(Adds quotes, debt context, market reaction)
By Ana Mano
SAO PAULO Nov 29 Brazilian phone carrier Oi SA
said on Tuesday that Dutch judicial authorities could compel
bankruptcy proceedings for its two Netherlands-based units,
which hold most of the company's bond debt.
Oi said in a securities filing that it hoped that a
bankruptcy process in the Netherlands, should it take place,
would have no meaningful bearing on its own bankruptcy court
procedures in Brazil.
Oi, Brazil's No. 4 wireless carrier, last June sought
Brazilian court protection for 65.4 billion reais ($19 billion)
in obligations, of which about 34 billion ($10 billion) is in
About 25 billion reais ($7.35 billion) of the bonds are held
by the two Dutch entities - Oi Brasil Holdings Coöperatief U.A.
and Portugal Telecom International Finance BV (PTIF), according
to company data.
Currently, the Dutch units have "suspension of payments"
legal standing -- which protects a company from creditors and
gives it time to reorganize.
"Dutch judicial administrators could require the conversion
of two suspension of payments procedures ... into bankruptcy
processes," Oi's security filing said.
If bankruptcy is declared, the assets of a company may be
liquidated to repay creditors, according to Rotterdam,
Netherlands-based law firm LVH-Advocaten.
The price on PTIF's 5 percent note due in November 2019
rose 2 cents on the dollar to 27 cents, the
biggest intraday gain since mid-June.
Rio de Janeiro-based Oi did not specify what conditions
would lead the two Dutch units to enter the bankruptcy
procedure. However, Tuesday's filing noted that the potential
bankruptcy of the units in the Netherlands does not affect
operational activities or Oi's cash position in Brazil.
However, the company said it hoped that prospect in the
Netherlands "does not result in significant impacts on the
bankruptcy process day by day on the company in Brazil."
In the filing, Oi also said it will start to settle claims
in Brazil worth up to 50,000 reais, aiming to help small
creditors get repaid. Reuters reported on Nov. 3 the company's
intention to repay small-sized supplies ahead of financial
($1 = 3.4059 reais)
(Reporting by Ana Mano; Editing by Guillermo Parra-Bernal and W