Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
“Batista is treated like royalty in Brazil, because of his strong ties with influential politicians, including President Dilma Roussef.” — Valporto.
The ongoing battle between Brazilian mogul Eike Batista’s debt-laden oil company and its minority shareholders is about to get nasty. Currently under bankruptcy protection, Oleo e Gas Participacoes (OGP) —formerly known as OGX— is set to be the subject of a formal investigation by public prosecutors.
Aurélio Valporto, the minority investor leading calls for action, is getting ready to provide authorities with a report of over 1,000 pages, containing what he claims are irrefutable proof of wrongdoing by the Brazilian stock exchange operator BM&FBovespa in relation to trades in shares of OGP.
“There were several irregularities involving the stock exchange’s procedures. Most of them don’t even require an investigation, as it’s very simple to demonstrate the body ignored countless trade laws, leading investors to giant losses, but benefiting Batista and others colluded with him,” the economist said in an interview with MINING.com.
Just before Christmas, OGP agreed with foreign creditors to renegotiate $5.8 billion in debt into a 90% stake in the firm. This, explained Valporto, means that minority shareholders —which made up almost 50% of the company— would be left with a mere 5% stake in the company. “Once again Batista is stealing from us,” he added.
Valporto insists that public prosecution is OGP’s stakeholders “only light at the end of the tunnel.”
“It is the only alternative we have because Brazil is a very corrupt country and Batista is has strong ties with influential politicians, including President Dilma Roussef and former president Luiz Inacio Lula da Silva,” Valporto said.
Buying time
Last Thursday Brazilian oil sector watchdog, the National Petroleum Agency or ANP extended the deadline for OGP from Jan. 6 to Jan. 24 to prove it can meet financial commitments to its oil field partners.
However, ANP’s Superintendence of Development and Production (SDP) has warned that if OGP fails to meet its obligations there will be a penalty such as “compulsory transfer” or even “contract termination”.
Valporto said he plans to submit all proofs before the end of the month.
“We have shares in this company, so we want save it, but Batista is a thief and OGP would be much better without him.”
Image by Leonardo Ferreira
