Brasil Telecom increases interest rate, offers to repurchase debentures

By Angela McDaniels

Tacoma, Wash., Jan. 28 - Brasil Telecom SA has decided to change the interest earned on its fifth issue of debentures to the daily average rate of the one-day Interbank Deposits, Extra-Group, capitalized by a spread of 3.5% per year, according to a 6-K filing with the Securities and Exchange Commission.

Interest was previously equal to 104% of the rate.

The company also offered to repurchase the debentures at par plus accrued interest, which will be calculated using the original rate up to but excluding Jan. 28 and the new rate from Jan. 28 through Feb. 9.

Those who wish to sell all or part of their debentures should indicate their interest no later than Feb. 4 by faxing and e-mailing a letter to Alex Pinheiro Veloso (send fax to 61 3481-7062 and e-mail to debentures@brasiltelecom.com.br) and Carlos Alberto Bacha of Pavarini DTVM Ltda. (send fax to 21 2507-1949 ext. 40 and 41 and e-mail to pavarini@pavarini.com.br).

Brasil Telecom said the acquired debentures will be placed in the market again, held or cancelled.

As previously reported in December, holders of the debentures approved an amendment of the indenture to include an exception to the rule of mandatory acquisition. The exception was sought in connection with the proposed sale of Brasil Telecom's equity control to Telemar Norte Leste SA.

For its part, the company said it would give the debenture holders the option to put back the debentures after the acquisition closed and would consider increasing the interest rate.

The debentures were issued in June 2006 and are the company's fourth public issue.

Brasil Telecom is a telecommunications services provided based in Brasilia.

Telemar Norte Leste is a Rio de Janeiro-based telecom umbrella group.

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