December 1, 2017 / 9:12 PM / in 15 days

Shareholder in Brazil's Oi requests Aurelius be barred from debt restructuring

BRASILIA (Reuters) - Societe Mondiale, a shareholder in Brazilian telecoms company Oi SA (OIBR4.SA) affiliated with Brazilian investor Nelson Tanure, filed a complaint with the nation’s telecoms regulator on Friday seeking to limit the actions of a key bondholder.

In the complaint, seen by Reuters, Societe Mondiale asks the competition unit of telecoms regulator Anatel to prohibit the company from signing any contract or engaging in negotiations that “may give legal substance to a deal implying transfer of control to any fund” related to Aurelius Capital Management LP.

The move represents the first attempt by Oi’s board to regain power after a judge on Wednesday effectively removed it from ongoing negotiations to restructure the carrier’s debt.

Representatives for Anatel and Aurelius did not immediately respond to requests for comment.

Oi, which filed for bankruptcy protection a year and a half ago, is riven by divisions between creditors, the board, and management.

Aurelius is spearheading a group of creditors known as the International Bondholders Committee, which is in turn part of an alliance of funds and banks holding about 22 billion reais ($6.75 billion) on Oi’s debt.

Those bondholders have been working for several weeks with Oi’s management to bang out a restructuring accord that would take the carrier out of bankruptcy protection.

    However, the board of the company - over which Tanure holds sway - has held firm against bondholder proposals, and has promoted a plan that would be more favorable to equity holders.

    In the complaint, Societe Mondiale says that under the restructuring proposal pushed by bondholders, Aurelius would become a co-controller of Oi. The complaint also says that Aurelius holds almost 17 percent of competing telecoms operator Nextel Communications Inc through intermediaries.

    According to the complaint, Aurelius - due to its indirect stake in Nextel - would break Brazilian anti-trust rules if its debt restructuring proposal for Oi were to go into effect.

    On Wednesday, the judge overseeing the Oi bankruptcy case gave Chief Executive Eurico Teles power to draft the restructuring plan and submit it to the bankruptcy court without board approval, effectively removing power from the Tanure-led body.

    Reporting by Leonardo Goy; additional reporting by Gram Slattery in Sao Paulo; Editing by Susan Thomas

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