(Adds details of BNDES statement, merger context, analyst
SAO PAULO, July 8 Brazil's state development
bank BNDES lashed out at Portugal Telecom SGPS SA over
a debt deal souring relations with Grupo Oi SA,
highlighting the mounting pressure threatening their planned
BNDES said on Tuesday that recent bond
investments by Portugal Telecom are "inconsistent with minimum
standards of good corporate governance." The bank said it is
pressing for more information as it aims to protect the
interests of Oi shareholders, including itself.
Oi said last week that Portugal Telecom did not make a
timely disclosure of its investment in Rioforte, which is held
by a key shareholder under investigation in Luxembourg.
Preferred shares of Oi tumbled nearly 6 percent, extending a
17 percent loss over the past month. Portugal Telecom dropped
5.1 percent in Tuesday trading.
Portugal Telecom has said it was intent on resolving
questions over the 897 million euros ($1.22 billion) in debt
from holding company Rioforte, owned by the Espirito Santo
banking family, a major shareholder in the Portuguese company.
The debt, equal to roughly 40 percent of Portugal Telecom's
market value, matures next week, and was hanging over the Oi
merger formalized in an April 28 share offering.
The merger was touted as a chance to strengthen Oi's
corporate governance after years of bickering between minority
and controlling shareholders, but distrust of the Portuguese
partner is clouding those hopes.
"We believe transactions with large shareholders without
proper disclosure to minorities are negative to corporate
governance," wrote JPMorgan Securities analyst Andre Baggio, who
cut his rating on Oi shares to "underweight" on Monday.
Baggio added that if Oi pushes for a lower valuation of
Portugal Telecom's assets in their merger, the improved terms
for Oi should boost its share price.
BNDES reiterated its support for Oi's current management,
including Zeinal Bava, the chief executive officer of both Oi
and Portugal Telecom's Portugal unit since June 2013.
BNDES is the main source of long-term lending in Brazil and
a major shareholder in several of the country's so-called
"national champions." The bank was a key sponsor of the 2008
merger that created Oi as well as the current tie-up with
(Reporting by Guillermo Parra-Bernal and Brad Haynes; Editing
by Jeffrey Benkoe)