Oi (OIBR3) completes sale of fiber unit slice to BTG after renegotiations; adjustment raises the sold share to 65.3%

The operator Oi (OIBR3;OIBR4), undergoing judicial reorganization, informed that the closing of the partial sale of the fiber optic unit InfraCo – or V.tal – to the funds of BTG Pactual (BPAC11), together with Globenet Cabos Submarinos, was concluded. The new investors thus take control of the operation.

The proposal was approved as the winner by the Court of the 7th Business Court of Rio de Janeiro in a competitive judicial procedure carried out in accordance with the amendment to the judicial reorganization plan, approved by the creditors and approved by that court on October 5, 2020.

The value of the operation, considering the sum of the Primary installment; of the Secondary Installment; Additional Primary Installments; and the fair value of the Investor Merger, totaling R$12.923 billion.

With the contract renegotiations, new investors take over 51% of the subsidiary, so that, after implementing some steps, they will hold, before any price adjustments, shares representing 57.9% of the voting and total share capital of V.tal .

Upon completion of other requirements, as a result of further negotiations, the parties agreed to make price adjustments limited to 7.38% of the total shares representing the total and voting share capital of V.tal – which would lead BTG to increase its share to 65.28%.

“The closing of the transaction took place after extensive negotiations between the parties on the final terms and conditions of the Transaction, which were reflected in the Closing Term entered into on this date. In this Term, the parties agreed to adjust the FTTH capacity provision contract to reflect more favorable commercial conditions for Oi in the monthly price per HC and in the applicable readjustment index, making the services more competitive, on the other hand”, highlighted the company in the statement. communicated.

Oi had already announced the possibility of adjustments to the transaction. In an October statement last year, Oi said that the changes could occur “based on certain performance metrics of SPE InfraCo, financial and operational, as per its business plan” to be agreed between the telecommunication group and BTG.

The sale of a slice in the optical fiber unit is part of Oi’s judicial recovery plan.

For the team at Genial Investimentos, the closing of the operation “makes room for Oi to be able to settle part of its debts”. “With the latest news and this closing, it is only a matter of time for the long awaited exit from judicial recovery,” he said in a note to clients.

Operation details

The closing of the transaction, in the form of the proposal already disclosed on October 1, 2021, includes, on the Closing date, the contribution of the following installments:

(i) Primary Installment: on this date, the Investor subscribed and paid in new common shares representing the voting capital of V.tal, through a cash contribution of R$ 1,776,100,067.34;

(ii) Secondary Installment: on this date, the Investor acquired common shares held by Oi representing the voting capital stock of V.tal, upon payment of a cash amount of R$ 8,010,200,000.01, to be paid by the Investor in up to 3 (three) installments, of which R$ 4,261,708,781.14 will be paid on this date and the remainder to be paid by 2023.

Therefore, on this date, immediately after the closing, the Investor held 51% of the shares representing the total capital stock of V.tal, and Oi, 49% of the same shares.

In a second stage, within 90 days after the closing date, the following additional contributions will be made to V.tal by the Investor, as provided for in the Investment Agreement:

(iii) Additional Primary Installment – ​​I: immediately before the Merger of the Investor, subscription and payment by the Investor of new common shares, representing the voting capital stock of V.tal, by means of a cash contribution of R$ 1,258,238,223, 33;

(iv) Merger of the Investor: immediately after the Capital Increase – Additional Primary Parcel I, merger of the Investor by V.tal, with the issuance of new common shares by V.tal, representing the voting capital stock of V.tal. The Investor’s fair value considered for the purposes of the Merger was R$ 1,518,800,000.00, attested by economic and financial appraisal reports prepared by independent appraisal companies hired by the Investor and by Oi, pursuant to the Public Notice, pursuant to Clause 3.9.4.2 of the Amendment to the PRJ; and

(v) Additional Primary Installment – ​​II: immediately after the Merger of the Investor, subscription and payment by the Investor of new common shares, representing the voting capital stock of V.tal, by means of a cash contribution of R$ 360,000,000, 00

In addition to the Investor’s contributions to V.tal, and also up to 90 days after the closing date, the company will receive the following payment:

(vi) Telemar Dividend Payment – ​​V.tal will pay the Telemar Dividend Credits, in the amount corresponding to R$ 2,721,135,396.03, in today’s values, restated until the effective payment date.

As a result of the implementation of the steps, the Investor’s Shareholders will hold, before any price adjustments, shares representing 57.9% of the voting and total capital stock of V.tal, with the Company and its affiliates remaining with the remaining interest in the voting and total capital.

The Agreement and its related instruments also contemplate the execution between V.tal and Oi and/or its affiliates of contracts for the provision of capacity and other operational contracts, as well as a shareholders’ agreement of V.tal, between the Investor and Hey.

The parties, still in the aforementioned Closing Instrument, carried out the necessary verifications and calculations on each of the financial and operational components provided for in the Agreement (such as indebtedness, working capital, number of HPs and HCs delivered, OPEX and CAPEX carried out, among others ) for the purpose of determining the applicable price adjustment, to be applied through the exercise of the subscription bonus by the Investor, pursuant to Clause 6 of the Agreement. As a result of these negotiations, the parties agreed to make price adjustments limited to 7.38% of the total shares representing the total and voting capital stock of V.tal, to be carried out in favor of the Investor’s interest (“Stake Adjustment” ), as described below.

As a result of said negotiations, the parties agreed that the Interest Adjustment will be implemented as follows: (i) within 30 days from this date, an adjustment of interest of 3.65% of the total and voting capital of V.tal ; and (ii) on July 31, 2023, an adjustment of interest of up to 3.73% of the total and voting capital of V.tal, due to the application and determination of the most favorable conditions for Oi negotiated in the FTTH contract, as mentioned above, during this period, which will result, immediately after the completion of the steps described above, in an Investor interest of up to 65.27% in V.tal.

In the Closing Agreement, the maintenance of certain assets (equipment of each client) at Oi was also detailed, due to the optimization of the operating model with V.tal, with the elimination of future participation adjustments related to these assets previously foreseen. in the contract.

In addition to adjustments made on the Closing Date, within 90 days of the Closing Date of the Transaction, additional cash adjustments will also be made, as provided for in Clause 10.9 of the Investment Agreement, related to the accounting of V.tal’s operations in the model “locked box” (cash results attributed to the Investor as of the beginning of fiscal year 2022), to be carried out via Oi’s cash contribution to V.Tal.

The value of the Transaction, considering the sum of the Primary Installment; of the Secondary Installment; Additional Primary Installments; and the fair value of the Merger of the Investor, totaling R$ 12,923,338,290.68.

Oi also informs that, with the conclusion of the Transaction, all the commitments of the debentures convertible into preferred shares, of the type with real guarantee, for private placement, of the 1st issue of V.tal (“Debentures” ), in the total updated amount of R$ 3,526,285,350.00, the payment of which was made with funds from the Secondary Installment, which were contributed by Oi in V.tal, and used for the repurchase of V.tal’s preferred shares that passed to be held by the Debenture Holders after the conversion of the debentures into V.tal. shares, in line with the provisions of the Debenture Deed of Issue.

“The conclusion of the Transaction, on this date, represents the implementation of the last critical stage of the Judicial Recovery Plan and the Strategic Transformation Plan of Oi, aiming to ensure the Company greater financial flexibility and efficiency and long-term sustainability, with its repositioning in the market, consolidating itself as one of the largest providers of high-speed internet services and solutions for companies”, pointed out the company.

(with Reuters)

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