July 15, 2014 / 1:56 PM / 6 years ago

Rioforte prepares to file for creditor protection

LISBON, July 15 (Reuters) - Rioforte, a holding company of Portugal’s troubled Espirito Santo banking clan, is preparing to file for creditor protection, sources familiar with the matter said on Tuesday, hours before Rioforte was due to repay over $1 billion in debt to Portugal Telecom.

The filing will be made with a court in Luxembourg, where Rioforte is registered, one source close to the process said, adding that the filing is aimed at preventing insolvency that would entail uncontrolled asset sales at any price.

Rioforte declined to comment.

The sources would not comment on how such a filing could impact Tuesday’s deadline of a 847-million-euro repayment to Portugal Telecom of Rioforte commercial paper. They said negotiations between Rioforte and PT were still going on.

The timing of the filing depends on lawyers working on it in Luxembourg, the sources said.

Rioforte holds assets ranging from real estate and hotels to farming and healthcare in Portugal and around the world, as well as a 49 percent stake in Espirito Santo Financial Group - the largest shareholder in Banco Espirito Santo.

Another source said recent market turmoil, in which investors dumped BES shares and other Portuguese assets, prevented Rioforte from going ahead on its own with previously-planned debt restructuring and asset sales.

Rioforte owes a total of 897 million euros to the country’s largest telecom services provider, Portugal Telecom, currently in the throes of a tie-up with Brazil’s Grupo Oi , which is likely to amend the terms of the deal in the event of a default.

$1 = 0.7331 Euros Reporting By Sergio Goncalves, writing by by Andrei Khalip, editing by Axel Bugge

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