Oi, bondholders propose adjustments to judicial restructuring plan

By Caroline Salls

Pittsburgh, Dec. 13 – Oi SA exchanged proposed changes to its restructuring plan in negotiations held with noteholders, according to a news release.

As previously reported, the company has been involved in discussions and negotiations with holders of or managers of entities holding, beneficial interests in the 9¾% senior notes due 2016 issued by Oi, 5 1/8% senior notes due 2017, 9½% senior notes due 2019 and 5½% senior notes due 2020 issued by Oi and guaranteed by Telemar Norte Leste SA, the 5 5/8% senior notes due 2021 and 5¾% senior notes due 2022 issued by Oi Brasil Holdings Coöperatief UA and guaranteed by Oi and the 6¼% senior notes due 2016, 4 3/8% notes due 2017, 5 7/8% senior notes due 2018, 5% senior notes due 2019, 4 5/8% senior notes due 2020, 4½% notes due 2025 and 5.242% senior notes due 2017 issued by Portugal Telecom International Finance and guaranteed by Oi.

On Nov. 27, Oi filed a draft term sheet and plan support agreement with the Brazilian bankruptcy court.

On Nov. 29, representatives of the company and the noteholders met to discuss feedback received by the noteholder representatives from Anatel, Banco do Brasil, Banco Nacional do Desenvolvimento Econômico e Social, Itaú Unibanco SA and the Advocacia-Geral da União. At that meeting, the parties discussed potential adjustments to the Nov. 27 term sheet and support agreement.

The adjustments discussed included revising a condition to a mandatory warrant exercise to eliminate the requirement that challenges to a required court decision be overruled by the Court of Appeals of the State of Rio de Janeiro.

Instead, it was recommended that only the absence of appeals, lawsuits or other proceedings filed against the plan that could suspend or stay its implementation would be required.

The adjustments also include revising a requirement for recognition by final order of the Brazilian bankruptcy proceeding in any and all ancillary restructuring proceedings. The suggested revision would instead require only the entry of a recognition order and the absence of any appeal, lawsuits or other proceedings related to the recognition order that could suspend or stay the relief granted.

The adjustments also suggest revising break-up fee and commitment premiums to be payable exclusively in common shares, rather than in cash, common shares or a combination of those.

On Dec. 8, the parties’ representatives also explained upcoming changes to a “bondholder option” included in the restructuring plan.

The changes include a requirement to reach a specified level of debt-to-equity conversion upon plan confirmation, with the percentage that such conversion will represent on the company’s capital stock still to be determined, and a capital raise of R$4 billion, with a predetermined price per share and subject to existing shareholders’ preemption rights.

The new draft of the restructuring plan was expected to be presented to the court on Dec. 12, “regardless of any plan support agreement or any other form of expression of support by bondholders,” the release said.

Oi is a Rio de Janeiro-based telecommunications service provider. It filed for Chapter 15 bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York on June 21, 2016 under case number 16-11791.

© 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.