Egyptian billionaire, Naguib Sawiris, is set to invest $250 million to bolster troubled Brazilian telecom company, Oi, to save it from bankruptcy.
According to the Wall Street Journal, the plan is to inject $1.25 billion into the Brazilian company, with $250 million coming from Mr. Sawiris and the remainder from a public Oi share sale.
Oi filed for bankruptcy protection in June with $20 billion in debt, making it the largest corporate default in Latin American history, according to Moody’s.
If accepted, the Oi investment would be the Egyptian billionaire’s first venture into the Brazilian telecoms market.
Oi has “huge potential,” said Karim Nasr, a Sawiris Group representative who is overseeing Mr. Sawiris’s plan to invest in Oi. The Brazilian market “has a lot of interesting prospects and we would like to participate.”
Shareholders and bondholders have been unable to agree on a recovery plan since September, when bondholders rejected a proposal from Oi that would have cost international creditors 70% of their investment.
But some Oi shareholders said Friday they aren’t interested in Mr. Sawiris’s proposal. A different group of bondholders, led by advisory firm G5 Evercore, recently broke away from the Moelis-led consortium and said it wants to work with Oi on a viable plan.
Oi, Brazil’s fourth-largest telecoms company by market share, was once seen as a potential globally competitive company, but two ambitious mergers loaded the company with debt without generating the cash flow needed to compete, even domestically. Mr. Nasr said it would take five years to get the company back to normal growth.