SAO PAULO (Reuters) - The top two shareholders in Oi SA have agreed to end their dispute over the future of Brazil’s largest fixed-line carrier, which is mired in a protracted bankruptcy protection process, two people briefed on the matter said on Tuesday.
Under terms of the accord, Pharol SGPS SA, Oi’s biggest shareholder, and Brazilian investor Nelson Tanure of investment fund Société Mondiale FIA will devise and discuss strategies aimed at helping pull Oi from creditor protection, said the first person.
The accord, which was approved by the judge overseeing Oi’s bankruptcy protection process in Rio de Janeiro, also calls on Pharol to endorse the appointment of Société Mondiale-backed Hélio Costa and Demian Fiocca as Oi board members, the sources said. The number of Société Mondiale’s alternate board members was raised to four under the accord from the current two, they said.
Pharol, in a statement sent to Reuters, said that “it has presented terms of an accord of understanding with Société Mondiale” as a way to “overcome the bankruptcy protection process.” The Portuguese company declined to elaborate on the terms.
Société Mondiale declined to comment.
The sources said the push by Pharol and Tanure to find common ground came after government officials pledged to keep their distance when Oi filed for creditor protection in June as talks to restructure 65.4 billion reais ($20 billion) in debt collapsed. A less litigious relation between both partners could pave the way for more proactive talks with creditors, the first person said.
“This is an encouraging sign that Oi could have brighter days ahead,” said the individual. Both sources requested anonymity because of the sensitivity of the matter.
A recent plan by Tanure and his partners in Société Mondiale to oust the Pharol-backed members from Oi’s board and present a parallel recovery plan involving the disposal of some non-essential assets spooked some in the government, some of the people involved said earlier this month.
Fiocca, a former HSBC Holdings Plc economist and government official, and Costa, a former communications minister, will join a board formed by five Pharol-backed members, one from state development bank BNDES and two independent members. Including Chairman José Mauro Carneiro da Cunha, Oi’s board has 11 seats.
Common shares of Oi (OIBR3.SA) gained 0.5 percent to 4 reais on Tuesday, in a day in which most shares trading in São Paulo fell. The stock is up 67 percent this year.
($1 = 3.2690 Brazilian reais)
Reporting by Tatiana Bautzer and Guillermo Parra-Bernal; Editing by David Gregorio and Peter Cooney