UPDATE 2-Brazil's Oi seeks to loosen debt terms for deal flexibility

lunes 15 de diciembre de 2014 14:32 GYT

(Adds details of Oi's debt profile, latest bond trading)

By Brad Haynes and Alberto Alerigi

SAO PAULO Dec 15 (Reuters) - Oi SA, Brazil's most indebted telecoms company, is asking bondholders to temporarily loosen restrictions on its debt levels to pursue potential merger options, its acting chief executive said on Monday.

The company will hold a Jan. 26 bondholder meeting to waive terms known as covenants limiting the company's ratio of gross debt to earnings before interest, taxes, depreciation and amortization (EBITDA), according to a newspaper ad on Monday.

CEO Bayard Gontijo said asset sales would boost cash flow next year, but he was looking for flexibility with the timing of debt payments and a possible merger bid.

"I want the time to use our cash in the most effective way. If it is for debt payments, then let's take time to pay the most expensive debts. If it is for a merger, then let's use our cash efficiently," Gontijo said in a telephone interview.

Oi plans to conclude the sale of its Portuguese assets in the first half of 2015 and sell its African assets in the second half, Gontijo told Reuters.

He reiterated Oi's intent to be a "protagonist" in the consolidation of Brazil's telecom market. Oi has engaged in talks with Spain's Telefonica SA and Mexico's America Movil SAB to buy and split up rival wireless carrier TIM Participações SA.

But Gontijo said the company has not made up its mind about the best way to pursue deals in Brazil and whether it would use cash or other instruments.   Continuación...