Oi settled all legal disputes with shareholder Bratel, a subsidiary of Portugese telecommunications company Pharol, as it looks to focus on a restructuring programme after filing for bankruptcy protection in June 2016.
In March 2018, Oi’s shareholders accepted a plan whereby they received equity stakes in the company as payment for outstanding debts. However, Pharol said it had obtained an injunction to stop the arrangement and threatened to file a €2 billion lawsuit, media reports stated.
Now, Oi has reached an agreement with Bratel “for the termination and extinction of any and all judicial and extrajudicial litigation in Brazil, Portugal and all the various countries where there are ongoing discussions involving companies of the two groups,” it said in a filing.
“Oi’s management and Pharol are in good faith aligned as to Oi’s best interests, so that the company may focus entirely on its operational turnaround and eliminate the distractions and costs relating to litigation,” the company explained.
As part of the deal Oi will pay €25 million to Pharol in exchange for 33.8 million Oi shares held by the company, and will “assume costs with judicial guarantees related to legal proceedings of Pharol in Portugal”.
Meanwhile Pharol has to “use of a minimum of €25 million in the subscription of the capital increase – new resources provided for the company in its judicial reorganisation plan” and will vote at Oi’s general shareholders meetings in favour of the plan.
Oi will have the right to nominate a member to Pharol’s board of directors for this, “and failure to implement this right is a condition for termination of the agreement,” the filing stated.
The terms and conditions of the agreement still require the approval of a judicial reorganisation court.
Oi filed for bankruptcy protection in June 2016, with debts at the time of BRL65.4 billion ($17.7 billion). It was then subject to disputes between shareholders and its debt owners as to how to restructure the business, with the Brazilian government also owed cash.
In August 2018 it was reported the investment companies which hold the biggest stakes in Oi were looking to improve its operations rather than focusing on a near term sale of their holdings.Subscribe to our daily newsletter