March 2, 2016 / 10:09 PM / 4 years ago

Brazil's Oi hires PJT Partners to renegotiate debt -sources

SAO PAULO, March 2 (Reuters) - Oi SA, Brazil’s most indebted telephone operator, has hired PJT Partners and Rothschild Group to refinance around 13 billion reais ($3.34 billion) of debt maturing by the end of next year, two sources with direct knowledge of the matter said on Wednesday.

According to the first source, the company will at first try to extend maturities. Rothschild, which Oi hired last year to improve the company’s debt profile, will negotiate with local lenders, both sources said, while PJT Partners, a former unit of Blackstone Group, will negotiate with the bondholders.

Oi, PJT Partners and Rothschild declined to comment.

Shares and bonds of Oi have been tumbling since last week, when Russian billionaire Mikhail Fridman’s investment firm Letter One abandoned an $4 billion offer to finance the takeover of a Brazilian rival.

Credit agency Moodys downgraded the company’s debt on Tuesday, saying its capital structure is untenable.

“We see a high risk of debt restructuring initiatives over the next 12 to 18 months that would likely involve losses to creditors,” said Moodys corporate finance vice-president, Marcos Schmidt, in a report.

The flopped merger plan between Oi and rival TIM Participaçoes as well as Letter One’s proposed capital injection were seen as a lifeline to the indebted telecommunications company, struggling with a 35 billion reais ($9 billion) net debt and slipping revenue as a result of Brazil’s deep recession.

At a time of convergence in the industry, Oi owns the biggest fixed line network in Brazil and lags behind its three major rivals in mobile subscriptions, with 18 percent market share.

The price on Oi’s 5.75 percent bond due in February 2022 sank to 19 cents on the dollar on Wednesday, about 16 cents lower than last week. Oi shares fell 42.5 percent in February and closed at 1.28 reais on Wednesday. ($1 = 3.8866 Brazilian reais) (Reporting by Tatiana Bautzer; Editing by David Gregorio)

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