How a Brazilian tycoon lost $25 billion
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How a Brazilian tycoon lost $25 billion

How a Brazilian tycoon lost $25 billion
Paulo Mendonca, the Chief Executive of OGX Petroleo was quite confident till fifteen months ago that the company which he was leading was on the firm path to become a independent oil producer in Brazil. There were some hiccups in realizing this target but these were being fixed for. However, things started changing for the worse and eventually it came to this that the company Tubarao Azul was able to produce only 17,000 barrels of oil and natural gas in a day. This meant that the yearend goal of producing 40,000 to 50,000 barrels of oil and natural gas in a day was going to be a tough task. Within a day of Paulo Mendonca making this admission, the shares of OGX slumped by 8.4 percent and confidence of those who had invested in the company got shattered. By the time, Mendonca resigned a month later, the shares had dropped by another 50 percent and this erased around $10.4 billion of shareholder value. Since the time of this fallout, things have only worsened for Batista. Mounting debts and a series of project delays ensured that his six publicly listed companies went through the most historic downfall in the recent corporate meltdown. The Brazilian Billionaire however ended up pumping around billions into the group’s companies. This was at a time when the share prices had plunged by around 90 percent. According to statistics available, the Brazilian Billionaire’s fortunes which were considered to be seventh biggest till last year have declined by over $25 billion over the last 18 months. The Brazilian billionaire was much in news in 2008 when Batista was able to raise $4.11 billion in OGX’s initial public offering. Things started improving for the better from the beginning even as a former Brazilian energy minister joined the OGX board. Support started building up even as Ontario Teacher’s Pension Plan Pacific Investment Management Co. bought around $500 million of OGX debt in 2010. However, the declining performance of Brazil’s Bovespa stock index, with the same performing worst among world’s 28 largest indexes had its effect on shares of OGX resulting into this historic loss for OGX Petroleo.
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