UPDATE 2-Brazil's Oi debt plan vexes bondholders with 70 pct haircut

lunes 5 de septiembre de 2016 23:10 GYT

(Recasts lead paragraph; adds bond swap info and bondholder reaction to plan from 4th paragraph)

By Ana Mano

SAO PAULO, Sept 5 (Reuters) - Brazil's largest fixed line carrier Oi SA on Monday unveiled a debt restructuring proposal, offering to sell assets and proposing a debt-for-equity swap option that could mean a 70 percent haircut for bondholders.

Oi filed for protection from creditors on June 20 in the country's biggest-ever bankruptcy case, involving 65.4 billion reais ($19.3 billion) in bonds, bank debt and operating liabilities.

In a securities filing on Monday, Oi offered four payment options to unsecured creditors such as bondholders owed approximately 34 billion reais. At the same time, the company said it is willing to repay secured creditors such as the Brazil's BNDES development bank in full over the course of 15 years.

Brazil's Oi offered to exchange up to 32.3 billion reais ($9.90 billion) in unsecured debt for equity under the plan, which would give lenders up to 85 percent of the company's capital, according to the filings.

The debt for equity exchange entails issuance of a convertible debt instrument with face value of 10 billion reais, Oi said. Creditors will receive voting capital if the company does not redeem the securities.

"The debt conversion option is by far the worse," a bondholder told Reuters on condition of anonymity.

In the best case scenario, creditors get paid 31 percent on their debt, plus 4 percent interest under the plan, he added.   Continuación...