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 Judge gives Oi creditors more time to negotiate restructuring plans

Por: Latin LawyerImprimirVisualizar em PDF

A judge in Rio de Janeiro has afforded creditors of Brazilian telecommunications company Oi additional time to vote on its restructuring plans, following the dismissal of the company's proposal to renegotiate regulatory fines.

Oi announced in a press release dated 23 October that its next general meeting of creditors has been delayed from 6 November to 10 November at the request of the company's Judicial Administrator. A second call to vote is due to take place on 27 November.

The order to postpone the vote was made by Judge Fernando Viana in the 7th Corporate Court in Rio de Janeiro the same day of Oi's statement. It means creditors will have more time to decide whether to approve Oi's plans to restructure seven of its entities at once, treating creditors as a consolidated group, and inject 9 billion reais (US$2.8 billion) of capital into the company.

The postponement came hours after an announcement by Anatel – Brazil's telecommunications regulator – that it was rejecting Oi's request to swap almost 5 billion reais (US$1.57 billion) it owes from regulatory fines for new investments.

"The unsatisfactory progress of the negotiations" regarding Oi's judicial reorganisation was behind Anatel's decision, a statement by the regulator read. It went on to explain that during the reorganisation – which began in June 2016 – it had become clear that "that the successive plans presented by the company did not provide guarantees of sufficient bearer assets" to satisfy the obligations of the swap deal.

This is not the first time the creditors' vote has been adjourned; Judge Viana had already allowed the first call to be delayed twice before his latest order.

The first call to vote on Oi's restructuring plans was originally planned for 9 October but delayed by the judge until 23 October following two appeal court rulings to allow creditors a vote on Oi's plans to consolidate their groupings while restructuring seven entities at once.

Oi's restructuring plan – filed with counsel at Brazilian law firm BMA - Barbosa, Müssnich, Aragão before the Rio court on 11 October – proposes a capital injection of 9 billion reais (US$2.8 billion) through a share offering worth 6 billion reais (US$1.8 billion) and a debt-for-equity swap intended to raise 3 billion reais (approximately US$950 million).

The swap had been demanded by creditors in August, who offered to purchase 88% of the company using 26.1 billion reais (US$8.2 billion). Oi's plan only allows for the conversion of debt into 25% of its equity.

However, the plan does meet the creditors' request for a rise in annual capital expenditure from 5 billion reais (US$1.6 billion) to 7 billion reais (US$2.2 billion), in addition to a share offering to inject 6 billion reais (US$1.8 billion).

The restructuring of Oi – the largest telecommunications company in South America – is the largest in-court reorganisation ever carried out in Brazil. Parallel proceedings are taking place in the US Bankruptcy Court for the Southern District of New York and in the Amsterdam District Court, as the company filed for Chapter 15 recognition on 7 July 2017 and for Dutch bankruptcy proceedings on 1 December 2016.

In the 7th Corporate Court of the Capital of the State of Rio de Janeiro

Judge Fernando Viana

Counsel to Oi

BMA - Barbosa, Müssnich, Aragão

Partners Luiz Antonio Sampaio de Campos, Sergio Savi and Felipe Evaristo dos Santos Galea in Rio de Janeiro

Rosman Penalva Souza Leao Franco Avogados

Partners Paulo Penalva Santos and Luiz Aberto Clonna Rosman in Rio de Janeiro

Basilio Advogados

Partner Ana Tereza Basilio in Rio de Janeiro

White & Case LLP

Partner Richard Kebrdle in Miami

 

Counsel to Jasper Berkenbosch as bankruptcy trustee of Coöp

E.Munhoz Advogados

Partner Eduardo Munhoz with Joao Vicente Carvalho, Carolina Iwamoto, Ana Luiza Arguello and Ana Elisa Laquimia

Jones Day

Partners Corinne Ball in New York and Louis Fischer in Washington, DC

 

Counsel for the International Bondholders' Committee

Sergio Bermudes Advogados

Marcelo Carpenter and Luis Tomas Alves de Andrade

Dechert

Partner Allan Brilliant in New York

 

Counsel to the Ad Hoc Group of bondholders

Pinheiro Neto Advogados

Partner Guiliano Colombo in São Paulo

Cleary Gottlieb Steen & Hamilton LLP

Partners Richard Cooper and Luke Barefoot in New York

 

Counsel to Bratel

Souza, Cescon, Barrieu & Flesch Advogados

Partners Maria Cristina Cescon, Carlos Braga, Tiago Lopes, Carlos Augusto Junquera and Guilherme Franca, and associates Fernanda Montorfano and Thenard Figueirdo in Rio de Janeiro

Andrade Fichtner Advogados

Partners Jose Antonio Fichtner, Sergio Nelson Mannheimer and Julio Rebello Horta, and associates Marcelo Dickstein and Eduardo Cardoso in Rio de Janeiro

 

Counsel to Societe Mondiale Fundo

Galdino, Coelho, Mendes, Advogados

Partners Joao Mendes, Rafael Pimenta and Lia Stephanie Saldanha Pompili in Rio de Janeiro

In the US Bankruptcy Court for the Southern District of New York

Judge Sean Lane

 

Counsel to Coöp's bankruptcy trustee

Jones Day

Partner Jasper Berkenbosch in Amsterdam

 

Counsel to Coöp's bankruptcy trustee

Jones Day

Partnerts Corinne Ball and Stephen Pearson, and associates Brian Kotliar and Anna Kordas in New York

 

Counsel to Oi

White & Case

Partner John Cunningham and associate Mark Franke in New York; partners Richard Kebrdle and Jason Zakia, and associate Laura Femino in Miami

 

Counsel to the steering committee of the ad hoc group of bondholders

Cleary Gottlieb Steen & Hamilton LLP

Partners Richard Cooper and Luke Barefoot in New York

 

Counsel to the international bondholder committee

Dechert

Partners Allan Brilliant and Benjamin Rosenberg in New York

 

Counsel to export credit agencies

Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados

Partners Alex Hatanaka and Marcelo Ricupero and associate Liv Machado in São Paulo

Milbank, Tweed, Hadley & McCloy LLP

Partner Nicholas Angel in London

 

FTI Consulting

In the Amsterdam District Court

 

Court-appointed insolvency trustee to Oi Brasil Holdings Coöperatief

Jones Day

Partner Jasper Berkenbosch in Amsterdam

 

Court-appointed insolvency trustee to Portugal Telecom International Finance

CMS

Partner Marcel Groenewegen in Amsterdam

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