Brazilian telecoms giant Oi has filed the largest bankruptcy request in the country’s history, after failing to reach an agreement with creditors, Bloomberg reports. The filing, which covers Oi and six subsidiaries, lists BRL65.4 billion (USD19.2 billion) of debt, and the company has said that it chose judicial reorganisation to preserve the value of its holdings and to continue providing service to its customers. Oi’s board decided to move ahead with the filing after determining that the company was unlikely to get approval from shareholders and creditors for a voluntary exchange offer in time to make the next debt payment, two people familiar with the matter have claimed.
Talks with creditors stalled last week after some board members disagreed with a plan by bondholders to swap debt for equity, giving them 95% of the company and leaving current shareholders with a 5% stake. The filing came just ten days after Bayard Gontijo resigned as Oi’s CEO, after disagreeing with some board members on how to proceed on negotiations with debt holders. Following Mr Gontijo’s departure, Marco Schroeder was appointed to replace him, becoming Oi’s sixth chief executive officer in five years.
Bloomberg notes that the filing is likely to have major repercussions in Brazil, since state-owned banks Banco Nacional de Desenvolvimento Economico e Social, Caixa Economica Federal and Banco do Brasil are among Oi’s top creditors, along with private banks such as Itau Unibanco Holding.