Oi (OIBR3): Justice orders the termination of judicial recovery after more than six years; Stocks rose

This Wednesday (14), the Seventh Business Court of the Court of Justice of Rio de Janeiro issued a decision to terminate the judicial recovery process of the telephone operator Oi (OIBR3🇧🇷OIBR4🇧🇷 However, in the post-decision session, on Thursday (15), stocks opened higher: OIBR3, at 10:20 am (Brasilia time), rose 41.18%, to R$0.24, while OIBR4 jumped 31.82. %, at 0.58 BRL. It is worth highlighting the low face value of the asset, which changes in a significant proportion with any change in cents on paper.

According to Judge Fernando Viana, the company complied with all the obligations it had undertaken in the process. The decision, which must be communicated to Anatel and the Public Prosecution Service, must be published within 20 days.

“The most influential and relevant judicial restitution process in the Brazilian judiciary has come to an end, and it is one of the most complex cases in the contemporary legal world,” the judge said in the ruling.

On the Oi side, the offices of Basílio Advogados, Barbosa Müssnich Aragão (BMA), Rosman, Penalva, Souza Leão, Franco and Vale Advogados were involved in the recovery process.

Created to be a national “giant”, Oi filed for judicial recovery in 2016 after accumulating R$65 billion in debt with 55,000 creditors. Since then, tele has been able to agree to a recovery plan, which has subsequently been modified, including further asset sales, discounts on payments to creditors, and extensions of terms.

From “super tele” to the biggest judicial boom in Brazil: what happened to Oi?

This process was scheduled to end in October 2021, but has received approval from creditors to extend it until May 2022 due to its complexity. At the time, the court set the March date, which now ends up not being met as well.

The judicial reorganization was supposed to finish in the first quarter of this year, but ended up being delayed due to questions from creditor banks and competitors Claro, Vivo and TIM to make adjustments after selling the Oi Móvel operation. The court dismissed the questions.

Most recently, Justice agreed to auction a new batch of fixed operation towers, for R$1.697 billion, to Highline. The sale of Oi TV (DTH base and equipment) was approved through direct sales to Sky, who submitted an offer of R$786 million. This sale, however, was not completed.

The Company entered into an expanded agreement with Program Creditors (PAC) to mediate debts up to R$50,000. According to the judge, 85% of creditors fall into this category. The second program was completed with 7907 agreements and R$61.475 million mediated. This made it possible to drop “thousands of lawsuits”. There was a third program, of more than 68,000 procedural incidents, which resulted in at least 20,790 settlements.

With the end of the judicial reorganization, and the formation of its billionaire debts, today the national telecom giant is entering its new phase, focusing on modern digital services, from the perspective of being an important generator of cash and jobs, for related social measures – exactly the opposite situation when the recovery began, when the debt accumulated over The level of vertigo is 65 billion riyals,” Viana wrote in the decision.

With regard to the qualifications and objections awaiting judgment, according to the judge, the closure of the judicial reorganization does not mean any harm to the creditor whose case has not yet been decided, as long as the normal procedures will be carried out by this court regardless of this decision.

He concluded that “what is not permissible, on pain of continuing the process, is that the judicial recovery continues until all appeals and credit qualifications have been adjudicated, the distribution of which in the current recovery has exceeded the home of 64,000 measures.”

History and challenges ahead

The emergence of Oi is one of the results of Telebrás’ privatization policy, in 1998, followed by the consolidation of private companies that began to hold the fixed-line franchise in the following years. The movement was boosted by funds from the National Bank for Economic and Social Development (BNDES) as an incentive to create a national superpower.

However, this policy turned out to be disastrous after a series of acquisitions carried the billionaire’s liabilities to Oi, as happened in the merger of Brasil Telecom and Portugal Telecom. Tele also suffered from a loss of revenue due to lower fixed-line usage and the need to invest in shaping mobile networks — which it ended up selling this year to rivals TIM, Vivo and Claro for R$16.5 billion. Then, the companies demanded a portion of the money I had paid Oi.

One of the biggest challenges for Oi is the legal discussion with the National Telecommunications Agency (Anatel) to review its fixed-line maintenance obligations. The company is also negotiating with creditors to re-arrange the payment of liabilities for the remaining total debt within the range of R$22 billion.

Judge Fernando Viana noted that market solutions for OI treatment extend beyond the period of judicial oversight. “The purpose of the recovery is not to check whether the debtor will fulfill all the obligations contracted in the plan or whether he will be able to escape from the crisis affecting him,” he muses. “The concept of this procedure is to facilitate transparent and balanced negotiations between the debtor and its creditors, an objective that has been successfully achieved in this process.”

Viana testified that Oye had so far fulfilled all the obligations laid out in her judicial reorganization plan – which was also attested by the Public Prosecutor’s Office and the judicial officer of the operation, Advogados’ father.

(with Estadao content)

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