On Monday 20 June, Oi, Brazil’s fourth mobile operator, presented the largest bankruptcy-protection filing in the history of Brazil at R$65bn (US$19bn). Oi was in talks to restructure its debt but the negotiations failed due to the imminent maturation of a euro-denominated bond valued at €231mn.
Of this R$65bn, as much as R$13bn is owed to three Brazilian banks (BNDES, Caixa Economic Federal and Banco do Brasil) and as noted by the Financial Times, these credits alone are “more than the total R$11bn debt of OGX, the oil company that collapsed in 2013 in the country’s last high-profile bankruptcy.”
In terms of future options, Oi’s past plans to merge with TIM now seem unlikely and the two viable solutions entail either a debt restructuring process or the total extinction of the company. Oi will need to wait for its request for protection to be approved by a judge and will then have sixty days to present its proposed restructuring plan.
