(Adds Oi response, updates share price)
By Gram Slattery
SAO PAULO, May 16 (Reuters) - A U.S. bankruptcy court is set to hear a dispute involving Brazilian telecoms company Oi SA and major shareholder Bratel Brasil SA, Bratel said on Wednesday, as investor discontent with Oi's bankruptcy reorganization process shows no signs of abating.
On Friday, Bratel, a subsidiary of Portugal's Pharol SGPS SA , which owns almost 28 percent of Oi's common shares, said it had filed a legal complaint in the United States. The complaint alleges that the rights of Oi shareholders were violated as part of an agreement approved by creditors in December to severely dilute shareholders' equity to take Oi out of bankruptcy protection.
In the Wednesday statement, Bratel said Judge Sean Lane of the U.S. Bankruptcy Court for the Southern District of New York had scheduled a hearing for May 29.
Representatives for Oi criticized the move in a separate statement sent to Reuters, writing that the company "believes Pharol is acting in a totally isolated way in relation to all of the stakeholders in this process," and that Pharol is trying to repeat arguments it unsuccessfully made in Brazilian courts.
"The company...will take the needed measures to protect from attacks that potentially hurt its operations," the company said.
In December, creditors in Oi, Brazil's largest fixed-line operator, approved a plan to restructure some 65 billion reais ($17.7 billion) in debt which will result in shareholders' equity being diluted by 72 percent. Shareholders vigorously objected, especially as the company's board was effectively removed from the process shortly before the vote.
That dilution process, in which debt will be converted into equity, has not yet occurred, though executives have told Reuters they hope to complete the process before the end of June.
That has resulted in several legal challenges.
Common shares in Oi, which have become extremely volatile in recent months, closed up 13.4 percent at 4.50 reais on Wednesday, while preferred shares closed up 6.1 percent at 3.47 reais.
$1 = 3.68 reais Reporting by Gram Slattery; Editing by Lisa Shumaker