* Plan would ensure banks are repaid their loans in full
* Shares of OGX surge; bonds trade near record-low levels
SAO PAULO, July 4 (Reuters) - Brazilian oil producer OGX Petróleo e Gas Participações SA may propose that bondholders accept a buyback or convert their securities into stock as part of an effort to stave off default, Valor Econômico reported on Thursday.
Prices for OGX’s $2.56 billion of notes due 2018 and for $1.06 billion maturing in 2022 sank to about 20 cents on the dollar over the past week, signaling that investors are increasing bets on a debt restructuring. OGX has estimated liabilities of $4.7 billion.
The plan to renegotiate debt terms with bondholders imply that banks, which currently hold about $2 billion in loans, are made whole during the process - meaning that they are paid back in full, Valor said, without saying how it obtained the information.
Calls to the media offices of OGX and Grupo BTG Pactual SA , OGX’s financial adviser, were not immediately answered.
Under the plan, controlling shareholder Eike Batista, the embattled billionaire, who founded OGX six years ago, would see his stake in the company fall to about 4 percent from the current 59 percent.
The price on the 2022 bond was unchanged on Thursday, and was trading between 20 cents and 22 cents on the dollar. Shares of the company surged as much as 19 percent.
In recent months, investors had balked at the complex structure of Batista’s companies, their appetite for debt and, in the case of banks, the existence of guarantees and undrawn, committed credit lines to OGX and other companies controlled by Batista. This week, Bank of America Merrill Lynch estimated that loan exposure to Batista’s Grupo EBX conglomerate was at $4.2 billion and concentrated in five large Brazilian banks.