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UPDATE 1-Brazil Oi's creditors present alternative restructuring plan
August 23, 2017 / 11:38 PM / a month ago

UPDATE 1-Brazil Oi's creditors present alternative restructuring plan

(Adds details, comments throughout)

By Guillermo Parra-Bernal

SAO PAULO, Aug 23 (Reuters) - Oi SA’s two biggest creditor groups agreed on terms of a joint proposal for the Brazilian phone carrier’s in-court restructuring, as they seek to speed up the resolution of a bankruptcy protection case that has dragged on for 14 months.

In a Wednesday statement, the International Bondholder Committee and the Ad-Hoc Group of Oi bondholders, alongside a group of export credit agencies, said they would agree to swap 26.1 billion reais ($8.3 billion) worth of their Oi bondholdings into the equivalent of 88 percent of the company’s equity.

They would also endorse injecting 3 billion reais of capital into Oi, a revamping of governance practices, a repayment of regulatory debts and an equal treatment for Oi’s unsecured creditors. Both groups and the so-called ECAs represent a combined 22.6 billion reais, or more than one-third of Oi’s 65 billion-real debt under restructuring.

The announcement comes a day ahead of a meeting between Oi executives and telecommunications industry watchdog Anatel, where the status of the in-court restructuring will be touched. A spokeswoman for Rio de Janeiro-based Oi, which is Brazil’s No. 4 wireless carrier, did not have an immediate comment.

A person familiar with the creditor group’s alternative plan said regulators have “delivered a very positive feedback about our plan, which should untangle a protracted process once and for all and get Oi to negotiate a definitive solution to this.”

The Oi restructuring, which started in June 2016 and remains Latin America’s largest bankruptcy protection case to date, has been marked by a series of disputes between creditors and shareholders. The government has threatened to intervene should Oi stakeholders fail to reach an agreement.

Chief Executive Officer Marco Schroeder’s turnaround plan is feeling the pinch of a slow economic recovery and the restructuring, which analysts said may be affecting customer views about the carrier.

Schroeder said on Aug. 9 that Oi has been negotiating with Anatel officials how to better treat a 13 billion-real fine it owes to the agency.

$1 = 3.1406 reais Reporting by Guillermo Parra-Bernal; Editing by James Dalgleish and Lisa Shumaker

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