Key Creditors Announce Cooperation on Key Economic Terms for Oi group Restructuring Framework

NEW YORK, Aug. 23, 2017 /PRNewswire/ -- The Steering Committees of the International Bondholder Committee and of the Ad Hoc Group of Oi Bondholders along with a majority of the group of export credit agencies (ECAs) represented by FTI Consulting (together, the "Oi Creditor Groups") announced today that they have been working cooperatively and have reached consensus on certain key economic terms of a common restructuring framework for Oi S.A. and its subsidiaries (the "Common Restructuring Framework"). The Common Restructuring Framework is an important milestone as the Oi Creditor Groups believe it is the first framework for plans that garners the support of the majority of Oi's main groups of creditors and provides a path for the potential consensual resolution of ongoing claims and the successful emergence of Oi as a well-capitalized, viable and strong competitor in the Brazilian telecommunications industry. The Oi Creditor Groups represent in excess of 22.6 billion Reais (US$6.6 billion) of Oi group debt.

The Common Restructuring Framework of the Oi Creditor Groups contemplates, subject to the qualifications set forth below, among other things, plans with the following mutually dependent features: (a) new committed equity capital of 3 billion Reais that will be backstopped in full by certain members of the Oi Creditor Groups, (b) significant debt reduction through a capitalization of up to 26.1 billion Reais in bond debt for 88% in equity of the restructured Oi, (c) a new transparent and professional governance structure, (d) the satisfactory resolution of all regulatory claims and (e) equivalent recoveries among all unsecured financial creditors on account of their claims, including parity treatment to all bondholders.  

Further, the Oi Creditor Groups are in discussions with other key creditors and stakeholders of Oi regarding the terms of the Common Restructuring Framework as it relates to their indebtedness so that the Common Restructuring Framework can also be acceptable to these interested parties.

This development follows the groups' announced and continued opposition to the amended restructuring plan terms disclosed by Oi S.A. on March 22, 2017 and the continued failure of the Oi group to engage in negotiations with its principal creditor groups, including the Steering Committees of the International Bondholder Committee and of the Ad Hoc Group of Oi Bondholders.  

The Oi Creditor Groups remain committed to discussing the benefits of their Common Restructuring Framework with the company and other major stakeholders as a viable path to implement a feasible restructuring that ensures Oi's emergence as a well-capitalized company that can prosper in the long run.

The International Bondholder Committee holds approximately US$2.7 billion of bonds issued by various members of the Oi group.  The Ad Hoc Group of Oi Bondholders holds approximately US$3.0 billion of bonds issued by various members of the Oi group.  The cooperating Export Credit Agencies hold approximately US$942 million of debt issued by various members of the Oi group.

The Common Restructuring Framework is non-binding on the Oi Creditor Groups, and the terms, conditions, form and structure of implementation of any proposals, plans or agreements will be subject to various customary conditions, including completion of due diligence,  all internal and credit committee approvals, negotiation and agreement of acceptable documentation, structuring and implementation of the plans, adoption of regulatory changes and judicial confirmation of restructuring plans in all applicable jurisdictions including the Netherlands.  The Oi Creditor Groups do not have or assume any fiduciary or other duties to any party.  Any transaction arising from the Common Restructuring Framework shall be voted on a non-substantively consolidated basis and shall be subject to approval by the trustees and court in the Netherlands for FinCo and PTIF, the court in Brazil for other debtors and the US Bankruptcy Court for all Chapter 15 debtors. Nothing in this press release shall create any binding legal obligations for any member of the Oi Creditor Groups and it is understood that all such members continue to reserve all rights in connection with any present or future legal proceedings to which they may be parties.  This press release is not intended as a solicitation for a vote on any plans or the offer or sale of any security.  There can be no assurance that Oi S.A. and its subsidiaries, the trustees in the Netherlands, or any other stakeholder will agree to the terms and conditions contained in the Common Restructuring Framework, that the terms and conditions contained in the Common Restructuring Framework will not be changed by the Oi Creditor Groups, that any plans will be approved by the Courts in all applicable jurisdictions, or that the transactions contemplated by the Common Restructuring Framework will be consummated.

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SOURCE International Bondholder Committee