UPDATE 1-Oi partners may sue Portugal Telecom on debt deal, source says
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By Guillermo Parra-Bernal and Alberto Alerigi
SAO PAULO, July 15 (Reuters) - Some large shareholders in Grupo Oi SA could take partner Portugal Telecom SA to court if a debt investment made by the latter ends up in default, a step that could delay the companies' planned merger, a source close to the transaction said on Tuesday.
Shareholders of Rio de Janeiro-based Oi want to push Portugal Telecom to agree to have a smaller stake in CorpCo, as the company resulting from the merger is known, depending on the outcome of the debt negotiations later on Tuesday, said the source, who requested anonymity because of the sensitivity of the issue.
The merger, however, is not at risk because "both companies need each other," the source added. The combination is touted as a chance to strengthen Oi's corporate governance after years of bickering between minority and controlling shareholders.
Going to court would be a "last resort" for the Oi shareholders, who were not informed of Portugal Telecom's 897 million euro ($1.2 billion) investment in Rioforte, a vehicle controlled by Portugal's Espírito Santo family, the source said.
The family owns about 10 percent of Portugal Telecom. Oi is controlled by Portugal Telecom and by other Brazilian companies including Andrade Gutierrez SA, the Jereissati family, a number of state-controlled pension funds and development bank BNDES.
If the debt is not repaid and Portugal Telecom has to write off the investment, the shareholders in Oi would have to sue in order "not to be seen as negligent or lenient over a serious corporate governance flaw," the source added.
Rioforte is preparing to file for creditor protection with a court in Luxembourg in hopes of preventing an uncontrolled fire sale of assets, sources with knowledge of the situation told Reuters on Tuesday. Those same sources declined to comment on how such a filing would impact the repayment of Rioforte's debt to Portugal Telecom, adding that negotiations on the matter were ongoing. Continuación...