Moody's may downgrade Portugal Telecom

Moody's Investors Service said it placed on review for possible downgrade the A3 issuer and senior unsecured long-term debt ratings of Portugal Telecom SGPS SA and its subsidiary Portugal Telecom International Finance BV.

The outlook remains negative, reflecting the company's weak operating performance and Moody's view that the company needs to strengthen its credit metrics.

The rating review follows the announcement by Sonae SGPS of its intention to launch an unsolicited offer for a controlling stake in Portugal Telecom at €9.5 per share, which implies a value of around €10.7 billion for 100% of the company's shares.

Moody's said its rating review will focus on the financial implications of the potential takeover, the extent to which debt is used to finance the takeover and the impact of this possible change in ownership on Portugal Telecom's financial policies and its corporate strategy going forward.

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