UPDATE 1-Brazil's Batista to challenge OGX call to meet cash pledge
(Adds details about Batista put option to put new money in OGX, share price)
RIO DE JANEIRO/SAO PAULO, Sept 9 (Reuters) - Brazilian tycoon Eike Batista will challenge a demand by OGX Petróleo e Gas SA, the oil company he controls, that he honor a pledge to pump as much as $1 billion of new capital into the cash-strapped company, OGX said on Monday in a securities filing
Batista, in a letter dated Sept. 6 and released by OGX , notified the company of his objections to the cash request, which was made under a put option that he granted the company in 2012. Without new investment, the company could run out of cash to pay debt and finance expansion before year end.
OGX on Friday called for Batista to start exercising the option while the company renegotiates its debt, saying it would take $100 million immediately in exchange for new OGX stock.
Under the put option, Batista, who has seen his fortune nearly evaporate in the past year, must buy the stock at 6.30 reais a share, more than 10 times OGX's current share price.
"I must stress my rights under the contract and under the law in order to question the circumstances, the form, the content, the validity and other legal aspects of the desired option exercise," Batista wrote in his letter to OGX.
He plans to take his case to Brazil's Market Arbitration Panel, a group set up to settle disputes for companies traded on the BM&FBovespa exchange if an agreement with OGX cannot be reached within 60 days.
OGX shares fell as much as 21 percent in early Monday trading after Batista's objections to the put option were published. OGX trimmed losses in early afternoon trading, falling 9.6 percent to 0.47 reais.
Batista, who was once worth more than $30 billion and ranked as Brazil's richest man, is now worth about $900 million and is no longer on the list of the world billionaires, according to Forbes Magazine.
OGX's top executives, who are running out of cash to both develop new revenue-producing oil fields and pay debt, voted unanimously to exercise the put option after the final member of a minority-shareholders subcommittee of the board of directors resigned last week, OGX's press office said.
In the minority subcommittee's absence, the executives have the right to exercise the option, the press office said.
Batista's own financial difficulties have forced him to sell OGX stock five times in recent weeks, trimming his controlling stake in OGX to about 52 percent to generate cash and avert bankruptcy.
While the capital injection from Batista, if it comes through, would improve the company's short-term liquidity, analysts say it would not address OGX's fundamental problems.
OGX is not producing oil at levels sufficient to cover its debt obligations and finance new production. The stock has tumbled by 97 percent since February 2012.
(Reporting by Caroline Stauffer and Jeb Blount; Editing by Leslie Adler)