An appeals court ruling on whether a Liberian mortgage is valid for a Brazilian-owned oil production ship, due on Wednesday, could cast doubt on the future of secured lending for such vessels in the world’s largest deepwater market.
The court in São Paulo is due to decide on the appeal by Nordic Trustee ASA to overturn a February ruling that the $500 million mortgage registered in Liberia is invalid for the OSX3 floating production, storage and offloading vessel, or FPSO, owned by a subsidiary of OSX Brasil SA.
The court will hold hearings on the case early on Wednesday, according to sources in the case and court documents seen by Reuters.
OSX, the shipbuilding and ship leasing arm of former billionaire Eike Batista’s mining, energy and logistics empire, has been under bankruptcy protection for three years. The OSX3 FPSO is owned by OSX3 Leasing BV, the OSX Brasil unit that is also under creditor protection in the Netherlands.
The lower court’s ruling favors investment bank Grupo BTG Pactual SA in an effort to recover a $28 million loan from OSX3. BTG Pactual has a lien on the FPSO and wants immediate repayment of the loan.