UPDATE 2-Brazil watchdog lifts suspension of Oi offer, paves way for merger

martes 1 de abril de 2014 18:38 GYT

(New throughout, updates with CVM decision, adds implications, background)

By Joan Magee and Guillermo Parra-Bernal

NEW YORK/SAO PAULO, April 1 (Reuters) - Brazil's securities industry watchdog CVM on Tuesday lifted a suspension on Grupo Oi SA's 6 billion real ($2.7 billion) share offering, paving the way for the Brazilian telecommunications company's merger with Portugal Telecom SGPS SA.

Regulators last week halted the offering after Oi Chief Executive Officer Zeinal Bava breached a mandatory quiet period ahead of the transaction. Grupo BTG Pactual SA, the bank handling the deal, and Oi agreed to urge investors to ignore Bava's remarks, a condition CVM said in a statement was enough to lift the suspension.

The decision takes effect past midnight and allows Oi to launch the offering within hours. Bankers were preparing to lunch the offering late on Tuesday, pending the CVM decision, two sources with knowledge of the situation told Thomson Reuters' IFR.

The offering is the backbone of Oi's planned capital increase of 14 billion reais that will allow it to tie up with Portugal Telecom, its biggest shareholder. The offer was originally scheduled to price on April 16.

Last week, shareholders of Oi and Portugal Telecom approved the capital increase and separate asset appraisals at their respective assemblies in Rio de Janeiro and Lisbon. Executives at the companies say the tie-up will give the resulting entity more clout to compete inside Brazil with bigger rivals such as Spain's Telefonica SA, Telecom Italia SpA's TIM Participações SA and Mexico's America Movil SAB .

The shorter timeline underscores Oi's urgency to get the deal done before more banks endorsing the offering have second thoughts. Banco Bradesco SA and Itaú Unibanco Holding SA are considering pulling out of the deal because of demands by regulators that they to buy up remaining shares if demand falls short, two sources told Reuters, requesting anonymity given the sensitivity of the issue.

Itaú and Bradesco, both based in São Paulo, as well as another 12 banks signed a firm commitment to the transaction about two weeks ago. Oi had obtained firm commitments from a group of lenders led by Grupo BTG Pactual SA, sources told Reuters late in March.   Continuación...