Ad Hoc Group of Bondholders, Short-Term Bridge Investors, and Debtor-in-Possession (DIP) Lenders in OGX’s Restructuring

Cleary Gottlieb is representing an ad hoc group of bondholders of a majority in amount outstanding under the 8.500% senior notes due 2018 and the 8.375% senior notes due 2022 issued by a subsidiary of Óleo e Gás Participações S.A. – Em Recuperação Judicial, formerly known as OGX Petróleo e Gás Participações S.A. (together with its subsidiaries and affiliates, “OGX”) in connection with the restructuring of OGX’s approximately $5.8 billion of debt. The restructuring, which is the largest private Brazilian reorganization in history, will be implemented through a judicial reorganization proceeding (recuperação judicial) under Brazilian Bankruptcy Law. The proposed reorganization would be the largest debt for equity restructuring in Brazil’s history and one of the few examples of such a transaction.

The ad hoc group represents the majority of OGX’s financial creditors, and is comprised of major financial and investments institutions in the United States, United Kingdom, and Latin America.

Founded in 2007, OGX was the largest private sector company in Brazil’s oil and natural gas exploration and production sector. OGX’s bankruptcy filing is Latin America’s largest ever.

On December 24, 2013, the ad hoc group entered into a Plan Support Agreement with OGX (the “Noteholder PSA”), which provided the general terms upon which the restructuring would be effected and debtor-in-possession financing would be provided. Concurrently with the entry into the Noteholder PSA, the ad hoc group and OGX also entered into plan support agreements with OGX’s controlling shareholder, Mr. Eike Batista, and OGX’s affiliated vendors, OSX Brasil S.A. and its subsidiaries. The Noteholder PSA provided the ad hoc group the right (but not the obligation) to subscribe or designate others to subscribe in a debtor-in-possession financing that would provide OGX with liquidity during its reorganization and would ultimately convert into a controlling stake in the equity of the reorganized OGX, on the terms described below.

On February 7, 2014, OGX entered into the DIP Financing, which is to be issued in the form of debentures in the aggregate amount of $215 million (the “Debentures”). Cleary Gottlieb represents the prospective investors in the DIP Financing. The Debentures will be senior secured super-priority claims in accordance with the Brazilian Bankruptcy Law. The Debentures will be issued in 2 tranches in the amount of $125 million and $90 million respectively. The Subscribers committed to subscribe and fund the entire first tranche of the Debentures and to backstop any portion of the second tranche of the Debentures that remains unsubscribed, all subject to the satisfaction of conditions precedent. The second tranche of the Debentures will be available for subscription by all creditors of OGX on a pro rata basis, pursuant to the Reorganization Plan to be filed in OGX’s judicial reorganization proceeding.

After the consummation of the Reorganization Plan and the satisfaction of conditions precedent, the Debentures shall convert into common stock representing 65% of the equity of the reorganized OGX. Pre-petition debt of OGX will convert into common stock representing 25% of the fully-diluted equity of the reorganized OGX (after the conversion of the Debentures). The remaining 10% of the fully-diluted equity of the reorganized OGX (after the conversion of the Debentures) will be held by the current shareholders, who will also receive 5-year warrants for 15% of the equity.

As part of the restructuring, Cleary Gottlieb previously represented certain investors in the provision of short-term bridge financing in the aggregate amount of $50 million to OGX to fund its operations and preserve its principal assets pending entry into the DIP Financing.

Cleary Gottlieb is also representing the ad hoc group in the renegotiation of various vendor and consortium partner arrangements, including existing affiliate arrangements, that are needed to support the viability of the restructured entity. A plan of reorganization is expected to be filed later in February 2014, and OGX is expected to emerge from restructuring between the second and third quarters of 2014.