LISBON, May 8 (Reuters) - The leading shareholders of holding company Portugal Telecom SGPS have proposed replacing chief executive Joao Franco Mello with Luis Palha da Silva, the former head of retailer Jeronimo Martins and board vice-president at oil company Galp.
Portugal Telecom said in a statement the proposal was backed by Grupo Visabeira, Novo Banco, Oi and RS Holding, who together have more than 35 percent of the company, and it will be voted at a general meeting on May 29.
PT SGPS is a holding company that owns a 27.5 percent stake in Brazil’s Oi, which in turn holds 10 percent of PT SGPS following last year’s ill-fated merger.
The deal soured after the now bankrupt Rioforte holding company of Portugal’s Espirito Santo banking family, ultimately a shareholder in PT SGPS, defaulted on 900 million euros of loans from Portugal Telecom, a debt which Oi said it had not been aware of before their merger.
The Brazilian company subsequently decided to sell the PT Portugal telecom business to a PT rival, Altice, while the Rioforte debt was sold back to PT SGPS in return for reducing its stake in Oi.
The affair led to the resignation of PT’s previous CEO, Henrique Granadeiro, as well as Oi’s CEO Zeinal Bava.
Franco Mello became CEO last September after Granadeiro’s departure.
PT Telecom’s shares were flat on Friday at 0.537 euros while the broader market index in Lisbon was up 1.3 percent. (Reporting By Andrei Khalip; Editing by Greg Mahlich)