RIO DE JANEIRO, Oct. 12, 2017 /PRNewswire/ -- Oi S.A. –
In Judicial Reorganization ("Oi," and together with certain of
its affiliates, the "Company"), in compliance with Article 157,
paragraph 4 of Law 6,404/76 and pursuant to CVM Instruction No.
358/02, hereby informs its shareholders and the market in general
that, as described herein, the Company has held a meeting with
certain holders (the "Noteholders") of, or managers of entities
holding, beneficial interests in, (i) the 9.750% Senior Notes due
2016 issued by Oi, (ii) the 5.125% Senior Notes due 2017 issued by
Oi and guaranteed by Telemar Norte Leste S.A. – In Judicial
Reorganization ("Telemar"), (iii) the 9.500% Senior Notes due 2019
issued by Oi and guaranteed by Telemar, (iv) the 5.500% Senior
Notes Due 2020 issued by Oi and guaranteed by Telemar, (v) the
5.625% Senior Notes due 2021 issued by Oi Brasil Holdings
Coöperatief U.A. – In Judicial Reorganization ("Oi Coop") and
guaranteed by Oi, (vi) the 5.750% Senior Notes due 2022 issued by
Oi Coop and guaranteed by Oi, (vii) the 6.250% Senior Notes due
2016 issued by Portugal Telecom International Finance B.V. – In
Judicial Reorganization ("PTIF") and guaranteed by Oi, (viii) the
4.375% Notes due 2017 issued by PTIF and guaranteed by Oi, (ix) the
5.875% Senior Notes due 2018 issued by PTIF and guaranteed by Oi,
(x) the 5.000% Senior Notes due 2019 issued by PTIF and guaranteed
by Oi, (xi) the 4.625% Senior Notes due 2020 issued by PTIF and
guaranteed by Oi, (xii) the 4.500% Notes due 2025 issued by PTIF
and guaranteed by Oi, and (xiii) the 5.242% Senior Notes due 2017
issued by PTIF and guaranteed by Oi (collectively, the
"Notes").
Confidentiality Agreements with Members of the Steering
Committee of the International Bondholder Committee and the
Steering Committee of the Ad Hoc Group of Bondholders
On October 10, 2017, the Company
executed confidentiality agreements (the "IBC/AHG Confidentiality
Agreements") with the Noteholders who are members of the Steering
Committee of the International Bondholder Committee (the "IBC") and
the Steering Committee of the Ad Hoc Group of Bondholders (the "Ad
Hoc Group") to facilitate potential discussions and negotiations
concerning the Company's capital structure and potential
alternatives for a proposed restructuring of, and capital infusion
by means of a capital increase into, the Company (a "Potential
Transaction"). Pursuant to the IBC/AHG Confidentiality
Agreements, the Company agreed to disclose publicly, after the
expiration of a period set forth in the IBC/AHG Confidentiality
Agreements, certain information (the "Confidential Information")
regarding, or shared in connection with, the discussions and/or
negotiations that have taken place between the Company, the IBC and
the Ad Hoc Group concerning a Potential Transaction. The
information included in this press release and certain documents
posted on the Company's website referenced herein are being
furnished to satisfy the Company's public disclosure obligations
under the IBC/AHG Confidentiality Agreements. The IBC/AHG
Confidentiality Agreements have terminated in accordance with their
terms, except as otherwise provided therein.
Meeting with the IBC and Ad Hoc Group
On October 10, 2017,
representatives of the Company and the Company's financial and
legal advisors (the "Company Representatives") met (such meeting,
the "IBC/AHG/ECA Meeting") in New
York with representatives of the IBC, the Ad Hoc Group,
advisors to certain export credit agencies (the "ECAs") that hold
Class III Claims, and the IBC's and the Ad Hoc Group's respective
financial and legal advisors (the "IBC/AHG/ECA Representatives") to
disclose (but expressly not to negotiate) the terms of a Potential
Transaction.
As of the date hereof, no negotiations have been held and no
agreement concerning the terms of a Potential Transaction has been
reached with the IBC, the Ad Hoc Group or the ECAs. While
negotiations between these parties and the Company may occur in the
future, there can be no assurance that negotiations will occur or
if they do occur, that they will result in an agreement regarding
the terms of a Potential Transaction.
Confidential Information
During the IBC/AHG/ECA Meeting, the Company Representatives
shared two presentations with the IBC, Ad Hoc Group, and ECA
Representatives: (1) a presentation (the "Laplace Presentation")
prepared by the Company's financial advisor, Laplace Finanças,
regarding the Company's restructuring under a new version of the
plan of reorganization (the "New Version of the Plan") filed
substantially contemporaneously herewith in the judicial
reorganization proceeding of the Company pending in Brazil and (2) a presentation prepared by the
Company regarding the Company's recent revisions to its long term
business plan and capital expenditure program (the "Company
Presentation" and, together with the Laplace Presentation, the
"Presentations").
