Calais increases offer for MCI's Embratel stake to $550 million

New York, April 23 - Calais Participacoes SA again increased its offer for MCI, Inc.'s stake in Embratel Participacoes SA, this time to $550 million from $470 million.

It also raised the non-refundable portion to $470 million plus reimbursement of the possible $12.2 million break-up fee from $396 million.

Furthermore, Calais restructured its offer. It will now use an interim trust to make the transaction in order to address MCI's concerns about obtaining prior approval from the Brazilian antitrust authority CADE.

Calais described the structure as one "that MCI knows from its own experience has worked in Brazil before."

"We believe that our offer as modified hereby continues to be vastly superior to the Telmex offer both with respect to price and execution risk," Calais said in a statement. "It represents $70 million more in immediate non-refundable payments to MCI which are not subject to any prior regulatory approval.

"Through the trustee structure, it affords a very high likelihood that Embratel will soon cease to be a management distraction to MCI; it provides insulation from purported liability concerns; and will result in a substantially higher purchase price upon the ultimate acquisition by Calais."

Calais also filed an objection to the sale process with the U.S. Bankruptcy Court for the Southern District of New York, describing it as "fundamentally flawed both in its structure and its execution."

Calais is owned by Geodex Communications SA and three Brazilian telecom companies: Brasil Telecom SA, Telemar Norte Leste SA and SP Telecomunicacoes Holding Ltd., a Brazilian unit of Telefonica.

MCI currently has an agreement to sell the Embratel stake to Telefonos de Mexico, SA de CV. On April 21, it said Telmex had increased the purchase price to $400 million from $360 million. The agreement includes a $12.2 million break-up fee. In addition, MCI will receive an up-front payment of $50 million from Telmex which MCI will retain this amount if the sale cannot be completed because of the inability to obtain regulatory approvals.

MCI has asked for a hearing on April 26 in the U.S. Bankruptcy Court for the Southern District of New York on April 26. A hearing to approve the sale to Telmex is scheduled for April 27.

MCI, an Ashburn, Va.-based telecommunications company, emerged from Chapter 11 on Tuesday.

© 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.