Oi Executives Say They Won’t Bow to Pressure to Raise Capital

(Bloomberg) -- Oi SA’s top executives have a message for investors and analysts pushing the company to sell more assets or take on more debt: Back off.

The Brazilian phone company -- now in the final stages of a $19 billion debt restructuring -- has various options to raise capital but won’t make any decisions under pressure, Chief Operational Officer Rodrigo Abreu and Chief Executive Officer Eurico Teles said in an interview.

Oi is in the process of selling assets, is benefiting from a 3 billion reais ($720 million) tax credit and is considering issuing as much as 4.5 billion reais in debt, as outlined in its judicial recovery plan, Abreu said.

“There is no fixed path in front of us,” Abreu said. “The execution of this range of options will depend on the order with which we’re able to sell assets.” Abreu declined to say what kind of debt the company might issue or exactly how much it might sell.

Oi sold a building in the Rio de Janeiro neighborhood of Botafogo last week for 120 million reais, Abreu said. He also reaffirmed its goal of selling a 25% stake in Angolan telecom operator Unitel SA by the end of the year -- a deal estimated at about $1 billion -- without elaborating.

Under Scrutiny

The company has been under scrutiny since posting a loss of 1.56 billion reais and burning about 2 billion reais of cash in the second quarter. Reuters and the Valor Economico newspaper reported last month that Oi had put its mobile network up for sale, going beyond the divesting of noncore assets such as towers, call centers and real estate that it had announced in its July strategic plan.

“We need to leave aside speculation,” Abreu said. “We have tools to manage our cash and inject resources into the company.”

While denying a formal process to sell Oi’s mobile business, the fourth largest in Brazil, Abreu welcomed the reported interest in the asset. “Our mobile operation is sustainable and generates value,” he said.

Abreu, a former CEO of Brazil’s Tim Participacoes SA who was a member of Oi’s board for a year, left the board to become operating chief last month. The company’s largest shareholder, GoldenTree Asset Management, had asked for the replacement of Oi’s top managers.

Oi is on the way to successfully concluding its judicial recovery and isn’t worried about any deadline, CEO Teles said.

“We’re focused on the company and not on the judicial process,” Teles said. “We need to fill the technological gap we have in the company and execute our strategic plan.”

To contact the reporter on this story: Fabiola Moura in Sao Paulo at fdemoura@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, John J. Edwards III

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