Oi Shareholder Calls for Vote on Action Against CEO, CFO
(Bloomberg) -- Oi SA’s largest equity investor called for a shareholders meeting to decide whether to take legal action against the chief executive officer and the chief financial officer and to scrutinize parts of the Brazilian phone company’s restructuring plan.
CEO Eurico Teles and CFO Carlos Brandao exceeded their authority by negotiating the plan with creditors without the board’s approval, and investors should decide whether to file a civil liability claim against them, Pharol SGPS SA said in a letter published Friday in a filing.
The bankruptcy court overseeing Oi’s restructuring gave Teles full authority to negotiate with creditors without requiring the board’s approval, but that hasn’t stopped the shareholders from threatening legal action to keep the deal from going forward.
The plan’s installment of new board members and a capital increase also require shareholders’ approval, said Pharol, a publicly traded holding company based in Lisbon.
Oi rebuffed the call, saying in a statement: “There’s no support for any allegation of supposed illegal behavior or violations of corporate bylaws by an Oi executive. The plan presented and approved -- by an ample majority of one class of creditors and practically unanimously by the three other classes -- adhered to the highest corporate governance standards and established legal precepts.”
Teles was complying with a judge’s decision to present a plan for creditors’ approval, regardless of the board’s input on it, Oi said in emailed comment.
Along with another major investor, Societe Mondiale, Pharol has agitated against the restructuring plan, which would dilute the holdings of shareholders and hand control of the company to creditors. The bankruptcy court overseeing Oi’s restructuring gave Teles full authority to negotiate with creditors without requiring the board’s approval, but that hasn’t stopped the shareholders from threatening legal action to keep the deal from going forward.
Teles was named CEO in November after his predecessor resigned due to conflicts with the board. Controlled by Oi’s shareholders, the board was resisting a plan to cope with the company’s $19 billion debt load that involved a capital dilution.
When the judge appointed him as personally responsible for negotiating and presenting a plan to creditors, Teles was seen as the consensus pick among the shareholders. The CEO lost support after presenting the final plan, approved by creditors, which included a dilution of as much as 90 percent to current shareholders and called for a transitional board, which ultimately will limit the power of Oi’s biggest shareholders on decisions.
NOTE: Bratel Calls for Shareholders Meeting, Suggests Governance Changes
(An earlier version of this article corrected the spelling of the CFO’s name in the second headline.)
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