Troubled Oi finds breakthrough with creditors

By:
James Pearce
Published on:

A filing from bankrupt Brazilian operator Oi reveals a restructuring plan that could take the company out bankruptcy protection, but leave control of it in the hand of creditors

Troubled Brazilian telecommunications operator Oi has struck a deal with two major creditors around a plan to exit bankruptcy protection, it has announced.

The company is around $19 billion in debt and filed for bankruptcy earlier this year, but according to a market filing, it has met with bondholders to discuss a new restructuring plan.

The filing said the Ad Hoc Group of Oi Bondholders and International Bondholders Committee had agreed in principle to a new proposal that would give the Brazilian telco’s creditors effective control of the company.

This backing could allow for formal approval at an upcoming creditor meeting, scheduled for 19 December according to Reuters.

Creditors include Aurelius Capital Management, Goldentree Asset Management, and York Capital Management, whilst the Brazilian government, which holds a significant amount of Oi’s debt, has also agreed in principle to the plan, the Reuters report claims.

Reuters claims the proposed deal with bondholders would see them take up to 75% of the company’s shares and effective control, leading shares to plunge around 23% on Wednesday (13 December).

It comes at a pivotal moment for Oi, which has been linked to potential takeovers or investment from China Mobile and China Telecom after the Brazilian firm reportedly signed a confidentiality agreement with the latter.