SAO PAULO Oct 18 An activist minority
shareholder in Oi SA urged the Brazilian phone carrier's board
to revamp a bankruptcy protection plan presented last month, in
a bid to neutralize growing pressure from large creditors like
bondholders and banks.
In a letter sent to Chairman José Mauro Carneiro da Cunha
dated Oct. 14, shareholder Nelson Tanure said Oi's in-court
restructuring needed to be designed in a way that favors the
survival of the company and not creditors. He urged stricter
cost-cutting efforts and a stance toward austerity.
Reuters viewed the letter. A media representative for Tanure
declined to comment on the letter.
Oi, which in June filed for Brazil's largest bankruptcy
protection plan on 65.4 billion reais ($21 billion) of
liabilities, declined to comment.
After dubbing investment firms that bought Oi debt at
distressed prices as "vulture funds disguised as proto-New
York-based banks," Tanure - who with other investors holds about
7 percent of Oi through an investment vehicle - said repayments
should prioritize small creditors. Oi owes money to over 55,000
people and companies.
Tanure's letter underscored the tough road ahead for Oi,
whose reorganization program has been hampered by escalating
shareholder disputes and protracted negotiations with
bondholders since the plan was presented on Sept. 5.
According to a source with knowledge of the matter, the
letter was a response to efforts by a group of bondholders that
teamed up with Egyptian billionaire Naguib Sawiris to bid for
Brazil's No. 1 fixed-line phone operator. The Moelis & Co-led
group joined forces with Sawiris "to discuss and evaluate
an alternative recovery plan for Oi" during and after it emerges
By seeking to favor smaller creditors at the expense of the
largest ones, Tanure might be druming up government support for
a revamping of the Sept. 5 proposal, the source added.
Government officials have warned that they are ready to
intervene in Oi if needed to ensure continuity of service.
In the letter, Tanure questioned the size of fines imposed
by telecommunications industry watchdog Anatel, urging that they
Bondholders frowned at the company's original plan because
it implied a 70 percent reduction on their debt holdings. With
34 billion reais of securities outstanding, bondholders form
Oi's largest creditor group.
Oi, the byproduct of a government-sponsored merger at the
end of the last decade, succumbed to a heavy debt burden,
mounting competition and years of internal disputes. After the
bondholders, state entities, including banks and industry
regulator Anatel, make up the largest Oi creditor group with
about 20 billion reais of debt.
($1 = 3.1865 reais)
(Reporting by Guillermo Parra-Bernal and Tatiana Bautzer;
additional reporting by Ana Mano in São Paulo; editing by