BRASILIA Feb 20 Brazilian telecoms company
Grupo Oi SA plans to raise about 14 billion reais
($5.9 billion) in a share offering, the company said in a filing
to the national securities regulator on Thursday.
The capital raising will be part of Oi's merger process with
Portugal Telecom, which will subscribe at least 7
billion reais in Oi shares in the operation.
Shares of Grupo Oi dropped in opening trade, losing 3.17
percent to 3.66 reais, their lowest price since early January.
"It's obviously bad for minority shareholders who will have
to deal with dilution," said Luiz Roberto Monteiro, a trader
with brokerage Renascenca in Sao Paulo. "We'll have to see how
the plan will play out but the immediate reaction is negative."
Portugal Telecom and Oi in October announced plans to
combine their operations to form a new company with more than
100 million subscribers, with almost $19 billion in annual
revenue to compete in Brazil with bigger global rivals such as
Spain's Telefonica SA and Mexico's America Movil
Grupo Oi is Brazil's most indebted telecom company. It plans
to continue selling assets to pay down debt after the recent
disposal of underwater fiber optic cables bolstered its
fourth-quarter profit, Chief Executive Zeinal Bava said on
Oi will offer ordinary and preferred shares, including
American Depositary Receipts. Pricing date was set for April 16,
and the settlement is expected to take place on April 23.
"In some ways it was expected," said Celson Placido, a
partner at XP Investimentos in Sao Paulo. "This company is in
debt, and it is carrying out the share offering because it needs
the money. The partnership looks good because Portugal Telecom
has good management, it has experience with mobile. But right
now the minority shareholder will have to help pay."
Banco BTG Pactual SA will be the lead
coordinator of the offering. Oi also hired Bank of America Corp
, Barclays PLC, Credit Suisse Group AG
and Banco Espirito Santo SA.
A special investment vehicle managed by BTG Pactual will
also subscribe up to two billion reais in the offering.
Portugal Telecom's capital injection in Oi will be voted on
by Portugal Telecom shareholders in an extraordinary general
meeting on March 27, Oi said in the filing.
Oi's net debt climbed 21 percent from a year earlier to
30.416 billion reais at the end of December.