Portugal Telecom (WKN:895464)

ECONOMY
Oi / PT creditors have until the 26th to express interest in an agreement
06.02.2018 às 18h47

20 days is the period Oi's creditors have to choose payment options under the Brazilian operator's legal recovery plan. Those who do not risk risking to lose up to 85% of the capital still in debt

Anabela Campos
ANABELA CAMPOS
Former PT bondholders, transformed into Oi bondholders after the merger of the Portuguese and Brazilian operators, have 20 days to claim credits that they are still entitled to, and if they do not they risk losing much of the investment.

"Now whoever does nothing and has an investment of more than 50,000 reais, risks losing much of the investment and receiving only in 25 years, without interest, after the 20 day deadline, and if the creditors nothing do, there is a clause that allows Oi to pay only 15% of the credit at any moment and to complete the process, "said António Carneiro Pacheco, a partner in the law firm who mediated between Oi and the company, in mid-October.

According to a statement from Oi, released on Tuesday by its main shareholder, Portugal's Pharol, creditors have until the 26th day to choose between the payment options, as provided in the plan. These are information that can be found on the judicial recovery website (www.recjud.com.br).

If they choose to say yes to the agreement, Oi's bondholders will receive part of the investment in 12 years with a six-year grace period. They will, however, suffer a 50% cut in the amount of the investment. This agreement provides for the payment of 6% interest, with capitalization immediately, that is, also in the first 6 years of grace period. In 2024, the creditors will be reimbursed every six months of the capital and annually of the interest.
Carneiro Pacheco estimates that if people opt for this modality of being paid at 12 years, they should receive at the end of the term approximately 80% of the investment.
Already Candeias Advogados, which represents 700 creditors of Oi, estimates that in 12 years the value bondholders will receive is about 95 to 110% of the amount invested.
In the second option, the one in which the bondholders do nothing, will receive 25 years, and the annual repayment is made at the end of the 20th year, during the next five years. In this case the risk of loss is great.

First phase already paid
"The overwhelming majority of bondholders who have agreed to sign the mediation agreement (to receive up to about 13,000 euros from the investment made) have already received the agreed amount. There may be occasional cases of people who have not received, but are cases I believe are being treated, "says Carneiro Pacheco, the lawyer who mediated.

And he recalls: "Oi paid 90% of the investment amount within 15 days of signing the agreement, and the remaining 10% were paid afterwards." They will be reimbursed as of today, since it began counting the deadline of 10 working days after published the approval of the creditors agreement, which happened on Monday.

The lawyer says that his law firm even signed in October, when he was mediating for Oi about 300 Oi / PT bond contracts per day. Oi in December issued a statement clarifying that agreements were reached with about 5,000 bondholders. It was a marathon, 36 people were involved in the process.

Pharol maintains AG despite refusal of Oi

Portugal's Pharol, which owns 27% of the Brazilian operator's share capital, wants to hold an Extraordinary General Meeting of Oi this Wednesday, the same one that the Brazilian telecoms company announced was canceled on Friday. There is an arm-rail that holds.

This AG, says Pharol, will have relevant topics on its agenda, which is why it "urges Oi's shareholders to participate in the aforementioned Assembly and any possible deliberations on the matters included therein."

As of 1 February, the Public Prosecutor's Office of Rio de Janeiro had filed an appeal against the decision to ratify the Oi Judicial Recovery Plan, which was approved at a general meeting of creditors at the end of 2017.

The Judicial Recovery Plan aims to reduce Oi's liabilities, which are around 65.4 billion reais (about 16 billion euros). It will be done by converting 75% of the debt borne by the creditors.
expresso.sapo.pt/economia/...a-manifestar-interesse-num-acordo

Even after approval of the recovery plan, Oi is subject to legal disputes
The operator took a year and six months to reach an agreement with its creditors, but it is far from having remedied the problems with its major shareholders
Jessica Sant'Ana [19/02/2018] [7:01]
www.gazetadopovo.com.br/economia/...-06teznwnn8hq8tmv7wkxn6d8p

Despite a year and six months of negotiation and nearly 15 hours of assembly to succeed in approving its recovery plan, Oi remains embroiled in a judicial imbroglio. The company's shareholders will have reduced participation and, in order to avoid this, are entering various actions to modify the approved proposal and to dismiss the current board of directors. The court has, until then, rejected the shareholders' requests, but as the dispute continues, Oi is still experiencing a period of instability and should be focused on cleaning the house and investing again to recover the lost space from when it entered crisis.

