SAO PAULO, Oct 29 (Reuters) - An arbitration chamber run by Brazil’s Sao Paulo Stock Exchange has temporarily suspended a capital hike planned by Oi SA in order to adjudicate a dispute between the major telecommunications company and a shareholder.
In a statement on Monday, Oi shareholder Pharol SGPS SA said it had been given until Nov. 5 to present additional arguments to the body regarding the legality of the planned capital raise.
Last December, creditors in Oi, Brazil’s largest fixed line telecom company, approved a plan to restructure about 65 billion reais ($17.7 billion) in debt after 18 months of testy negotiations between bondholders and shareholders. As part of that plan, key creditors had agreed to inject an additional 4 billion reais into the company to allow for needed capital expenditures and to improve its debt profile.
Just last week, Oi said that the plan had been approved by a bankruptcy court in Portugal, an important step that sent Oi shares higher. Oi shares erased most of their gains on Monday, with common shares falling 2.7 percent in early afternoon trade.
In a statement, Oi said it had rigorously complied with court orders, had received approval for its plans from bankruptcy courts, and would hold Pharol legally responsible for any delays in the capital hike that could cause financial losses.
It added that the arbitrator’s decision was “provisional” and could be changed.
$1 = 3.67 reais Reporting by Gram Slattery; Editing by David Gregorio