Oi board approves changes to reorganization plan, support agreement

By Caroline Salls

Pittsburgh, Nov. 27 – Oi SA’s board of directors approved guidelines for adjustments to the terms and conditions of the judicial reorganization plan and the plan support agreement of Oi and several subsidiaries, according to a news release.

In addition to Oi, the plan covers subsidiaries Oi Móvel SA, Telemar Norte Leste SA, Copart 4 Participações SA, Copart 5 Participações SA, Portugal Telecom International Finance BV and Oi Brasil Holdings Coöperatief UA.

A previously reported, the plan was filed in the 7th Corporate Court of the District of the Capital of the State of Rio de Janeiro, where Oi’s judicial reorganization is pending.

According to the release, the approved adjustments include some of the adjustments that were being defended by the company’s board of executive officers so that the plan reaches a configuration that allows the evolution of the negotiations to a new level, in search of consensus among the parties involved in the Oi companies’ proceeding.

The approved adjustments include capitalization of up to R$8 billion in new money, of which at least R$3.5 billion must be subscribed by the creditors, up to a maximum limit of R$5.5 billion; and R$2.5 billion to be subscribed by shareholders.

An R$3 billion issuance of convertible debentures is also scheduled.

The adjustments also include a capital increase to be realized once conditions are satisfied, including approval of the plan in the Appellate Court in Brazil and in the jurisdictions of the United Kingdom and United States, minimum EBITDA of R$5.75 billion and the company not being under intervention.

Once the conditions have been fulfilled, it will not be necessary for the board of directors to approve the capital increase, as previously required.

If the conditions are not fulfilled by the end of two years after approval of the plan by the court, there will be no obligation of capitalization by the creditors.

The payment of fees to creditors participating in the capitalization will be made at the time of capitalization and not in advance, as required in the previous version filed with the court. This payment may be made in cash or in shares, in accordance with Oi’s best interests, and not just in cash.

The percentage to be paid to creditors who provide resources to the company is 14% of the amount of new cash capitalization in the first year and 8% cumulative in the second year.

Oi said it will incorporate into the plan and the support agreement the adjustments and will file new versions of those documents with the court, Anatel and the Brazilian Securities and Exchange Commission to enable them to be appraised and submitted to the general meeting of creditors to be held on Dec. 7.

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.

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