Shareholders in incumbent Portugal Telecom (PT) and Brazil’s Oi have approved the revised terms of their previously announced merger.
The new terms are the result of Rioforte’s default on a €847m (US$1.1bn) debt payment to the Portuguese operator…
Shareholders in incumbent Portugal Telecom (PT) and Brazil’s Oi have approved the revised terms of their previously announced merger.
The new terms are the result of Rioforte’s default on a €847m (US$1.1bn) debt payment to the Portuguese operator in mid-July, which forced it to reduce its stake in its merger with Oi from 37.4% to 25.6%.
PT has a six-year call option to acquire the difference. However, the amount of shares the Portuguese company is allowed to purchase will fall over time.
Rioforte, which is currently under creditor protection, holds a 49% stake in Espirito Santo Financial Group, which in turn holds 20% of Banco Espirito Santo. The investment bank, which was bailed out last month, owns a 10% interest in PT.
Portugal Telecom had allegedly not informed Oi of the risky investment.
Rioforte’s default also prompted PT CEO Henrique Granadeiro to resign in early August.
At that time, Portuguese media cited Granadeiro as saying he was sure the independent analysis to be carried out would prove he always acted in the best interests of PT and its stakeholders.
Last month, some PT minority shareholders reportedly sued the company’s management over investments made in Espirito Santo group made since 2001, demanding compensation for the lost value of their shares.
The new terms are subject to the approval by Brazil’s securities market authority, Comissao de Valores Mobiliarios.
