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Exclusive - Brazil's Oi considers capital hike to accelerate reorganization
June 9, 2017 / 4:08 PM / 3 months ago

Exclusive - Brazil's Oi considers capital hike to accelerate reorganization

A consumer stands in front of an Oi store, Brazil's largest fixed-line telecoms group, in Sao Paulo, Brazil June 24, 2016. REUTERS/Paulo Whitaker

SAO PAULO (Reuters) - Oi SA is working on a proposal to raise 8 billion reais (£1.9 billion) in fresh capital from shareholders and investors as a way to accelerate the Brazilian wireless carrier’s emergence from bankruptcy, Chief Executive Officer Marco Schroeder told Reuters on Friday.

Under terms of the plan, which are under analysis by Oi’s executives and financial advisers, new stock would be offered to shareholders and, if some of them forgo the chance to subscribe, to other investors, Schroeder said in an interview. He declined to elaborate on the plan.

That would come on top of a revised proposal laid out in March, which offers financial creditors 25 percent of its equity or convertible bonds to be called in three years, at which point they could own up to 38 percent of its shares. Creditors have not yet extended a counteroffer to that plan, Schroeder said.

The new money would be used entirely to bolster Oi’s balance sheet, enabling Brazil’s fourth-largest mobile carrier to undertake more investments in fibre optic and connectivity, Schroeder said. He expects to present the plan to the company’s board before the end of the month.

The Oi reorganization process, which began almost a year ago and remains Brazil’s largest bankruptcy protection case to date, has been marked by a series of disputes between creditors and shareholders over the fate of Brazil’s No. 4 wireless carrier. The government has threatened to intervene should Oi stakeholders fail to reach an agreement.

Common shares rose 1 percent in early afternoon trading, extending gains to nearly 50 percent so far this year.

Schroeder is confident that differences among creditors and shareholders will eventually ironed out. He wants to propose a final vote on Oi’s amended in-court reorganization plan by about September, well ahead of the bankruptcy court’s deadline of February 2018.

“It’s a constant work of fine-tuning the proposal, until most parties involved consider it fair and valuable,” Schroeder said.

Orascom TMT Holdings SAE and a group of bondholders have repeatedly given management and shareholders of Oi additional time to amend the latter’s original reorganization plan.

Other creditors and investors, including billionaire Paul Singer’s Elliott Management Corp, have also presented their own reorganization proposals in recent months.

Editing by Dan Grebler and Bernadette Baum

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