Brazil government gaining clout in contentious Oi bankruptcy

viernes 2 de septiembre de 2016 01:00 GYT

By Guillermo Parra-Bernal and Ana Mano

SAO PAULO, Sept. 2 (Reuters) - Growing tensions over Oi SA's bankruptcy process are driving some bondholders to court Brazil's government as an ally against several investors whom they view as a threat to the phone carrier's survival.

Private creditors and their advisers have been meeting in recent weeks with cabinet members, state-controlled bank executives and industry watchdog Anatel about heading off rogue investors who may try to break the carrier up in the middle of Oi's reorganization, seven people directly involved in the process have told Reuters.

The push to find common ground with the government comes after Brazilian officials pledged in June to keep their distance when Oi filed for bankruptcy protection in June after talks to restructure 65.4 billion reais ($20 billion) in debt collapsed.

The stakes are high. Oi is Brazil's largest fixed-line carrier, employs some 140,000 people and is the only phone company in 1,800 Brazilian towns, or about one-third of the nation's 5,500 municipalities. Several state banks have lent billions in reais to Oi, leading creditors and government officials to discuss options ahead of the presentation of Oi's recovery plan expected late next week.

"We envision a plan in which private creditors bear losses accordingly with their risk-taking, and no predator shareholder prevails," said a senior government official who asked for anonymity because the matter is sensitive. "The ideal would be for everyone to understand that the new Oi must provide services with quality."

The prevailing view among state agencies is that some of the activist investors seeking control of Oi through litigation want the state banks acting as the carrier's lenders to take heavy loan losses - a situation the official described as "worrying."

A recent plan by Brazilian distressed debt investor Nelson Tanure and his partners in fund Société Mondiale FIA to oust part of Oi's board and present a parallel recovery plan involving the disposal of some non-essential assets has particularly spooked some in the government, some of the people involved said.

While there is nothing unusual in Anatel wanting Oi to stay as a stable industry player, or in state banks seeking to minimize potential losses, their backstage role reflects the government's push to protect jobs and avert service disruptions as Latin America's biggest economy struggles with a harsh recession, the people said.   Continuación...