SAO PAULO (Reuters) - A creditor group has challenged Oi SA’s in-court reorganization plan presented in September, saying the Brazilian wireless carrier’s proposed restructuring has “illegal and abusive elements” that favor shareholders at the expense of bondholders.
In a statement on Tuesday, the group accused Oi of being reluctant to share key information which it said prevents creditors from taking a stance on decisions such as potential asset sales. The Moelis & Co-advised group presented an alternate plan for Oi’s reorganization on Dec. 16.
According to the statement, Rio de Janeiro-based Oi has failed to engage in discussions with creditors over its future. Oi, which is trying to restructure about 65.4 billion reais ($20.4 billion) of debt after filing for Brazil’s largest ever bankruptcy protection in June, did not have an immediate comment.
The creditor group’s objection “focuses on the illegal and abusive nature of the Sept. 5 plan, particularly its inappropriate favoritism of the company’s existing equity holders to the detriment of creditors,” its statement said.
The group’s statement has the potential of reigniting a rift between creditors and shareholders of Brazil’s No. 4 wireless carrier. Pharol SGPS SA, Oi’s largest shareholder, fought a restructuring accord prior to Oi’s June bankruptcy filing, saying it called for a highly dilutive debt-for-equity swap.
The escalating tension among creditors and shareholders of Oi has forced the Brazilian government to repeatedly threaten a potential intervention in Oi. In an interview published on Tuesday, Communications Minister Gilberto Kassab said the government is ready to intervene in Oi if in-court negotiations fail.
Kassab told Folha de S. Paulo newspaper that the government, through industry watchdog Anatel, ”has an obligation to intervene. His media office was not immediately available to confirm his remarks.
Oi’s preferred shares gained 0.4 percent to 2.64 reais on Tuesday, extending this year’s gains to 17 percent.
Reporting by Ana Mano; Editing by Guillermo Parra-Bernal, Nick Zieminski and Paul Simao