| SAO PAULO, April 28
SAO PAULO, April 28 Grupo Oi SA,
Brazil's biggest fixed-line telephone carrier, on Monday got
closer to its planned merger with Portugal Telecom SGPS SA as
investors were willing to place more than enough bids in a share
offering expected to be worth at least 8 billion reais ($3.6
billion), sources told Reuters.
The offering consists of a combined 5.75 billion common and
preferred shares and could rise by almost 2 billion shares with
supplementary and additional allotments. According to two
sources with direct knowledge of the deal, Oi's preferred shares
may price at around 2 reais, or at the bottom of the
suggested range of 2 reais to 2.30 reais.
So far, investors have pledged to buy as much as 10 billion
reais worth of stock in the offering, said the sources, who
requested anonymity because the deal is in the works. The share
offering is scheduled to price later on Monday, according to a
prospectus released on April 3.
Preferred shares fell to a record low in Monday afternoon
trading, shedding 5.6 percent to 2.37 reais, while common shares
were down 2.4 percent to 2.47 reais. Banks estimate that Oi
needs to raise at least 8 billion reais in order to adequately
reduce Oi's stifling debt.
Rio de Janeiro-based Oi, which also controls Brazil's
fourth-largest mobile phone carrier, expects to use fresh
capital to beef up CorpCo, the proposed name of the company
after the proposed tie-up with Portugal Telecom.
Executives at Oi and Portugal Telecom say CorpCo will have
more clout to compete in Brazil with bigger rivals such as the
local unit of Spain's Telefonica SA , Telecom
Italia SpA's TIM Participações SA and
Mexico's America Movil SAB.
Under terms of the deal, Portugal Telecom will contribute
its assets, excluding its stake in Oi, and own 38 percent of the
new company. Oi would have as much as 30 percent of CorpCo and
other investors such as BTG Pactual and a number of Brazilian
pension funds would own the rest.
Each Oi common share would be exchanged for 1 share in
CorpCo and each Oi preferred share would be swapped for 0.9211
Grupo BTG Pactual SA, the largest listed Latin
American investment bank, is handling the transaction, along
with the investment-banking units of Bank of America Corp
, Barclays Plc, Citigroup Inc, Credit
Suisse Group AG, Banco Espírito Santo SA and
HSBC Holdings Plc.
Banco do Brasil SA. Banco Bradesco SA,
Banco Caixa Geral de Depósitos SA, Goldman Sachs
Group Inc, Itaú Unibanco Holding SA, Morgan
Stanley & Co and Banco Santander SA are also
($1 = 2.23 Brazilian reais)
(Additional reporting by Brad Haynes in São Paulo; Editing by