Dutch court puts two units of Brazil's Oi into bankruptcy proceedings

Pharol SGPS SA

20/04/2017 03:40

SAO PAULO, April 19 (Reuters) - A Dutch court on Wednesday 
ordered two subsidiaries of Brazilian phone company Oi SA 
 OIBR3.SA  to begin bankruptcy proceedings, giving some 
creditors a new form of leverage for their fight in Brazil's 
biggest-ever bankruptcy case. 
    The ruling, which overturned a lower court's decision in 
February, gives Oi the chance for a final appeal before the 
Dutch Supreme Court, which the company said it would request. 
    If Wednesday's ruling stands, court-appointed trustees for 
Oi Brasil Holdings Coöperatief UA and Portugal Telecom 
International Finance BV will be tasked with liquidating the 
units to repay creditors.  
    Oi's two Dutch subsidiaries issued about 5.8 billion euros 
($6.2 billion) of debt, representing most of the company's 
outstanding bond debt of approximately 8.5 billion euros. 
    Those funds were passed largely to the parent company, which 
is protected from creditors by its own restructuring process in 
a Brazilian court, where the judge will have a say over claims 
from trustees of the Dutch subsidiaries. 
    Oi said in a securities filing that the Dutch ruling had no 
impact on its day-to-day operations, including sales, 
maintenance and investments. 
    In June, Oi filed for Brazil's largest-ever bankruptcy 
protection process, in an effort to restructure about 65 billion 
reais ($21 billion) of bond, bank and regulatory liabilities. 
    The Dutch case created an early divide among the company's 
bondholders. Investors such as Aurelius Capital Management LP, 
Attestor Capital LLC, Citadel LLP and York Capital Management 
formed the so-called International Bondholder Committee to press 
their case in the Netherlands while a group advised by Moelis & 
Co  MC.N  focused exclusively on the Brazilian case. 
    The International Bondholder Committee, which holds more 
than $2 billion of bonds issued by the two Dutch companies and 
other Oi units, declined to comment on Wednesday's ruling.  
    ($1 = 3.149 reais) 
 
 (Reporting by Brad Haynes and Alberto Alerigi Jr.) 
 ((brad.c.haynes@tr.com; +55 11 5644 7725; Reuters Messaging: 
brad.c.haynes.thomsonreuters.com@reuters.net)) 
 
Keywords: OI SA RESTRUCTURING/