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Oi was able to approve its judicial recovery plan at dawn on December 20, after a year and six months of dispute between shareholders, creditors and the government. The lawsuit involved a presidential exchange - left Marco Schroeder and Eurico Teles - and a court decision to keep shareholders out of the negotiation to give full power to the board of trustees led by Teles to define the terms of the agreement with creditors. It was the biggest recovery request ever recorded in the country's history, after the company accumulated debts of R $ 64 billion with about 55 thousand creditors.

LEARN MORE: How Oi went into crisis?

The recovery plan approved in December and ratified on January 8 will take about a year to be fully completed. It provides, among other things, for a substantial debt reduction of some R $ 38.5 billion, in exchange for up to 75% of the company's capital for creditors, resulting in a dilution of the a quarter of the current size. The proposal also establishes a capital increase of R $ 4 billion until February 2019, raising R $ 2.5 billion in the financial market and reinvesting of any asset that will be sold within five years. A transitional board of directors will be formed in April and the current board will be in place until the beginning of next year, when Oi, already as a new team of shareholders (the former creditors) will define its new administrative structure.

Judicial war
But even after it has been approved and approved, major shareholders continue to contest the validity of the recovery plan in court. They claim that the plan presents "inconsistencies," not ensuring long-term business continuity. In addition, they say that they were harmed because they could not participate in the construction of the proposal and say that the current board, which is responsible for the final terms of the plan, has committed illicit acts in the management of the operator. Oi denies the information and there is no judicial decision in favor of the shareholders.

The Portuguese shareholders of Pharol, which hold 22.24% of the shares and are Oi's main individual shareholder, are leading the judicial war against Oi, supported by other shareholders, including Nelson Tanure , owner of the Société Mondiale fund and Pharol. The Portuguese have filed applications to suspend the plan in court, the Securities and Exchange Commission (CVM), the National Telecommunications Agency (Anatel) and the Arbitration Chamber of the Brazilian Stock Exchange. The Association of Minority Investors (Aidmin) filed a lawsuit with the US Justice Department and the Public Prosecution Service also filed suit, challenging the terms of the settlement agreement with Anatel and requesting the validation of the plan in a new meeting, with the presence of shareholders. Until then, the court has denied the requests.

The most tense moment came earlier this month, when the Pharol fund convened a general meeting of shareholders and, at that meeting, they dismissed Eurico Teles and Carlos Augusto Brandão from the posts of president and chief financial officer respectively. Oi did not recognize the legality of the meeting and, the next day, the Court ruled that the meeting was illegal and that its decisions have no effect, maintaining the board and the terms of the agreement approved in the meeting with the creditors.

There is also an imbroglio with Anatel. The plan predicts that R $ 8.3 billion of administrative debt will be paid in 240 times and that the other R $ 6.1 billion will be 20 years grace period. Anatel voted against the proposal and said that the model for repaying debts with the agency is illegal and will cause damage to the treasury. The agency has already stated that it will appeal to the last instances. But she agreed with the other terms of the agreement and advocates implementing the plan.

Hi, I already lost almost 10 million customers
As this novel drags on, Oi continues to try to put into practice its judicial recovery plan. The implementation is essential for the operator to re-invest at least R $ 7 billion per year, as promised, and try to recover its lost space. Oi had been investing around R $ 4 billion per year, lower than the market average and used only to maintain the network. Anatel says it takes R $ 8 billion a year for Oi to be able to upgrade its network.

The operator has already lost 9.92 million customers since it went into judicial reorganization in June 2016, until December 2017 in the fixed, mobile and broadband segments. In the area of ​​pay-TV alone, it achieved a positive balance of 299 thousand customers in the period. It is the operator that lost the most customers in mobile telephony, an area considered essential for the future of the teles.

Among other things, the plan foresees the conversion of the debt up to the limit of 75% of the capital of the operator, allowing Oi to be effectively acquired by the creditors.  It also foresees a contribution of R $ 4 billion in new resources by creditors and shareholders and the possibility of capitalizing an additional R $ 2.5 billion via capital markets for new investments, until the beginning of 2019.

