Oi has a new recovery plan, but creditor wants to postpone analysis of the pr...

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The telephone company Oi presented a new version of its judicial recovery plan to the 7th Business Court of Rio de Janeiro. The proposal must be submitted to the general meeting of creditors, scheduled for next Tuesday (12/19), but it is already facing resistance.


The new plan foresees that creditors can B2B Lead hold up to 75% of the company's capital and that the financial debt will fall from R$49.4 billion to R$23.9 billion, converting part of the obligations owed into company shares and new bonds of debt.

“After more than 18 months of negotiations with various creditors, we reached a level of conversion of debt into shares considering a balance between economic value for shareholders and credit recovery for creditors. We understand that it is the possible equation and that it enables a sustainable business plan”, said, in a statement, the president and legal director of Oi, Eurico Teles.

reproduction
Oi has been in the recovery process since June 2016, but a plan is pending.
reproduction
According to the company, the plan also foresees that, after the conversion of debts into shares, discounts and extensions of terms, there will be a capital increase of R$4 billion in new resources, in addition to R$2.5 billion in additional resources that can be sought in the capital market.

According to the company, the plan presented represents a market solution for Oi and provides legal guarantees for the judicial recovery process. If the proposal is approved at the general meeting of creditors, the plan must be approved by the Court and follow the approval procedures in all competent regulatory spheres.

In the process of judicial recovery for more than a year, since June 2016 , Oi has accumulated debts of around R$64 billion.



Contested plan
Despite the proposal, the Société Mondiale Fund questioned the plan and wants the 7th Business Court to postpone the general meeting of Oi's creditors.

In a petition signed by the firm Galdino, Coelho, Mendes Advogados, the fund states that an essential document was missing to provide a firm guarantee of a capital increase — the so-called Commitment Agreement, where all the conditions are or should be in place to put new money into the company. Without it, the creditor argues, there is no firm guarantee of the capital increase, nor the precedent conditions for capitalization to occur.