Oi exits bankruptcy protection
December 19, 2022
By Chris Forrester
Brazilian telco operator Oi has announced the ending of its local version of Chapter 11 bankruptcy protection. A court in Rio de Janeiro announced the reconstruction proceedings on December 14th and said that Oi had met the key terms regarding debt payments.
Its bankruptcy was Brazil’s biggest-ever (some 65 Brazilian Reals, about €11.2m) and 55,000 listed creditors.
If filed for bankruptcy in June 2016. The bankruptcy came about because of economic challenges faced by Brazil and the severity of a nationwide recession.
The news of its exit caused its shares to jump 53 per cent. Oi says it has now repaid debt-holders $871 million, mostly to Brazil’s state development bank BNDES. Part of that funding came about by the sale in April 2022 of its cellular “crown jewel” division to TIM’s Brazilian subsidiary, as well as Telefonica of Brazil and Claro for some $1.5 billion, and helping the overall asset sale which reached $5 billion. Those assets include real estate, its cellular fixed towers and its well-developed fibre-optic business (which was bought by V.tal) and its pay-TV operation
Oi still has a debt burden of some $4 billion.
In a November report, Fitch said that the Brazilian company was expected to report higher leverage and lower profitability as a result of the disposal of assets with higher operating margins, such as the mobile operation.
Oi president Rodrigo Abreu said that the conclusion of the judicial reorganization is an important milestone for the company. However, he also said that “highly critical challenges” still lie ahead, such as the growth of operations and the development of new revenue sources, the regulatory discussions over the fixed telephony concession, ongoing negotiations with creditors and the future of Oi’s legacy networks, among others.