Oi holds negotiations with bondholder groups despite PSA - CEO - Debtwire

Oi holds negotiations with bondholder groups despite PSA – CEO

13 November 2017 - 12:00 am

Oi‘s management continues to negotiate with the three large groups of bondholders to try to reach na agreement before the 7 December creditor meeting, CEO Marco Schroeder told Debtwire. The Brazilian telecom is doing so despite already approving a plan support agreement (PSA) supported by one of the three groups, the so-called G6.

 

“We are holding conversations with all the creditors. The biggest issues are the shareholders’ dilution in a debt-for-equity conversion and how the debt with [Brazilian telecommunications regulator] Anatel will be paid,” the CEO said.

 

The G6 group originally included Solus Alternative Asset Management, Centerbridge Partners, Silver Point Capital, Attestor Capital, Davidson Kempner Capital Management, and JPMorgan, but has lost some members.

 

However, the PSA has not been signed yet as Anatel has not approved its terms, Schroeder said.

 

The other two groups of bondholders – the Ad Hoc Group od Bondholders, advised by Moelis, and the International Bondholder Committee, advised by G5 Evercore – opposed the approval of the PSA by the board.

 

Oi’s creditor meeting had been scheduled for 10 November after several postponements. However, on 9 November, Judge Fernando Ferreira Viana, responsible for the case, accepted a request made by creditors Banco do Brasil, Caixa Economica Federal and China Development Bank and rescheduled the meeting to 7 December, with a second date of 1 February 2018.

 

According to Schroeder, it is likelly that the 7 December meeting will have the minimum quorum required to happen, as creditors holding BRL 59bn in Oi’s debt out of the total BRL 64bn had already registered to be part of the 10 November meeting.

 

“The minimum quorum might not be a problem. However, it is possible that an agreement with creditors is not reached by 7 December and more discussions might be held during the meeting. In that case, There could be a suspension of the meeting to resume negotiations and take a final plan to a vote on 1 February,” Schroeder said.

 

Under Brazilian bankruptcy law, the first creditor meeting can proceed only if creditors representing more than half of the total value of the debt in the four categories of claims (labor, unsecured, secured and microenterprise) are in attendance. Then creditors can decide whether they wish to vote for the plan proposed by the company. If the minimum quorum is not reached, the assembly is postponed and is held on the second scheduled date, regardless of the amount of debt represented at that time.

 

Oi released today its 3Q17 results. The telecom’s EBITDA reached BRL 1.605bn in 3Q17, down 2.4% YoY, according to the results release. Net services revenue dropped 4.7% in 3Q17 YoY, to BRL 5.863bn.

 

Capex has increased 36.3% in 3Q17 YoY, to BRL 1.339bn, according to the results.

 

“We have been increasing capex and sales over the past two quarters and it might have a positive impact on revenue over the next quarters,” the CEO said.

 

by Camila Dias