The saga of Brazilian telecommunications company Oi and its ongoing attempts at restructuring its operations and settling its debts continues this week with news that it is seeking court approval to amend its existing debt recovery plan.
The proposed amendments reportedly involve renegotiating payment terms with labour unions and certain unsecured creditors. The company is also hoping to align cash flow with payment obligations, reduce overall liabilities and free up funds for ongoing operations.
It’s probably no surprise to learn that the overall aim is to improve Oi's financial situation and allow its new management to better adjust its capital structure. However, the amendments require approval from both creditors and the court.
This news comes less than a week after ratings agency Fitch downgraded Oi's Foreign and Local Currency Long-Term Issuer Default Rating and its National Long-Term rating. It suggested that the downgrade reflected Oi's worsening financial situation, highlighted by intensified cash burn beyond Fitch's expectations.
Fitch has suggested that to prevent default, the company is increasingly requesting waivers to pay-in-kind (PIK) its coupon obligations. This, it says, signals exceptionally elevated credit risk and deteriorating payment conditions for holders of the 2027 bond and V.tal's debentures (Oi still has a stake in digital infrastructure solutions company and neutral fibre optic network owner V.tal). These actions, Fitch adds, may lead to a distressed debt exchange, underscoring Oi's urgent liquidity management efforts. Oi’s management plans to address these challenges by 2026 by selling its 27.5% stake in Vital and using the proceeds to fully repay these two obligations.
In addition the shift from a concession to an authorisation regime has apparently enabled the company to sell up to around 7,500 real estate assets, potentially valued around BRL5 billion (about US$924.5 million).
However, Oi's debt totalled BRL35.9 (a staggering US$6.6 billion) in face value as of the first quarter of 2025. It looks like a saga that began in 2016 is far from over yet.
