Egyptian broker Naguib Sawiris is reportedly investing $250 million to pull Brazil’s Oi out of bankruptcy proceedings.
A proposal for the investment has been drafted by the Sawiris Group – the controlling shareholder in Orascom Telecom Media & Technology – together with the investment bank Moelis and a group of bondholders. Previous interactions between Sawiris and Oi had been reported, but played down.
The Sawiris Group plans to provide Oi with a cash injection of $1.25 billion, with $1 billion of this sum generated by a public share sale. The deal will also grant the group control over Oi. Reportedly, some shareholders do not approve of the proposed deal, with advisory firm G5 Evercore leading a selection of bondholders in an attempt to reach an alternative agreement.
Oi became the largest ever company in Brazil to file for bankruptcy protection when it initiated proceedings in June last year. Its progress since then has been faltering, as it attempts to reconcile the interests of its shareholders with those of its bondholders.
While Oi has considerable fixed line infrastructure, its mobile presence is less substantial. The beleaguered operator has been plagued by setbacks including regulatory requirements regarding its fixed assets and its troubled merger with Portugal Telecom, from which it has since extracted itself.
The operator has also stated its intent to sell off “non-relevant” asset Timor Telecom, and has requested court approval for the sale as per its reorganisation strategy. Investel Communications saw off its competition for Oi’s direct and indirect holdings in the unit with a bid for $36 million, along with the payment of Timor Telecom’s debts to Oi, which totalled around $26 million.
Oi also has a portfolio of African assets that it obtained through its previous merger with Portugal Telecom. These assets are also saleable.