Tue Oct 29, 2013 2:28am EDT
* OGX may seek bankruptcy protection Tuesday -three sources
* Batista oil company has debt payment deadline this week
* OGX output failures led to Batista's EBX meltdown (Adds detail about possible bankruptcy protection filing by OGX, share price)
By Jeb Blount and Guillermo Parra-Bernal
RIO DE JANEIRO/SAO PAULO, Oct 29 (Reuters) - Brazil's OGX Petróleo e Gas Participações SA ended talks with holders of $3.6 billion of its bonds due in 2018 and 2022 after months of talks, the cash-strapped oil company controlled by Brazilian tycoon Eike Batista said on Tuesday.
Rio de Janeiro-based OGX's failure to meet expected oil output targets sparked the meltdown of former billionaire Batista's EBX energy, mining, port and shipbuilding group. OGX announced the end of bondholder talks in an e-mailed statement after midnight Tuesday (0200 GMT).
OGX is preparing to file for bankruptcy protection in a Brazilian court as early as Tuesday, three sources with direct knowledge of the situation told Reuters on Monday.
Press and investor-relations officials at OGX did not answer telephone or e-mailed requests for comment.
One of the sources on Monday said that OGX plans to exclude its OGX Maranhão natural-gas unit, which is currently in talks to sell a stake to Eneva SA, from the bankruptcy-protection filing. Eneva was formerly known as MPX Energia SA and was founded by Batista.
OGX, which is saddled with over $5 billion in debt, declined to comment on Monday on the possibility of a bankruptcy protection filing.
If confirmed, the bankruptcy filing would be the largest-ever in Latin America, according to Thomson Reuters data. The decision comes as a 30-day grace period OGX had to pay $44.5 million in interest to investors was about to expire.
Not only would a filing be a sign of how far Batista's star has fallen, but it would also provide a stiff test of whether Brazil's eight-year-old bankruptcy law provides adequate protection to creditors.
Batista, 56, less than 18 months ago owned the world's seventh-largest fortune.
Batista's dramatic decline has become a symbol of Brazil's own economic woes after the end of a decade-long boom that made it one of the world's hottest emerging economies.
If foreign investors do not feel they have been treated fairly in the restructuring process, they may be less willing to invest in other Brazilian companies.
Shares of OGX were flat on Monday at 0.29 reais, reversing early losses of about 30 percent earlier in the day.
($1 = 2.18 Brazilian reais) (Additional reporting by Sabrina Lorenzi in Rio de Janeiro.; Editing by Michael Urquhart and David Cowell)
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