Judicial war may remove Pharol from prosecution

Even so, the company faces a dispute between shareholders and part of the creditors.  Last Friday (23), the Public Prosecutor's Office of Rio de Janeiro reported that it asked the Rio Court of Justice (TJ-RJ) to bar the participation of shareholders Pharol and Sociètè Mondial in the board of directors of Oi.

In the request, dated February 13, the promoter Gustavo Lunz pointed out as a reason the extraordinary general meeting held on February 7 and convened by the shareholders.  According to the MP, the purpose of the meeting was to disrupt the judicial recovery process.

On March 8, the State Court of Rio de Janeiro granted an injunction suspending the effects of the deliberations of the shareholders' meeting.  In the decision, Judge Ricardo Laffayete Campos of the 7th Rio de Janeiro Business Court accepted Oi's request to decree the illegality of the meeting for disregarding the judicial decision that approved the recovery plan.  "Eventual change of the recovery plan could not be carried out extrajudicially," says the judge in the decision.

The MP wants all the participants in the event to be prevented from joining Oi's board of directors or to appoint names for it during the next two years, the period of validity of the judicial recovery plan.  In a statement, Pharol said that "there is no legal basis for suspension of shareholder rights."
www.portugaldigital.com.br/...oi-escolham-forma-de-pagamento/

Oi has 48 hours to rule on the arbitration award, which, in favor of Pharol, proposes to halt the capital increase. The Brazilian operator considers the procedure illegal.
Lusa
11:38
eco.pt/2018/03/07/...rol-oi-tem-dois-dias-para-se-pronunciar/

Brazilian operator Oi has two days to rule on the ruling of the Market Arbitration Chamber (CAM), known on Tuesday, which prevents the company from realizing the capital increase approved on Monday. This Tuesday, Pharol ↓ PHR 4.89% informed the Portuguese Securities Market Commission (CMVM) in Portugal that CAM prevented Oi from realizing the capital increase for the capitalization of credits approved on Monday in extraordinary meeting of the Board of Directors.

However, in a statement released a few hours later to the Brazilian market, the Brazilian operator stresses that "such a manifestation was delivered without the company being heard or had an opportunity to express itself, and Oi was granted 48 hours to provide information and to speak on the claims of Bratel [subsidiary of Pharol] ", which initiated the arbitration procedure.

Oi considers that "[t] he arbitration procedure, by creating illegal obstacles to the implementation of the company's capital increase provided for in the [judicial reorganization] plan, is contrary to the resolution of the general meeting of creditors that approved the plan, , as well as other judgments rendered by the judicial recovery court, the only court competent to decide on the matter in question, as ratified by the Superior Court of Justice. "

"The company clarifies, finally, that it considered it appropriate to disclose this material fact, despite the 48-hour period granted and necessary for its analysis and deepening of the arbitration proceeding, according to the publicity given by third parties to the arbitration procedure and to the arbitrator's manifestation support, "says Oi, ensuring that" it will take appropriate measures to prevent any harm to the implementation of the plan. "

This position had already been transmitted through written information, in which the Brazilian telecommunications operator insists on the completion of the capital increase approved, a move that Portugal's main shareholder Pharol tried to halt, namely in trying to prevent the meeting. Oi has been in the process of recovering since 2016, with the objective of reducing its liabilities, which is around 65.4 billion reais (about 16 billion euros).

The Judicial Recovery Plan, approved at the end of last year by creditors, proposes to reduce the company's liability, which is around 65.4 billion reais (about 16 billion euros), by converting 75% of the debt borne by the creditors, to whom rights will be granted over the company. However, the decision to approve this plan was challenged by Bratel, who claims that the document did not have the "prior approval" of the shareholders and the Board of Directors, but the court of Rio de Janeiro would reject this claim of the subsidiary of Pharol .

Meanwhile, Pharol convened an extraordinary shareholders meeting of Oi on February 7, in which it was decided to sue the president and the director of the telecommunications company, but the Rio de Janeiro court eventually considered "invalid and ineffective any deliberation extrajudicial decision that would run counter to the issues already approved in the plan ". Oi, in which Portugal's Pharol is a reference shareholder with 27% of the shares, was in a merger with Portugal Telecom, which never materialized.