UPDATE 2-Brazil telecom Oi files for $5.9 billion stock offering
BRASILIA Feb 20 (Reuters) - Brazilian telecoms company Grupo Oi SA plans to raise about 14 billion reais ($5.9 billion) in a share offering, the company said in a filing to the national securities regulator on Thursday.
The capital raising will be part of Oi's merger process with Portugal Telecom, which will subscribe at least 7 billion reais in Oi shares in the operation.
Shares of Grupo Oi dropped in opening trade, losing 3.17 percent to 3.66 reais, their lowest price since early January.
"It's obviously bad for minority shareholders who will have to deal with dilution," said Luiz Roberto Monteiro, a trader with brokerage Renascenca in Sao Paulo. "We'll have to see how the plan will play out but the immediate reaction is negative."
Portugal Telecom and Oi in October announced plans to combine their operations to form a new company with more than 100 million subscribers, with almost $19 billion in annual revenue to compete in Brazil with bigger global rivals such as Spain's Telefonica SA and Mexico's America Movil .
Grupo Oi is Brazil's most indebted telecom company. It plans to continue selling assets to pay down debt after the recent disposal of underwater fiber optic cables bolstered its fourth-quarter profit, Chief Executive Zeinal Bava said on Wednesday.
Oi will offer ordinary and preferred shares, including American Depositary Receipts. Pricing date was set for April 16, and the settlement is expected to take place on April 23.
"In some ways it was expected," said Celson Placido, a partner at XP Investimentos in Sao Paulo. "This company is in debt, and it is carrying out the share offering because it needs the money. The partnership looks good because Portugal Telecom has good management, it has experience with mobile. But right now the minority shareholder will have to help pay." Continuación...