An Oi public telephone in Recife
An Oi public telephone in Recife, Brazil, in November. Image credit: Diego Herculano/NURPHOTO VIA ZUMA PRESS

Egyptian billionaire Naguib Sawiris is ready to invest $250 million to help steer troubled Brazilian telecom company Oi SA out of bankruptcy proceedings, according to a recovery plan his investor group is presenting to the company.

The Sawiris Group, which controls Egyptian phone company Orascom Telecom Media & Technology, said it put the proposal together with a group of bondholders and with the help of investment bank Moelis. The plan is to inject $1.25 billion into the Brazilian company, with $250 million coming from Mr. Sawiris and the remainder from a public Oi share sale.

Oi filed for bankruptcy protection in June with $20 billion in debt, making it the largest corporate default in Latin American history, according to Moody’s.

Egyptian entrepreneur Naguib O. Sawiris, Chairman and Chief Executive Officer of Orascom Telecom Holding.
Egyptian entrepreneur Naguib O. Sawiris, Chairman and Chief Executive Officer of Orascom Telecom Holding. Image credit: AFP PHOTO/MAHMUD TURKIA

If accepted, the Oi investment would be the Egyptian billionaire’s first venture into the Brazilian telecoms market.

Oi has “huge potential,” said Karim Nasr, a Sawiris Group representative who is overseeing Mr. Sawiris’s plan to invest in Oi. The Brazilian market “has a lot of interesting prospects and we would like to participate.”

Shareholders and bondholders have been unable to agree on a recovery plan since September, when bondholders rejected a proposal from Oi that would have cost international creditors 70% of their investment.

But some Oi shareholders said Friday they aren’t interested in Mr. Sawiris’s proposal. A different group of bondholders, led by advisory firm G5 Evercore, recently broke away from the Moelis-led consortium and said it wants to work with Oi on a viable plan.

Oi, Brazil’s fourth-largest telecoms company by market share, was once seen as a potential globally competitive company, but two ambitious mergers loaded the company with debt without generating the cash flow needed to compete, even domestically. Mr. Nasr said it would take five years to get the company back to normal growth.

SOURCEThe Wall Street Journal
Carlos Monteiro is a Brazilian citizen, graduated in Business Administration by the Catholic University of São Paulo. He lives in Odense, Denmark with his Danish Wife, Cathrine, and their half Danish /Brazilian daughter Ines Marie. You are very welcome to be in contact him at any time.
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