Oi SA, the distressed Brazilian telecom operator, asked a court to shield it from creditors ahead of a major debt payment, in what may lead to a second bankruptcy protection process in seven years.
(Bloomberg) — Oi SA, the distressed Brazilian telecom operator, asked a court to shield it from creditors ahead of a major debt payment, in what may lead to a second bankruptcy protection process in seven years.
The company, which underwent one of the largest corporate restructurings in Brazil’s history — that began in 2016 and ended just last year — said it needs urgent help to fend off creditors, according to a filing to a Rio de Janeiro court seen by Bloomberg News. Oi said it currently has about 29 billion reais ($5.7 billion) of debt, with half denominated in dollars.
With 600 million reais coming due on Feb. 5, the company said recent negotiations with bondholders have failed to yield an agreement and therefore it needs protection to prevent an acceleration of its liabilities.
“Unfortunately, diverse unpredictable and uncontrollable factors, along with the economic and financial situation, has made it absolutely necessary to seek judicial protection to implement a new stage of restructuring and guarantee the preservation of the company, which is a generator of jobs and revenue,” the company said.
Oi didn’t reply to a request for comment outside of normal business hours. Valor reported the news earlier on Wednesday. The company said in a presentation in late December that it was in talks with creditors to address short-term funding needs.
The move by Oi comes nearly two weeks after Americanas SA, one of Brazil’s most emblematic retailers, filed for bankruptcy protection due to a massive accounting error that doubled its debt. Oi’s court filing, prepared by the same law firm as Americanas, mentions the measure that was granted to the retailer to fend off creditors and try to preserve liquidity.
Other factors mentioned in the filing include a sudden surge in interest rates in Brazil and a continued loss of fixed line clients over the past several years.
The firm’s shares have tumbled 77% in the past year to 2.4 reais with a current market value of 1.6 billion reais. Oi bonds due in 2025 trade at just 11 cents on the dollar, according to data compiled by Bloomberg.
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