(Adds Breakingviews column)
By Guillermo Parra-Bernal and Brad Haynes
SAO PAULO, April 3 A group of 14 banks led by
Grupo BTG Pactual SA on Thursday removed a firm
commitment to subscribe to part of a 24.22 billion reais ($10.6
billion) share offering by Brazilian phone carrier Grupo Oi SA
if investor demand falls short.
The offering's revamped terms, published in a Thursday
newspaper ad, came after securities industry watchdog CVM urged
BTG Pactual and Oi to specify whether the banks were ready to
guarantee a 6 billion reais portion of the offering. Originally,
the banks pledged to backstop the deal if it met a minimum level
of investor demand.
Itaú Unibanco Holding SA and Banco Bradesco SA
considered pulling out of the deal on Tuesday,
sources told Reuters that day. Bloomberg News reported that
Citigroup Inc and Goldman Sachs Group Inc also had
second thoughts about the plan before BTG Pactual asked them to
reconsider. All the banks agreed to stay in the offering.
A massive bank pullout would have jeopardized the offering,
the cornerstone of Oi's merger with its largest shareholder,
Portugal Telecom SGPS SA, analysts said.
Oi's stock offering will consist of up to 5.75 billion
common and preferred shares and could increase by almost 2
billion shares with supplementary and additional allotments.
The value of the transaction is based on Wednesday's closing
prices for Oi's stock.
Common shares of Oi fell 1.6 percent to 3.15
reais on Thursday and are down 11 percent this year. Its
preferred shares edged up 0.3 percent to 3.09 reais
but have lost over 13 percent this year.
According to the ad, the company and banks can begin
approaching potential investors for the deal on Wednesday, with
pricing for the offering taking place on April 28. The shares
will begin trading on April 30.
Rio de Janeiro-based Oi, which controls Brazil's
fourth-largest mobile phone carrier and the largest fixed-line
phone operation in the country, expects to use fresh capital to
beef up CorpCo, the name of the company after the tie-up with
Executives at Grupo Oi SA and Portugal Telecom say CorpCo
will have more clout to compete in Brazil with bigger rivals
such as Spain's Telefonica SA, Telecom Italia SpA's TIM
Participações SA and Mexico's America Movil SAB
($1 = 2.28 Brazilian reais)
(Additional reporting by Marcela Ayres and Silvio Cascione;
Editing by Lisa Von Ahn and Phil Berlowitz)