Brazilian telco Oi has priced new common and preferred shares to raise R$7.5bn (US$3.4bn) fresh capital as part of its merger with Portugal Telecom (PT).
PT subscribed to a further R$5.7bn (US$2.6bn) new Oi shares in line with the merger, the amount…
Brazilian telco Oi has priced new common and preferred shares to raise R$7.5bn (US$3.4bn) fresh capital as part of its merger with Portugal Telecom (PT).
PT subscribed to a further R$5.7bn (US$2.6bn) new Oi shares in line with the merger, the amount adjudged to be the value of PT’s assets which it is contributing to the combined entity.
In total Oi has issued 2.1 million common shares at R$2.17 each, and 4.3 million preferred shares at R$2.00 each – at the low end of the range it had proposed. PT acquired 1 million of the common shares and 1.7 million of the preferred shares.
Including the contribution from PT, Oi has raised R$13.2bn (US$5.9bn) from the offering. Oi’s underwriters have a greenshoe option and press reports have suggested the banks will choose to.
When the offering closes PT is set to hold 37.4% of Oi’s stock, excluding its stake in Oi’s controlling shareholder Telemar Participacoes.
Oi, which offers mobile and fixed telephony in Brazil, will use the proceeds to pare its debt pile which stood at R$30.4bn (US$13.4bn) at the end of 2013.
Brazilian bank BTG Pactual is leading the offering. BofA Merrill Lynch, Barclays, Citigroup, Credit Suisse, Espirito Santo, HSBC, Banco Bradesco, Banco do Brasil, Caixa GD, Goldman Sachs, Banco Itau, Morgan Stanley, and Santander are also working on the issue in Brazil and internationally.
The completion of the capital raise, expected in early May, will allow Oi and PT to tie-up their merger. Bernstein Research estimates this will take another two to three months.
