Portugal Telecom may get cash, not stock from Oi option

SAO PAULO, July 28 Mon Jul 28, 2014 7:35pm EDT

SAO PAULO, July 28 (Reuters) - Portugal Telecom SGPS SA may get cash rather than additional shares in a new Brazilian company if it exercises a call option under a revised merger agreement with Brazil's Oi SA that was released on Monday.

The new company, called CorpCo, does not need to hold the shares in its treasury over the next six years, while Portugal Telecom has the option. If CorpCo sells or cancels the shares, it can pay the Portuguese company the difference between the strike price in the contract and the share price at the time, according to securities filings late on Monday.

In that case Portugal Telecom could be left with about 25 percent of CorpCo under the new accord, first announced on Aug. 16, rather than the 38 percent stake established in October.

The Portuguese company was forced to cut its share of the new company after a holding company of the Espirito Santo family failed to repay more than $1 billion it owed to the telecom.

Portugal Telecom will submit the new terms to a shareholder assembly by Sept. 8 and Oi's board of directors will take a vote, the filing said. (Reporting by Cesar Bianconi and Brad Haynes)