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Portugal Telecom SGPS SA and Oi SA Announce Combination of Their Businesses

Wednesday, 2 Oct 2013 02:21am EDT 

Portugal Telecom, SGPS SA (PT), Oi SA (Oi), AG Telecom Participacoes SA (AG Tel), LF Tel SA (LF Tel) and their respective affiliates have signed on October 2, 2013 a memorandum of understanding (MOU) setting out the basis for a proposed merger of PT, Oi and the Oi Holding Companies (as defined below) into a single Brazilian incorporated listed entity (CorpCo). The merger is a fulfilment of the industrial alliance established in 2010. As part of the merger, Oi proposes to undertake a cash capital increase of a minimum of BRL 7.0 billion (EUR 2.3 billion), and with a target of BRL 8.0 billion (EUR 2.7 billion). Shareholders of Telemar Participacoes SA (Tpart) and an investment vehicle managed by Banco BTG Pactual SA (BTG Pactual), will subscribe approximately BRL 2.0 billion (EUR 0.7 billion) of the cash capital increase. The proposed exchange terms are as follows: one Oi ON share will be exchanged into one CorpCo share, one Oi PN share will be exchanged into 0.9211 CorpCo shares, and one PT share will be exchanged into the equivalent of EUR 2.2911 of CorpCo shares (to be issued at the price of Oi’s capital increase) plus 0.6330 CorpCo shares. At completion, PT shareholders will own 38.1% of the voting and outstanding capital of CorpCo. Upon completion, CorpCo will be listed on the Novo Mercado segment of BM&FBOVESPA, on the NYSE Euronext and on the NYSE. Closing of the proposed transaction is anticipated in the first half of 2014. 

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