The restructuring of troubled Brazilian telecoms operator Oi hit more stumbling blocks, with its largest creditors calling for a meeting to renegotiate its debt plan, Reuters reported.
A letter sent by advisors of the bondholder committee called for a meeting to “negotiate in good faith and on an expedited basis the terms of an acceptable plan of reorganisation”.
The move came after a proposed restructuring plan was said to not address creditor concerns, due to containing “conflicts of interest” and giving too much control to shareholder Societe Mondiale, which owns just 6.5 per cent of voting capital, but punches above its weight.
According to an earlier Reuters report, creditors and credit agencies described the proposal as ignoring “fundamental creditor concerns”, stating it “threatens the company’s long-term viability and abusively enriches existing shareholders”.
A steering committee for Oi’s bondholders said the operator had “spent time negotiating with a small group of conflicted creditors, some or all of whom also hold equity, for a failed deal that focuses exclusively on preserving value for the existing shareholders”.
Last week it was said Oi’s assets of BRL40.8 billion ($12.9 billion) could fetch just half the figure if Oi had to sell in a hurry. This would cover less than a third of the debt under renegotiation.
Oi’s woes have been ongoing for some time, with the company in 2016 filing for bankruptcy protection – the biggest case of its kind in the country.
The company faced challenges including regulatory requirements linked to its fixed line business, debt incurred through mergers and acquisitions, and a weak Brazilian economy.
It also owns Brazil’s fourth largest mobile operator, in a market where a number of notable international competitors – America Movil, Telefonica and Telecom Italia – are present.
It was mooted Oi could dispose of its mobile unit, but the suggestion came to nothing.