(Adds proposal details, background throughout)
By Rodrigo Viga Gaier
RIO DE JANEIRO Dec 16 A group led by creditors
and Egyptian billionaire Naguib Sawiris unveiled on Friday an
alternative restructuring proposal for debt-laden Brazilian
phone carrier Oi SA that contemplates 37 billion
reais ($11 billion) in investments over five years in exchange
for a 95 percent stake.
The group of bondholders represented by Moelis & Co
and Sawiris told Oi on Friday they would also raise $1.25
billion in new capital and take immediate control of the carrier
through a debt-for-equity swap. Oi filed in June for Brazil's
largest ever bankruptcy protection.
In a statement, the group said Sawiris and his company
Orascom TMT Investments SARL have already committed to subscribe
$250 million worth of new Oi shares in an offering, with
bondholders committing $750 million. The proposal calls for a
debt-for-equity swap in which 24.82 billion reais worth of bond
debt would be exchanged for a 95 percent stake.
The remainder of Oi's bond debt would be exchanged for new
The proposal has the potential of reigniting a rift between
creditors and shareholders including largest stakeholder Pharol
SGPS SA, because of the high degree of dilution that
the debt-for-equity swap entails, analysts said.
The government has threatened to intervene if the disputes
Under terms of the proposal, Oi's existing shareholders
would be given the chance to subscribe up to 50 percent of the
new stock on offer, with retail investors having the chance of
taking up to 10 percent of the offering.
Bloomberg News first reported terms of the Moelis-Sawiris
proposal on Dec. 14.
($1 = 3.3891 reais)
(Reporting by Rodrigo Viga Gaier; Writing by Tatiana Bautzer;
Editing by Guillermo Parra-Bernal and Lisa Shumaker)