things that can still occur and that the situation could even still worsen.

For instance, in the same issue of EXAME, on OGX, the natural gas logistics subsidiary, currently under construction:

 The OSX facility was planned to be “the  largest shipyard in the  Americas,” with capacity to  work on 14 platforms at a given time during the first stage of development, a feat requiring R$ 4.8 billion in investments. Without petroleum from its sister company OGX [–  drilling came up empty –],  orders have dried up. The shipyard, with 2.5 million square meters of usable land, docks fully equipped and warehouses built, remains unused.

OSX has tried to sell off the facility but no one has proven willing to pay the expected preliminary price. “The project, as planned, is no longer viable. It has no orders with which to pay the bills,” said a source in the maritime industry. …

… The new OGX is unlikely to be able to support payments on $3.63 billion of bonds, the source said. OGX debt due in 2018 and 2022 is already trading at less than 20 percent of face value, a sign that investors expect a default.

OGX shares have  recovered some of their value late this week with the announcement that Batista is stepping down as chairman of the board.