In a statement to shareholders, Brazilian telecoms giant Oi SA has confirmed that it will retain EUR400.0 million (USD463.2 million) of debt initially issued by merger partner Portugal Telecom SGPS (PT SGPS) as part of the proposed sale of Portuguese operating unit PT Portugal Telecom SGPS (PT Portugal) to Altice Group of Luxembourg. The announcement follows a similar statement from PT SGPS, which it issued after the holding company postponed a scheduled vote to approve the EUR7.4 billion sale of PT Portugal to Altice.
Meanwhile, in a separate statement issued on 16 January, Oi has stressed the significance of the asset sale, noting: ‘PT Portugal is facing an adverse situation, the importance of which must be clearly understood. The Rio Forte episode, which caused a EUR879 million default, caused serious damage to the company, including a downgrade to its rating by credit agencies, complicating access to capital markets and increasing the cost of capital. Oi has concentrated all of its efforts on supporting an investigation of the facts to ensure that the proper responsibility is assigned for the acts that were carried out, and shall take all appropriate measures, given that it is the main victim of the investments made in Rio Forte … To this end, Oi believes that the PT SGPS shareholders’ meeting scheduled for 22 January is the best opportunity to ensure the sustainable future of PT Portugal and Oi. This decision, which will create more value for all shareholders, will benefit the Portuguese company, resulting in a company with low leverage, prepared to face the financial and operational challenges of the future. PT Portugal will continue to be a company concentrated in Portugal, providing services to the people of Portugal, investing, collecting taxes and creating jobs in that country. The sale to be proposed to shareholders will only result in a change in the control of the company, but the company itself will not change. It will emerge strengthened from the current situation … Oi also believes that the sale of PT Portugal is the best for all of its direct and indirect shareholders, including for PT SGPS, whose main asset is its investment in Oi. This is because, with the sale, Oi will also reduce leverage and gain financial flexibility and investment capacity. In addition, it will enable itself to participate in the expected consolidation process in Brazil, which has the potential to capture material synergies and economies of scale, as well as to increase competitiveness.’
According to TeleGeography’s GlobalComms Database, on 5 May 2014 the entire share capital of Portuguese unit PT Portugal was contributed to Oi SA by PT SGPS, as part of a capital increase related to the planned merger of the Brazilian and Portuguese telcos. In December 2014 Oi clarified that its agreed sale of PT Portugal to Altice did not include the Africatel holding company, Timor Telecom or the EUR879 million debts attributed to Rio Forte Investments, and therefore these three assets must be separated from PT Portugal prior to the approved sale to Altice.