PT SGPS has said that unwinding the merger with Brazilian telco Oi would destroy value for all the parties involved.
PT SGPS, which owns about 25% of Oi, believes a demerger would lead “to a legal dispute of unpredictable duration in the Brazilian…
PT SGPS has said that unwinding the merger with Brazilian telco Oi would destroy value for all the parties involved.
PT SGPS, which owns about 25% of Oi, believes a demerger would lead “to a legal dispute of unpredictable duration in the Brazilian courts, further prolonging the deadlock situation of PT Portugal and inevitably creating a process of destruction of value for all parties involved”.
The statement was issued on Thursday after Portuguese market regulator the CMVM requested PT SGPS to provide additional information to shareholders ahead of a general meeting to vote on Oi’s decision to sell telco incumbent PT Portugal to Altice.
The meeting, which was due to be held on Monday, was rescheduled for 22 January.
In its statement on Thursday, PT SGPS pointed out that the specific terms of the business combination did not include any limitation on the future ability of Oi to decide to sell its assets.
Therefore, the sale of PT Portugal would not necessarily end the merger process between the two companies and would not result in any legal liability for Oi, it said.
The company, however, reiterated that, further to the approval of the sale, the goal of creating “a leading telecommunications operator, covering a geographical area of 260 million inhabitants and about 100 million clients” will be abandoned.
Earlier today, Oi issued a separate statement to further express its support for the sale of PT Portugal, while adding that the merger with PT SGPS is “irreversible”. Some shareholders had reportedly called for a demerger.
The combination between Oi and PT SGPS, first announced in October 2013, soured in July 2014 after Rioforte, a unit of collapsed banking group Banco Espirito Santo (BES), defaulted on a nearly €900m debt payment to the Portuguese operator. Oi claimed it was unaware of the investment, forcing PT SGPS to reduce its stake in the combined entity from 37.4% to 25.6%.
However, an independent analysis carried out by PwC and published last week, has highlighted some discrepancies on the matter.
In yesterday’s statement, PT SGPS said it was “analysing to what extent the conclusions of the PwC report and other facts that may be found could be the grounds for a potential initiative to renegotiate the terms of the exchange or other aspects of the agreements signed with Oi, as well as the initiation of legal liability actions”.
A Portuguese analyst told TelecomFinance earlier this week that rather than terminating the merger process, PT SGPS shareholders might instead seek to increase their stake in Oi, if it is established that the Rio de Janeiro-based telco was aware of the Rioforte investments.
