November 28, 2017 / 1:42 PM / a year ago

Brazilian regulator bars Oi's restructuring plan, says has "ruinous potential"

SAO PAULO, Nov 28 (Reuters) - Brazilian telecoms regulator Anatel has forbidden telecoms carrier Oi SA from signing with creditors its most recent restructuring proposal, arguing that it has “ruinous potential for the company,” Oi said on Tuesday.

In an early morning securities filing, debt-laden Oi said its board had finalized a new debt restructuring proposal to take to a bankruptcy court. However, the company added in a second filing that Anatel had forbidden the board from officially signing any documents with creditors to enforce the new plan.

The filing also said that Brazilian antitrust watchdog CADE would now have the right to attend any Oi board meetings.

A creditors vote on a restructuring plan is due for Dec. 7 in Rio de Janeiro. However, both the company and creditors are pessimistic about a solution being reached on that date, or in the near-term more generally, two sources with direct knowledge of the matter told Reuters.

Creditors and shareholders are too far from reaching a consensus, both people said, asking for anonymity due to the sensitivity of the issue. In the meantime, Oi, Brazil’s biggest fixed line carrier by geographic reach, continues to lose market share to rivals.

The board of Oi, which filed for bankruptcy protection 17 months ago, first presented a restructuring plan earlier in November, which major private creditors have publicly rejected. According to its terms, some bondholders would stand to face a haircut of up to 73 percent, according to analysts at Itau BBA.

At the time, Anatel said it should have the opportunity to review the plan before it could be officially filed with a bankruptcy court, and the regulator then asked for adjustments.

Oi modified its plan in response, changing the structure of fees paid to creditors who agree to inject capital into the carrier, among other measures.

However, both Anatel and private creditors holding billions of dollars in debt remain skeptical.

On Tuesday, Anatel board member Leandro Euler said that the regulator had identified clauses in the company’s revised plan that generated uncertainties about whether a capital raise would actually take place. The agency was not establishing a deadline for new adjustments, he added. (Additional reporting by Leonardo Goy; Editing by Frances Kerry)

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