Brazil’s Oi seeks holder approval for use of sale proceeds, leverage

By Tali Rackner

Norfolk, Va., Jan. 27 – Oi SA will hold a meeting for the holders of its fifth issuance of nonconvertible unsecured debentures, in two series, according to a filing with the Securities and Exchange Commission. The notes were originally issued by Telemar Norte Leste SA.

The company is looking for consent to make the following changes:

• Any amounts received from the sale of all of the shares of PT Portugal SGPS SA to Altice Portugal SA, substantially consisting of the operations conducted by PT Portugal in Portugal and Hungary, will, before Dec. 31, 2015, (a) remain denominated in euros, or (b) if the company decides to transfer some or all of the funds to Brazil and therefore convert them into reais, it will establish instruments to hedge against foreign exchange variation in relation to the resources that were converted in reais;

• Oi will use all the amounts received from the PT Portugal sale exclusively for the payment of its debts and/or to perform corporate transactions that aim to consolidate the telecommunications industry in Brazil, including the purchase of interests in other mobile operators;

• The company will not pay dividends to its shareholders, as declared for the fiscal years ended Dec. 31, 2014 and Dec. 31, 2015, except for the payment of mandatory minimum dividends; and

• The maximum leverage with respect to each of the four quarters of 2015, obtained by dividing the total gross debt of Oi by its EBITDA, will be less than 4.5 times, except if (a) prior to the closing of the sale, there is a need to deconsolidate the EBITDA of PT Portugal and its subsidiaries from the company’s consolidated EBITDA calculation while, at the same time, there is a need to consolidate the debt of PT Portugal and its subsidiaries in the calculation of total gross debt of the company, or (b) after the closing, PT Portugal’s debt will have been substantially transferred to Oi and its subsidiaries, being that, in either case, the maximum leverage for each of the four quarters of 2015, obtained by dividing the total gross debt by Oi’s EBITDA, will be less than 6 times.

Oi submitted a call notice for a general meeting of debenture holders on Dec. 15, 16 and 17, but these matters were not included in the agenda. They were discussed at the meeting, which was held Jan. 27, but in order to approve the changes, the company must convene a meeting specifically for this purpose. As such, the company will publish a call notice on Jan. 28 for a new general meeting to be held on Feb. 12.

Rio de Janeiro-based Oi is an integrated telecommunications service provider.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.