New York court to hear shareholder objections to Oi bankruptcy plan

Pharol SGPS SA

16/05/2018 19:55

By Gram Slattery
    SAO PAULO, May 16 (Reuters) - A New York court is set to
hear a dispute involving Brazilian telecoms company Oi SA
 OIBR4.SA  and major shareholder Bratel Brasil SA, Bratel said
in a statement on Wednesday, as shareholder discontent with Oi's
bankruptcy recovery process shows no signs of abating.
    On Friday, Bratel, a subsidiary of Portugal's Pharol SGPS SA
 PHRA.LS , which owns almost 28 percent of Oi's common shares,
said it had filed a legal complaint in the United States. The
complaint alleges that the rights of Oi shareholders were
violated as part of an agreement approved by creditors in
December to severely dilute shareholders' equity as part of an
agreement to take Oi out of bankruptcy protection.
 urn:newsml:reuters.com:*:nL1N1OF277 urn:newsml:reuters.com:*:nL1N1OJ0JL
    In the Wednesday statement, Bratel said Judge Sean Lane of
the U.S. Bankruptcy Court for the Southern District of New York
had scheduled a hearing for May 29.
    Representatives for Oi did not immediately respond to a
request for comment, though the company has repeatedly said the
recovery plan is legally airtight.
    In December, creditors in Oi approved a plan to restructure
some 65 billion reais ($17.7 billion) in debt which will result
in shareholders' equity being diluted by 72 percent.
Shareholders vigorously objected, especially as the company's
board was effectively removed from the process shortly before
the vote.  urn:newsml:reuters.com:*:nL1N1O00NH urn:newsml:reuters.com:*:nL1N1RO2GS
    That dilution process, in which debt will be converted into
equity, has not yet occurred, though executives have told
Reuters they hope to complete the process before the end of
June.  urn:newsml:reuters.com:*:nL1N1RP1NF
    That has resulted in several legal challenges.  urn:newsml:reuters.com:*:nL2N1Q50EB
    Common shares in Oi, which have become extremely volatile in
recent months, climbed 6.3 percent to 4.22 reais in afternoon
trade, while preferred shares were up 2.8 percent at 3.36 reais.
    ($1 = 3.68 reais)

 (Reporting by Gram Slattery; Editing by Lisa Shumaker)
 ((gram.slattery@thomsonreuters.com; +55-11-5644-7714))