Brazil's BNDES refuses to extend loan to OSX

Tue Nov 19, 2013 6:46pm EST
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By Sabrina Lorenzi and Guillermo Parra-Bernal

RIO DE JANEIRO/NEW YORK (Reuters) - Brazil state development bank BNDES refused to extend a loan to OSX Brasil SA (OSXB3.SA: Quote) after the ailing shipbuilder's decision to file for bankruptcy protection, according to a securities filing on Tuesday.

The financing line that BNDES declined to renew was worth 428 million reais ($189 million), according to the OSX filing, smaller than the 550 million reais principle-and-interest figure provided to Reuters earlier by two sources with direct knowledge of the situation.

The loan, made by BNDES at the start of 2012, bore a guarantee from Banco Votorantim SA, and no vessel from the shipbuilder was set aside as collateral, according to a source who asked not to be identified due to banking secrecy rules in Brazil. Votorantim assumed full credit risk on the OSX loan and repaid the loan on Monday, another source said.

BNDES decided not to roll over the loan when it matured on Friday, a week after OSX, controlled by former billionaire Eike Batista, filed for bankruptcy protection, the two sources said.

The loan had been extended by 30 days in mid-October, sources told Reuters at the time.

Votorantim will write down the loan in its fourth-quarter results, the first source said. State-controlled Banco do Brasil SA (BBAS3.SA: Quote), which holds a 49.9 percent stake in Votorantim, expects the São Paulo-based lender to return to profit this quarter following more than a year of losses.

A spokesman for Banco do Brasil told Reuters the bank maintains its profit forecast for Votorantim even after repaying the OSX loan.

Shares of Banco do Brasil fell 3 percent to a nearly six-week low amid a broad selloff on the benchmark Bovespa stock index .BVSP.   Continued...

A worker is pictured at the construction site of Port of Acu in Sao Joao da Barra March 11, 2013. REUTERS/Ricardo Moraes