Brazil’s Oi to file for bankruptcy on Monday

Brazilian telecom provider Oi SA is set to file its bankruptcy reorganization plan with a Rio de Janeiro court on Monday, two sources familiar with the situation told Reuters.

The plan for the debt-laden company would be filed following a board meeting, also to take place on Monday, to consider the proposal, two sources said. A third source said the board meeting to consider the reorganization plan could happen as soon as this weekend.

The sources spoke on condition of anonymity because they were not authorized to speak publicly about the matter.

Oi, Brazil’s largest fixed-line phone carrier and No. 4 mobile operator, along with six subsidiaries, filed on June 20 for the country’s biggest-ever bankruptcy protection, involving 65.4 billion reais ($19.3 billion) of bonds, bank debt and operating liabilities.

The case pits minority shareholders against a controlling group led by Pharol SGPS SA. Some bondholders are courting Brazil’s government as an ally to avoid a break-up of the carrier, according to sources involved in the process.

Separately on Friday, the judge overseeing Oi’s bankruptcy proceedings suspended an extraordinary meeting of shareholders scheduled for Sept. 8. The meeting had been called by minority shareholder Société Mondiale, which wants to replace Pharol-appointed board members.

Société Mondiale has also proposed legal action against current and former managers of Oi for losses the company allegedly incurred as a result of their management decisions.

Oi said in a securities filing that the judge had called on the dissenting parties to resolve the conflict through mediation within an initial period of 20 days.

Once Oi’s reorganization plan is presented to the court, creditors and the company can negotiate terms before the judge organizes a creditor vote on the plan.

Oi preferred shares rose 3 percent in afternoon trading on the Sao Paulo stock exchange, to 2.53 reais.

Source: Reuters