Boston, MA 04/02/2014 (wallstreetpr) – Citigroup Inc. (NYSE:C), ItauUnibanco Holding SA (ADR) (NYSE:ITUB) and BancoBradesco SA are proposing an exit from a consortium of 14 underwriters who are to underwrite 6 billion reais ($2.65 billion) in new shares as part of Oi SA (ADR) (NYSE:OIBR)’s capital enhancement plan
The firms, including Goldman Sachs Group Inc (NYSE:GS), may withdraw their commitment due to changes in terms of the transactions sought by Brazil’s securities market regulator CVM, has changed the terms of the deal for the issue to be considered as “fully underwritten”.
This comes despite more than half of the original 14 participating banks agreeing to the new terms, and that Grupo BTG Pactual, acting as the lead underwriter, is engaging in discussion to other banks following the CVM request.
The agreementis part of a 14.1 billion-reais recapitalization deal, a necessary condition for Oi’s planned merger with Portugal Telecom. Oi SA (ADR) (NYSE:OIBR), which is Brazil’s largest fixed phone company, hasn’t been notified of any change in the banks’ commitment to the deal.
Best efforts basis
The banks referred to previous agreement under which the issue would be considered as fully underwritten where the firms would only step in to buy shares of investors who placed orders between 1 and 1.3 times the offering size, as per to the prospectus.
The Comissão de ValoresMobiliários in its disclosures to investors, said in an e-mailed response to questions that unless the underwriters decide to buy any remaining shares for the offer to be the action would be considered as “best efforts” offer vis a vis “fully underwritten” if all unsold shares were to be bought by the banks.
Trans-Atlantic carrier
Oi SA (ADR) (NYSE:OIBR) agreed to the deal in October 2012, with aspirations of creating a trans-Atlantic carrier with almost USD 17 billion in revenue and over 100 million subscribers. The merger if it goes through is projected to result in 5.5 billion reais via cost synergies, and reestablishing the company in Brazil, which with approximately 270 million subscribers is the world’s fifth-biggest cellular market.
