U.S. court to hear fight over Brazil telecom Oi's bankruptcy plan (updated)

Pharol SGPS SA

16/05/2018 22:43

(Adds Oi response, updates share price)
    By Gram Slattery
    SAO PAULO, May 16 (Reuters) - A U.S. bankruptcy court is set
to hear a dispute involving Brazilian telecoms company Oi SA
 OIBR4.SA  and major shareholder Bratel Brasil SA, Bratel said
on Wednesday, as investor discontent with Oi's bankruptcy
reorganization 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 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 criticized the move in a separate
statement sent to Reuters, writing that the company "believes
Pharol is acting in a totally isolated way in relation to all of
the stakeholders in this process," and that Pharol is trying to
repeat arguments it unsuccessfully made in Brazilian courts.
    "The company...will take the needed measures to protect from
attacks that potentially hurt its operations," the company said.
    In December, creditors in Oi, Brazil's largest fixed-line
operator, 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, closed up 13.4 percent at 4.50 reais on
Wednesday, while preferred shares closed up 6.1 percent at 3.47
reais.
    ($1 = 3.68 reais)

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