Oi creditors greenlight restructuring plan
22 December 2017 | Natalie Bannerman
Oi creditors have approved a restructuring plan that will take the struggling elco out of bankruptcy protection.
According to Bloomberg and as a result of a 15-hour meeting, the terms of the restructuring plan include a proposal for Oi to repay its biggest single creditor Anatel In five yearly instalments after a 20 year grace period. Currently fines under the attorney general’s jurisdiction would be paid in monthly instalments over 20 years.
In addition, Oi said that it would implement a 4 billion real ($1.2 billion) capital increase to happen within the next 12 months, complete with scaled back conditions for the cash injection, subject to the approval of the bankruptcy court.
“We expect the capital injection to happen even before one year. We have firm commitments for the operation, including from Aurelius, with whom we’ve been litigating,” said Eurico Teles, CEO of Oi.
A minimum of 50 lawyers and creditors were present at the meeting to revise the proposal so it could be approved without the support of Anatel. During the meeting Teles reportedly pleaded with the creditors for patience while he worked on the changes and Oi’s trustee declared three recesses to allow the negotiations to go ahead.
It goes on to say that Anatel, which is owed 11 billion reais ($3.3 billion), voted against the plan after the attorney general’s office said it must continue in court for full payment of Oi’s debts. The attorney general gave Anatel authority to approve or reject the plan.
100% of labor creditors and BNDES (Brazilian Development Bank), as well as 99.8%of small businesses and 79% of public banks, bondholders and private banks approved plan.
“I’m deeply moved,” Teles said. “This is a victory so big that it makes my heart ache.”
As for the acquisition by China Telecom, Teles said that despite the fact that China Development Bank and China Telecom expressed interest, neither presented a firm proposal and it isn’t currently discussing a sale.
The news of the approved restructuring has driven Oi shares up as much as 22%, reaching 4.09 reais on 20 December in Sao Paulo trading, while the company’s $1.79 billion bond due in 2020 rose 0.14 cent to 40.46 cents on the dollar.