Oi slumps as talks stall on debt restructuring

New York / AFP

Shares of Oi SA tumbled on speculation that Brazil’s most indebted telecommunications operator is closer to filing for bankruptcy protection after documents showed little sign of progress in talks with bondholders.
The documents give a glimpse into just how complicated the restructuring is. Rio de Janeiro-based Oi, which has about 50 billion reais in debt ($14.5 billion), said creditors are seeking to hold 95 percent of the company after a debt-to-equity swap plan, leaving current shareholders with a 5 percent stake. Oi hasn’t yet responded to the proposal, which is dated June 11 — one day after then-CEOBayard Gontijo resigned.
Preferred shares of Oi fell 27 percent in Sao Paulo Friday to 1.10 real. They have declined 44 percent this year. Voting shares slid 2.9 percent, bringing their losses for 2015 to 44 percent as well.
The fourth-biggest mobile-phone operator in Brazil is running out of time as a €231 million-denominated ($261 million) bond matures in almost a month. The company forecasts it will finish the second quarter with total debt of 48 billion reais, with negative cash flow after interest of 2.5 billion reais. Cash flow after interest and before amortization is projected to be negative 7 billion reais between 2016 and 2018.