Portugal Telecom (PT) and Oi have said they remain committed to the full completion of their business combination, after Rioforte Investments, a holding company owned by PT shareholder Espirito Santo, failed to pay EUR847 million (USD1.2 billion) of short-term debt. The two companies have signed a new Memorandum of Understanding (MoU), which will give PT a smaller stake in their new joint company CorpCo. PT said in a statement that the new agreement is aimed at providing ‘the time that may be necessary to minimise the loss in the value of the Rioforte debt’ and ‘to allow for the completion of the business combination as soon as possible’. Bloomberg reports that PT will now own a 25.6% stake in the combined entity CorpCo (compared to 39.6% under the original arrangement announced in October 2013), after an agreement to exchange the Rioforte debt with some so-called ‘Oi ON shares’ and ‘Oi Call shares’. PT added that it will pursue its legal and procedural options against Rioforte, to secure repayment of the debt.
In October last year PT and Oi announced they would combine operations to form a new Brazil-based company in order to strengthen the Brazilian firm and simplify its ownership structure, while also helping to shore up PT’s operations in its domestic market. The combined entity will have more than 100 million subscribers with annual revenues of around USD19 billion.