Oi Said to Raise More Than $3 Billion Needed for Share Offering

Apr 25, 2014 11:01 pm ET

April 26 (Bloomberg) -- Oi SA, Brazil’s biggest phone company, has raised more than the minimum 7 billion reais ($3.12 billion) needed to move ahead with its Portugal Telecom SGPS merger, said two people with direct knowledge of the deal.

Demand for Oi’s stock offering could lead to a price of more than 2 reais a share, the people said, asking not to be identified because the terms aren’t public. The price will be defined on April 28.

Investors are showing interest in the transaction with the shares down 43 percent since the merger was announced on Oct. 2. The 7 billion reais doesn’t include the fund of 2 billion reais that Grupo BTG Pactual SA, the lead underwriter, is raising, and the number would be higher if the demand from smaller retailer investors were included, one of the people said.

Oi has said it plans to sell as many as 5.75 billion shares, with the possibility of an additional offering of 20 percent and an overallotment of 15 percent, according to company filings.

BTG Pactual and 13 other banks involved in the transaction are attempting to attract a target of 8 billion reais to inject capital into the company and help pay off 4.5 billion reais in debt held by its controllers, Telemar Participacoes SA. The full amount raised is expected to reach about 14.1 billion reais, including 5.75 billion reais in assets contributed by Portugal Telecom.

Oi Chief Executive Officer Zeinal Bava is counting on the transaction to help pay off Telemar’s debt so its shareholders, which include the Jereissati and Andrade-Gutierrez families and government pension funds, will relinquish control of the company. That will let Oi revamp its structure so that every shareholder will have an equal vote.

A BTG press official declined to comment on the share offering. Oi’s press office also declined to comment, citing a silent period during the share sale.

Oi preferred shares dropped 4.9 percent to 2.51 reais yesterday in Sao Paulo. Common shares, which carry voting rights, slid 7 percent to 2.53 reais.