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Oi revises debt restructuring plan ahead of creditor’s meeting

Oi revises debt restructuring plan ahead of creditor’s meeting

The board of Brazilian operator Oi has revised its proposals for restructuring its debt after its creditors shot down its previous suggestions.

Oi’s updated plan has the core goal of bringing in an overall increase in capital of up to BRL8 billion ($2.4 billion). It has asked its creditors to contribute a minimum of BRL3.5 billion in fresh capital, with a maximum cap of BRL5.5 billion, and will accrue the remaining BRL2.5 billion from its shareholders.

Brazilian regulator Anatel was dismissive of Oi’s previous proposals to pay creditor’s capitalisation fees upfront, and the operator has responded by updating this term. It will now only pay the charges once funds have been received. Oi will be able to choose whether to make these payments in cash or shares. Upon receiving the capital, it will pay fees of up to 14% of the total within the first year, and 8% in the second year.

In October, Oi’s creditors rejected the board’s previous proposals for restructuring its debt, while in turn the board was not keen for a group of creditors holding  liabilities worth BRL23 billion to assume an 88% equity stake in Oi.

Oi will present its updated proposals to the Brazilian Securities and Exchange Commission and several courts before its scheduled creditor’s meeting on 7th December. The operator filed for bankruptcy protection in June last year, with debts of BRL65.4 billion. Recent reports have indicated that China Telecom may acquire a BRL20 billion stake in the operator.

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