UPDATE 1-Oi-Portugal Telecom merger may be renegotiated if debt default- minister

lunes 14 de julio de 2014 20:06 GYT

(Recasts to add details, comments, background throughout)

By Leonardo Goy

BRASILIA, July 14 (Reuters) - Shareholders of Grupo Oi SA are likely to seek to renegotiate terms of a merger with Portugal Telecom SPGS SA if the latter's debt investments with Banco Espírito Santo SA end up in default, Brazilian Communications Minister Paulo Bernardo said on Monday.

Shareholders of Oi, which include state development bank BNDES, could also seek to change the stakes that partners would have in the combined company in a default, Bernardo said. But he said he does not believe a planned merger of Oi and Portugal Telecom is at risk.

Recent disclosures of financial irregularities at family-held holding companies behind Banco Espírito Santo SA, Portugal's largest listed bank, have raised questions about potentially destabilizing losses at the bank and other companies in the family's orbit. One of those holding companies faces the repayment of almost 850 million euros ($1.16 billion) in debt on Tuesday.

"There's a transaction that matures tomorrow. If the money comes back, it's fine. If it doesn't come back, it's evident that BNDES and the other partners will revisit terms of the merger and their stakes in the combined company. This situation certainly badly hurt one of the partners," Bernardo said.

Bernardo's comments indicate that the situation is far from becoming a political issue, with Brazil's government expecting both Portugal Telecom, Oi and their shareholders to find a solution to the impasse.

Bernardo told reporters in Brasilia that he requested from Anatel, the telecommunications industry watchdog, additional information on Portugal Telecom and to monitor how the situation evolves.   Continuación...