In addition to the Presentations, the Company Representatives
shared orally certain Confidential Information with the IBC/AHG/ECA
Representatives to clarify the Confidential Information included in
the Presentations. Specifically, the Company Representatives
stated that:
- they anticipate that capital expenditures in the second half of
2017 will be higher than the first half;
- they aimed to address a portion of the liquidated and
unliquidated claims (the "Anatel Claims") Agência Nacional de
Telecomunicações holds or may hold against the Company in various
ways, including by applying the approximately BRL 1.3 billion of judicial deposits made by the
Company in connection with ongoing administrative proceedings in
Brazil to reduce the total amount
of the Anatel Claims by the amount of such judicial deposits and
that the amounts of payments on account of the Anatel Claims as set
forth in the Laplace Presentation are net of the deposits;
- the opportunity to fund or backstop all or any portion of the
"Strategic Creditor Capital Increase" (as described in the Laplace
Presentation) will be offered to all unsecured creditors that elect
the conversion option, and to date, the Company has not obtained
any commitments from any party to backstop or fund such Strategic
Creditor Capital Increase or to support the New Version of the
Plan;
- the Forecasted Cash Flow of Joint Alternative Restructuring
Plan until 2020 on page 5 of the Laplace Presentation does not
include the proceeds of asset sales;
- as illustrated on slide 22 of the Laplace Presentation, the
Strategic Creditor Capital Increase may be funded by either
contributing new cash or equitizing claims—the price for the new
cash portion will be equal to a 30% discount to the future VWAP,
and the price for the portion funded by equitizing claims would be
equal to a premium of 42% above the future VWAP; and
- although the "first call" general meeting of creditors is
scheduled for October 23, 2017 (the
"First Call GCM"), they did not know if the requisite quorum of
holders of claims eligible to vote on the New Version of the Plan
would be present at the First Call GCM and that, if such a quorum
is not present at the First Call GCM, the New Version of the Plan
would be voted on at the "second call" general meeting of creditors
scheduled for November 27, 2017.
In addition, to the foregoing, the Company Representatives and
the IBC/AHG/ECA Representatives discussed the non-assignable
instrument providing for a principal amount thereunder equal to the
amount of such holders' prepetition unsecured claims (such claims,
the "Class III Claims") offered as one treatment option under the
New Version of the Plan (the "Par Fixed Payment Debt Instrument
Option") that holders of Class III Claims would be entitled to
elect to receive under the New Version of the Plan.
Under the New Version of the Plan, in the event that the Par
Fixed Payment Debt Instrument Option is oversubscribed, the excess
of Class III Claims the holders of which selected the Par Fixed
Payment Debt Instrument Option over the subscription cap for the
Par Fixed Payment Debt Instrument Option would be treated by
default under another treatment option under the New Version of the
Plan providing for, among other things, the general payment option
described on slide 15 of the Laplace Presentation (the "General
Payment Default Option") and as set forth in the New Version of the
Plan; such General Payment Default Option provides a debt
instrument with a 19-year term, a 10-year principal grace period
and interest rate of TR+0.5% p.a. for credits in Brazilian Reais
and of 0.5% p.a. for credits in U.S. Dollars or Euros.
Certain Other Important Information
In addition to the disclaimers and qualifiers set forth in the
materials themselves, all statements made in the Presentations are
in the nature of settlement discussions and compromise, are not
intended to be and do not constitute representations of any fact or
admissions of any liability and are for the purpose of attempting
to reach a consensual compromise and settlement. In the event
that any statement herein or in the Presentations is inconsistent
with or conflicts with the New Version of the Plan, the terms and
conditions of the New Version of the Plan prevail. Nothing
contained in the Presentations is intended to or shall be construed
to be an admission or a waiver of any rights, remedies, claims,
causes of action or defenses. The information contained in
the Presentations is for discussion purposes only and shall not
constitute a commitment to consummate any transaction, or otherwise
take any decisions or actions contemplated in the
Presentations.
Furthermore, the contents of the Presentations shall not be
construed as guidance by the Company in relation to its future
results, and the Company does not assume and expressly disclaims
any responsibility to update such contents or information at any
time.
This communication does not constitute an offer to sell or a
solicitation of an offer to buy securities. This communication is
not an offer to purchase or a solicitation of an offer to purchase
with respect to any Notes or any other securities.
The Company has published the Presentations on its website,
available at http://ir.oi.com.br (English) and
http://oi.com.br/ri (Portuguese).
Carlos Augusto Machado Pereira de Almeida Brandão
Chief Financial Officer, Investor Relations Officer and Officer
Oi S.A. – In Judicial Reorganization
IR Contact: +55 21
3131-2918
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SOURCE Oi S.A.
