Brazil’s OAS presents plan to bankruptcy court; no noteholder deal

By Caroline Salls

Pittsburgh, June 22 – OAS SA presented a plan of reorganization to the First Specialized Bankruptcy Court of Sao Paulo, Brazil, according to a news release.

The company said it previously entered negotiations with holders of, or managers of entities holding beneficial interests in, OAS Investments GMBH’s 8¼% senior notes due 2019, OAS Finance Ltd.’s 8% senior notes due 2021 And OAS Finance’s 8 7/8% perpetual notes. Roughly $1.78 billion principal amount plus accrued interest is outstanding on the notes.

Negotiation history

During the week of June 8, OAS and its financial and legal advisers met with representatives of the noteholders and their advisers to negotiate the terms of a potential financial restructuring that would have the support of the noteholders.

However, an agreement concerning the terms of a transaction had not been reached as of Monday.

While negotiations with the noteholders may continue in the future, the company said there can be no assurance that negotiations will continue or if they do continue that they will result in an agreement.

Specifically, during the course of the negotiations, OAS said its representatives presented potential written restructuring scenarios, as well as written answers to certain questions posed by some of the noteholder representatives before June 8.

On June 10, the noteholder representatives provided a written restructuring term sheet. Company representatives responded on June 16 by submitting its own term sheet.

OAS said the noteholder term sheet was the only term sheet or proposal delivered to date concerning the terms of a restructuring transaction.

Restructuring scenarios

According to a company presentation, two restructuring scenarios were presented by the company on June 9.

Under the first scenario, distributable value would include a possible R$2.2 billion of OAS Infraestrutura gross cash proceeds, $1.4 billion in OAS Investimentos cash and up to R$800 million in OAS/COAS take-back paper.

Holders of OAS Infraestrutura secured claims would be repaid in full in cash, including accrued interest, from Invepar sale proceeds.

OAS Infraestrutura unsecured claims would be netted against intercompany payable associated with a debtor-in-possession facility; holders of OAS Investimentos unsecured claims would receive a share of net cash proceeds and holders of OAS/COAS unsecured claims would receive a share of take-back paper, except for critical vendors, which would receive different treatment in exchange for post-bankruptcy trade credit.

Under scenario two, distributable value would include R$2.5 billion in cash proceeds from asset sales, as well as take-back paper.

Secured creditors would be repaid in full in cash from Invepar sale proceeds, and unsecured creditors would receive a share of net cash and take-back paper, except for critical vendors.

OAS is a Sao Paulo-based construction company.

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