Oi creditors approve plan to exit bankruptcy protection

22 Dec 2017

Creditors owed money by financially stricken Brazilian telecoms operator Oi have approved a plan to bring the telco out of bankruptcy protection, Bloomberg reports. Final changes to the restructuring plan include: a proposal to pay for the fines owed to telecoms watchdog the National Telecommunications Agency (Agencia Nacional de Telecomunicacoes, Anatel) – Oi’s largest individual creditor – in five yearly instalments after a 20-year grace period. Fines under the attorney general’s jurisdiction would be paid in monthly instalments over 20 years. Anatel and the attorney general voted against the plan, the news agency noted, although their disapproval was not sufficient to derail the proposal.

Oi also said a BRL4 billion (USD1.2 billion) capital increase will happen within a year, subject to the approval of the bankruptcy court. The plan, which restructures around USD19 billion in debt by giving creditors a stake of as much as 75% in the company, is likely to face legal challenges by shareholders unhappy with the dilution.

According to TeleGeography’s GlobalComms Database, Oi filed the largest bankruptcy request in Brazil’s history in June 2016, after failing to reach an agreement with creditors. The filing, which covered Oi and six subsidiaries, listed BRL65.4 billion of debt and the company chose judicial reorganisation to preserve the value of its holdings and to continue providing services to its customers. Both China Telecom and China Mobile have been linked with a buyout of Oi in recent months.

Brazil, Oi