Brazil Telco Oi To Sell $7.2 Billion In New Common, Preferred Shares
19 February 2011 - 10:11AM
Dow Jones News
Brazilian telecommunications company Tele Norte Leste
Participacoes (TNE, TNLP4.BR), or Oi, plans to sell up to 12
billion Brazilian reals ($7.2 billion) worth of new shares in a
capital increase that will fund the company's international
expansion plans and pay down debt.
In a filing with local stock regulators late Friday, Oi said
that it would issue up to 126 million new common shares priced at
BRL38.55 per share. The company will also issue up to 252 million
new preferred shares at BRL28.27 per share. The capital increase
was previously announced on July 28.
Oi, Brazil's largest telecommunications company, said that
controlling shareholder Telemar Participacoes would buy a minimum
of BRL1.36 billion worth of shares and possibly as much as BRL2.25
billion, depending on the number of shares purchased by minority
shareholders. Minority shareholders can accompany the offer, Oi
said.
The capital increase was designed by Oi, controlling
shareholders and strategic partner Portugal Telecom SGPS S.A. with
an eye toward developing a Portuguese-Brazilian telecommunications
company with global reach, Oi said. The share sale should also help
Oi compete on better footing against heavyweights such as America
Movil (AMX), Telecom Italia (TI) and Spain's Telefonica SA (TEF),
which have increased their presence in the region.
Latin America's growth rates, especially in mobile phone use,
have outpaced more mature markets such as Europe and the U.S. and
attracted intense interest from global telecoms looking to expand
and counter declining revenues at home.
In January, Portugal Telecom finalized a BRL8.32 billion deal to
take at least a 22.38% stake in Oi and a 12.1% stake in holding
company Telemar Participacoes. Oi will also take up to a 10% stake
in Portugal Telecom as part of the deal.
Oi's deal with Portugal Telecom was linked to a separate accord
between Portugal Telecom and Telefonica. In that deal, Portugal
Telecom sold its stake in mobile operator Vivo (VIV) to Telefonica
for EUR7.5 billion.
Oi is the main fixed-line phone operator in most areas outside
Sao Paulo state. In addition, it controls about 18% of the cell
phone market and about 43% of the broadband Internet market.
The company's shares closed 1.5% higher at BRL36.06 in trading
on the Sao Paulo Stock Exchange.
-By Jeff Fick, Dow Jones Newswires; 55-21-3288-5011;
Jeff.Fick@dowjones.com
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