Oi $20 billion restructuring
Davis Polk is advising a major creditor and backstop party in the $20 billion restructuring of Brazilian telecommunications provider Oi S.A. Oi’s Recuperação Judicial (a proceeding under Brazil’s bankruptcy law) is the largest court-supervised restructuring ever to take place in Latin America. In addition to the proceedings in Brazil, Oi is also subject to chapter 15 cases in the United States and ancillary proceedings in other foreign jurisdictions.
On February 5, 2018, the court in Rio de Janeiro that oversees Oi’s bankruptcy issued a decision approving the company’s judicial restructuring plan and ratifying a creditor vote in favor of the plan that took place at a general meeting in December 2017. When consummated, the restructuring plan will provide Oi with a deleveraged balance sheet, new working capital and a path to emergence from more than 18 months of bankruptcy and related litigation with its creditors. Among other things, the restructuring plan calls for Oi to raise R$4 billion (approximately $1.2 billion) through an equity rights offering that will be backstopped by certain Oi bondholders pursuant to a subscription and commitment agreement.
Approval of Oi’s restructuring plan follows several months of negotiations, throughout which Davis Polk worked closely on behalf of its client with Brazilian co-counsel Stocche Forbes Advogados, as well as with Oi’s management, advisers and other stakeholders, to develop novel transaction structures and negotiate terms of Oi’s post-restructuring debt and equity in an effort to satisfy multi-jurisdictional legal and regulatory requirements and the commercial interests of Oi’s bondholders and other creditors. As part of this effort, Davis Polk was able to bring to bear both its considerable expertise in fulcrum bondholder representations, cross-border restructurings and Latin American corporate and capital markets transactions.
Approval of Oi’s restructuring plan remains subject to potential appeals and motions for clarification and the process of implementing the plan is ongoing.
Oi is an integrated telecommunications provider, offering, among other things, mobile and fixed line telephone access, broadband and television services throughout Brazil. Across these platforms, Oi has more than 63 million customers and more than 143,000 direct and indirect employees in Brazil.
The Davis Polk restructuring team includes partner Timothy Graulich, counsel Veerle Roovers and associates Aryeh Ethan Falk, David Schiff, Sarah E. Levin and Erin Walsh. The corporate team includes partners Manuel Garciadiaz and Stephen Salmon and associate Bryan M. Quinn. The tax team includes partner Kathleen L. Ferrell. Members of the Davis Polk team are based in the New York, Northern California, London and São Paulo offices.