Oi pursuing $1B in credit to enable TIM merger

Brazil’s Oi is currently looking to secure financing from two banks as it seeks to merge with TIM.

The banks have not been identified, but it has been speculated that they may be Barclays and Banco Santander. Other sources have claimed that the banks may become part of Oi’s M&A advisory unit. The operator is looking to procure up to $1 billion in credit in order to pay off short-term debts.

Currently, the lead negotiator for the arrangement is Grupo BTG Pactual. There has been concern that the group’s problems – including the arrest of its former CEO last year – could stymie Oi’s merger plans, but the operator has talked down BTG’s role in the negotiations, describing it as an adviser.

Oi has been pursuing a tie-up with TIM for some time, claiming that it would “enable the consolidation of the sector”. Last October Oi signed a deal with LetterOne in order to further this goal. “A potential business combination of Oi and TIM Participacoes should result in the creation of a more complete and well-positioned telecommunications operator that would be able to compete against global players already operating in Brazil.”

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