By Luciana Bruno and Guillermo Parra-Bernal
RIO DE JANEIRO/SAO PAULO, March 18 Brazilian
telecommunications company Grupo Oi SA lined up firm
commitments from as many as 14 banks to buy up to 6 billion
reais (US$2.5 billion) in an upcoming share offering, two
sources with direct knowledge said on Tuesday.
Grupo BTG Pactual SA leads the group, which
includes Bank of America Corp, Barclays Plc,
Credit Suisse Group AG, Banco Espírito Santo SA
, Banco do Brasil SA, Banco Bradesco SA
, Caixa Geral de Depositos SA, Citigroup Inc,
Goldman Sachs Group Inc, HSBC Holdings Plc, Itaú
Unibanco Holding SA, Morgan Stanley & Co, and
Banco Santander Brasil SA, said the two sources, who
requested anonymity because the deal is private.
Bank of America, Goldman, Citigroup and Bradesco declined to
comment. The other 10 banks did not have an immediate comment on
The banks will subscribe to Oi shares in accordance with
their mandate in the share offering, one of the sources said.
Common shares of Oi closed up 5.4 percent on Tuesday, their
biggest daily gain since Jan. 3. The stock dropped 6 percent
last week on speculation that Oi had failed to secure financial
backing for the offering.
Analysts have said that without significant support from the
banks the offering could likely founder. Capital markets
activity in Brazil, including initial public offerings and share
offerings, is off to its worst annual start since at least 2004.
The transaction is part of a plan by Oi to merge with
Portugal Telecom SGPS SA, which is under scrutiny from
The share offering is expected to price at some point in
mid-April, according to the prospectus filed by Oi with Brazil's
securities watchdog CVM early this year.
Portugal Telecom and Oi have been discussing how to tie up
since the former bought 25 percent of Oi in 2010. The market
value of both companies has fallen more than half over the past
three years, a sign that investors bet that a merger would take
place sooner or later.
The tie-up has been attacked by many Oi shareholders who
have said the capital increase favors Oi's largest shareholders,
including Portugal Telecom, at the expense of minorities,
according to a document last week by Glass Lewis & Co, a New
York-based firm hired to issue an independent opinion for
Under terms of the deal, Oi will sell about 8 billion reais
in new stock and use proceeds to cut debt. Portugal Telecom will
in turn contribute its assets, excluding its stake in Oi, and
own 38 percent of the new company, which will be named CorpCo.
Oi will have as much as 30 percent of the new company and other
investors such as BTG Pactual and a number of Brazilian pension
funds will own the rest.