Brazil hopes to avoid intervention in debt-laden carrier Oi | Reuters - Firstpost
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Brazil hopes to avoid intervention in debt-laden carrier Oi | Reuters

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By Guillermo Parra-Bernal
| SAO PAULO

SAO PAULO The Brazilian government is not considering an intervention in debt-laden carrier Oi SA at this point, on hopes creditors and shareholders can reach a negotiated solution involving no state bailout, Communications Minister Gilberto Kassab said on Monday.Officials are currently working on providing Oi the necessary support to emerge stronger from bankruptcy protection, Kassab said at an event in Brasilia. The government is all for Oi to negotiate a "market-based solution" that helps it emerge stronger from creditor protection, he said. He confirmed newspaper reports earlier in the day that government officials were analyzing the possibility of changing Brazil's bankruptcy law to facilitate an intervention in Oi. According to Valor Econômico and Folha de S. Paulo, the move would also help revamp the way the government oversees carriers, which currently operate under two types of license."There's no such intention, we are just preparing ourselves in case of an event that could lead to an intervention," Kassab said. "But, I can tell you, so far, there's no reason to intervene Oi. We are doing our part to lend Oi support."The situation underscores mounting speculation that President Michel Temer's administration is worried about the rifts afflicting Oi. Last month, several government officials acknowledged that an intervention of Oi was possible, although it did not involve any bailout.Oi's in-court reorganization process, Brazil's biggest ever, is struggling with disputes between shareholders and creditors. Rio de Janeiro-based Oi, which also controls Brazil's No. 4 wireless operator, filed for bankruptcy protection in June after talks to restructure 65.4 billion reais ($20 billion) in debt collapsed.

DECREE
Common shares accelerated gains following Kassab's remarks, adding 2.4 percent to 3.43 reais, a one-week high. In turn, a rise in preferred shares lost steam - a sign minority shareholders see an intervention speeding up a takeover of Oi and a buyout of their holdings.

Kassab acknowledged that the Temer administration is working on a draft decree that would aim at altering some aspects of the bankruptcy law, but that it would only be used as a "last resort" measure. Usually Congress has 180 days to discuss and approve an executive decree before expiration.Government analysis of the changes are currently focused on whether they would comply with Brazil's 1988 constitution, Kassab said.According to Folha, which did not say how it obtained the information, an intervention would remove Oi's current management and board of directors and keep a committee of financial comptrollers. Industry watchdog Anatel would initially intervene Oi for a year, the paper added.

In a statement sent to Reuters, Oi Chief Executive Officer Marco Schroeder said he acknowledges closer state monitoring of the situation but said an intervention is "unnecessary" because the operational performance of the company remains healthy.The presidential palace did immediately comment on both stories.The restructuring plan that Oi presented to creditors on Sept. 5 failed to garner support from key state creditors and Anatel, which altogether are owed almost 30 billion reais by the company, Folha said, without citing sources for the information.($1 = 3.2319 reais) (Additional reporting by Bruno Federowski in São Paulo; Editing by Louise Heavens and Alistair Bell)

This story has not been edited by Firstpost staff and is generated by auto-feed.

First Published On : Nov 7, 2016 23:45 IST

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