Hi, you will not need to hold Portugal Telecom shares in treasury.
The announcement was made by Oi to the market this Monday, the 28th; two weeks ago, to guarantee the continuation of the merger, Portugal Telecom agreed to deliver almost 475 million ordinary shares and nearly 950 million preferred shares of Oi to the Brazilian company; in exchange, the Portuguese group will receive overdue and unpaid debt securities from Rioforte worth 897 million euros and will have an option to purchase the Oi shares that will be delivered over six years.
SAO PAULO (Reuters) - The Oi shares that will be delivered by Portugal Telecom to save the merger of the companies will not need to be held in the treasury of the Brazilian company or the resulting company, CorpCo, according to a relevant fact disclosed this Monday, the 28th, by Oi.
The default on an €897 million debt by Rioforte, a holding company of the Espírito Santo Group, which is the main shareholder of Portugal Telecom, threatened the Portuguese-Brazilian union in the telecommunications sector.
Two weeks ago, to ensure the merger could proceed, Portugal Telecom agreed to hand over nearly 475 million ordinary shares and nearly 950 million preferred shares of Oi to the Brazilian company. In exchange, the Portuguese group will receive overdue and unpaid debt securities from Rioforte worth €897 million and will have an option to purchase Oi shares, which will be delivered over six years.
The details of the agreement signed between Oi and Portugal Telecom on July 15, released this Monday, show that "neither Oi nor CorpCo are obligated to hold the exchanged shares in treasury."
If there are not enough free treasury shares to deliver to Portugal Telecom, the option may be settled financially, by paying the amount corresponding to the difference between the market price of the option shares and the option's exercise price.
The final terms of the agreement also indicate that Portugal Telecom may not purchase shares issued by Oi or CorpCo, directly or indirectly, in any way other than through the exercise of the option, nor may it assign or transfer the option.
CorpCo will, upon its creation, have the current partners of Portugal Telecom with a 25,6 percent stake, down from the approximately 38 percent initially projected, due to the imbroglio involving Rioforte.
According to the relevant fact disclosed this Monday, the terms of the share swap and share purchase option agreements were approved by the Board of Directors of Portugal Telecom.
"The signing of the definitive contracts and the implementation of the exchange and option... are subject to the fulfillment of conditions, including, among other corporate approvals, approval by the Board of Directors of Oi and by the shareholders' meeting of Portugal Telecom," according to Oi.
(By Cesar Bianconi)