Brazil's Oi plans global offering of preferred, common stock; proceeds to pay down debt

By Stephanie N. Rotondo

Phoenix, April 3 - Oi SA is planning a global offering of preferred and common stock, according to a prospectus filed with the Securities and Exchange Commission on Thursday.

The securities will be sold both in Brazil and internationally. Up to 3.83 billion American Depositary Shares representing one preferred share will be sold, along with 1.92 billion common shares.

Dividends on the preferreds have a priority minimum non-cumulative status, meaning that dividends must be paid on the preferreds before the common shares. The dividend will equal the greater of 6% per year in regards to a pro rata share of capital or 3% per year of the pro rata share of the book value of shareholder equity.

Common dividends have a minimum mandatory dividend, equal to 25% of annual adjusted net profits.

Brazilian underwriters include Banco BTG Pactual SA; BofA Merrill Lynch Banco Multiplo SA; Banco Barclays SA; Citigroup Global Markets Brasil, Corretora de Cambio, Títulos e Valores Mobiliarios; Banco de Investimentos Credit Suisse (Brasil) SA; BES Investimento do Brasil SA - Banco de Investimento; HSBC Bank Brasil SA - Banco Multiplo; BB - Banco de Investimento SA; Banco Bradesco BBI SA; Banco Caixa Geral - Brasil SA; Goldman Sachs do Brasil Banco Multiplo SA; Banco Itau BBA SA; Banco Morgan Stanley SA; and Banco Santander (Brasil) SA.

International underwriters are Banco BTG Pactual SA - Cayman Branch; BofA Merrill Lynch; Barclays; Citigroup Global Markets Inc.; Credit Suisse Securities (USA) LLC; Banco Espirito Santo de Investimento SA; HSBC Securities (USA) Inc.; Banco do Brasil Securities LLC; Banco Bradesco BBI SA; Caixa - Banco de Investimento, SA; Goldman Sachs & Co.; Itau BBA USA Securities Inc.; Morgan Stanley & Co. LLC; and Santander Investment Securities Inc.

Banco BTG Pactual (Cayman) will have an international over-allotment option of 575.12 million preferred shares and 287.55 million common shares. The main bank will have an option of selling the same amount of additional preferred and common shares to the Brazilian community.

Additionally, the company and the underwriters could agree to sell another 20% of the initial offering.

Shareholders of both securities as of April 9 will be given an opportunity to subscribe for shares in the Brazilian offering, on a priority basis. TmarPart, Valverde, AG Telecom and LF Tel have agreed to assign their respective priority rights to Portugal Telecom, which will then subscribe for an equivalent of R$5.7 billion in preferred and common stock in the Brazilian offering.

The company also entered into a subscription agreement with Caravelas, which will subscribe for a combination of shares equal to the difference between R$2 billion and the amount of subscription orders placed by TmartPart shareholders.

Proceeds will be used to pay down debt.

Pricing is expected April 28.

Oi is a Rio de Janeiro-based integrated telecommunications service provider.

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