UPDATE 3-Oi prices biggest Brazil follow-on offer in almost four years

lunes 28 de abril de 2014 23:00 GYT

* Oi raises total 8.25 billion reais from preferred and common stock sale

* Including asset swap, the transaction worth 13.95 billion reais (Recasts to add details on offering, size, bidders, background)

By Guillermo Parra-Bernal and Joan Magee

SAO PAULO/NEW YORK, April 28 (IFR/Reuters) - Brazilian wireless and fixed-line carrier Grupo Oi SA took the biggest step yet toward combining with partner Portugal Telecom SGPS SA on Monday by completing Brazil's largest follow-on share offer in almost four years at the lowest price expected.

Oi raised a total 8.25 billion reais ($3.7 billion) from selling common and preferred stock to local and foreign investors as well as a fund led by Grupo BTG Pactual SA, the deal's main adviser, according to a source with direct knowledge of the transaction. Including an asset swap with Portugal Telecom, the transaction was worth 13.95 billion reais.

The amount fetched was the largest for a follow-on offering in Brazilian equity markets since Petróleo Brasileiro SA's 120 billion-real capital increase in September 2010, according to Thomson Reuters data. The transaction was also the first share sale completed in Brazil since mid-December.

Oi lured European and U.S. funds, who bought 85 percent of the 5 billion reais in stock sold to minority investors, by pricing the securities at the lowest level possible. The cut-off price for preferred shares was 2 reais, at the bottom of the 2 reais to 2.30 reais suggested tag. Common shares were priced at 2.17 reais each, in line with a proposed premium of about 8 percent to the preferred stock.

Proceeds from the offering will help Oi reduce a stifling debt load. The recapitalized Oi, which also controls Brazil's fourth-largest mobile phone carrier, plans to use its stronger balance sheet to form CorpCo, the proposed name of the company after the tie-up with Portugal Telecom.

Executives at Oi and Portugal Telecom say CorpCo will have more clout to compete in Brazil with bigger rivals such as the local unit of Spain's Telefonica SA , Telecom Italia SpA's TIM Participações SA and Mexico's America Movil SAB.   Continuación...