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Investor says Brazilian telco’s board not equipped to face current challenges.
No fewer than three investors have acquired or increased their minority holdings in troubled Brazilian telco Oi in recent days, and one of them has called for several board members to be replaced.
Fund manager Bridge Administradora de Recursos, which represents a group of investors led by Brazilian businessman Nelson Tanure, last week revealed it has increased its stake in Oi – which filed for bankruptcy protection in June – to 6.6% from 5.9%. It followed up the transaction with a letter to Oi requesting an extraordinary general meeting to discuss overhauling the company’s board.
"The company’s management, together with its internal and external advisors, has been conducting the company’s reorganisation process with proficiency and diligence," Bridge said. "However, we understand that the board of directors should be partially renewed, so that it is prepared to face the economic, legal, technological, market and regulatory challenges presented to the company."
Bridge wants to replace five board members and four alternate board members. Of the nine, five were appointed by holding company Pharol, formerly called PT Group, which is Oi’s biggest single shareholder with a direct and indirect stake amounting to 27.5% of the company.
Oi said in a statement that its board is evaluating the meeting request.
According to a report by Reuters, it was Pharol’s board representatives who blocked Oi’s attempt to renegotiate its hefty debt burden, which led to the resignation of the operator’s CEO Bayard De Paoli Gontijo and ultimately led to Oi filing for bankruptcy protection, known in Brazil as judicial reorganisation, on 20 June.
In a statement, Pharol said it is aware of Bridge’s request and urged Oi’s board members to "remain alert to the possible appearance of investors…focused on the opportunistic return of their investments and who may act in order to obtain an advantageous negotiating position at the expense of the interests of companies going through financial difficulties."
Meanwhile, in separate disclosures earlier this week, Oi revealed that it has two new minority shareholders.
New York-based Marathon Asset Management on Tuesday acquired 14.5 million preferred shares, giving it 9.2% of Oi’s preferred capital stock. A day earlier, another New York fund, PointState Capital, bought 34.5 million common shares, giving it a 5.2% stake in the operator’s outstanding shares.
Unlike Bridge though, both funds said they do not currently intend to change the control of Oi, nor do they intend to exert any influence over the management.
