Brazil’s largest fixed-line operator accepts the bankruptcy law
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The telephone company Oi , Brazil’s largest fixed telephony operator, took the bankruptcy law on Monday to be able to renegotiate the debt of R $ 65,400 million (about 18,685.7 million dollars, 16,514.39 million) with the help of justice of euros).
“Considering the challenges generated by the economic and financial situation of the company in the light of the maturity schedule of its debts and the threats to its coffers due to imminent embargoes or blockages in judicial processes , and taking into account the need to urgently adopt measures of protection, the Oi concluded that the presentation of the request for judicial recovery would be the most appropriate measure at this time, “the company said in a statement.
The debt of the Oi is the largest among the Brazilian companies that have requested the so-called judicial recovery , as in Brazil the bankruptcy law is known.
Until now, the Brazilian company with the highest debt that had to request justice intermediation to renegotiate its obligations was the OGX oil company, owned by ex-billionaire Eike Batista , which in 2013 accepted the bankruptcy law with 11,200 million reais (about 3,200 million euros). dollars) of liabilities.
In addition to being the largest fixed telephony operator in Brazil, with nearly 17 million customers, Oi is one of the largest providers of broadband internet access, the fourth largest mobile telephony operator and a major player in the mobile phone market. television by subscription.
Considered the third largest company in the telecommunications sector in South America, with some 50 million customers, the Oi has among its main shareholders the former Portugal Telecom , its strategic partner since 2010 and which owns 27.5% of the capital.
A large part of the Oi’s debt comes precisely from the problems caused by its merger with Portugal Telecom, carried out in 2013 but liquidated at the beginning of 2015, with the sale of the assets of the Portuguese company to the Luxemburgian Altice.
The Oi came to negotiate this year an agreement with the investment fund LetterOne, controlled by the Russian billionaire Mijail Fridman, to acquire the also Brazilian TIM in an attempt to clean up their finances, but the Russians ended up giving up.
The possible merger with TIM would have strengthened it in the mobile market and given the conditions to compete in Brazil under better conditions with Spain’s Telefonica, which operates under the Vivo brand , and Mexico’s América Móvil, with its Claro label, which it also offers in the fixed telephony country, mobile telephony, internet access and subscription television.
The company explained in its press release that, if the justice accepts its request to accept the bankruptcy law, it will be able to refinance its debts and at the same time guarantee the offer of services to its clients.
The operator only communicated its decision after the closing of the Sao Paulo stock exchange, but its shares suffered a sharp drop on Monday, 10% preferential and 6% ordinary, after the company admitted that it had to reach a agreement with the National Bank of Economic and Social Development (BNDES) to suspend the payment of its financial obligations for 180 days.
The company accumulated losses last year by 5,300 million reals (about 1,766.7 million dollars) and in the first quarter of this year its damage amounted to 1,640 million reals (about 468.6 million dollars).
Last week the rating agency Fitch Ratings downgraded its note to “C”, the last level before bankruptcy, as it is considered unsustainable.