SAO PAULO, July 26 (Reuters) - Brazilian phone carrier Oi SA wants creditors to cut debt by almost two-thirds and inject $1 billion in fresh cash to exit bankruptcy protection, O Globo newspaper reported on Tuesday, citing a person with direct knowledge of the matter.
Under terms of an accord that is under discussion between Oi bondholders represented by investment-banking firm Moelis & Co, and shareholders and management of Brazil’s No. 4 wireless carrier, total debt would be reduced to about 25 billion reais ($7.6 billion) from the current 65.4 billion reais, Globo said, citing the source.
The accord would allow Oi to obtain $1 billion in cash frm creditors that would be used for capital spending, the newspaper added. That amount is equivalent to the investments that Oi, which filed for a court-led reorganization in June, made last year, the paper said.
Oi declined to comment, as did a media representative for the Moelis-led group of about 70 bondholders owning $4 billion worth of Oi bonds.
Rio de Janeiro-based Oi, the byproduct of a government-sponsored merger at the end of last decade, succumbed to a heavy debt burden and mounting competition after years of shareholder disputes. The disputes led to the collapse of negotiations with the Moelis-led group after largest single shareholder Pharol SGPS SA balked at the prospect of being heavily diluted in a debt restructuring deal.
Common shares of Oi slumped 5.7 percent to 2.82 reais on the news. Preferred shares shed 3.5 percent to 2.46 reais on Tuesday. ($1 = 3.2794 Brazilian reais) (Reporting by Guillermo Parra-Bernal; Editing by Jonathan Oatis)