Aurelius helps form dissident Brazil's Oi bondholders group

Reuters News
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Posted: Nov 14, 2016 9:25 AM

By Ana Mano

SAO PAULO (Reuters) - Aurelius Capital Management, the New York-based investment firm, has helped form a second group of bondholders in Oi SA <OIBR4.SA> to negotiate with bankrupt Brazilian phone carrier, a source with direct knowledge of the matter told Reuters on Monday.

The group will also soon announce a financial adviser to handle negotiations with the debt-laden carrier, which filed in June for Brazil's largest-ever bankruptcy, to restructure about 65.4 billion reais ($19 billion) in bank, bond and regulatory liabilities.

New York-based Houlihan Lokey is one of the firms vying for the role of financial adviser to the group, but no decision has been made, said the source, who asked not to be named because the strategy is not yet public.

Neither Aurelius nor Houlihan Lokey immediately responded to requests for comment.

The dissident bondholder group said last week that investors representing $1.5 billion of the face amount of Oi bonds will negotiate with the company "to construct a viable operational and reorganization plan."

The new group consists of several investment firms, most of them owning bonds issued by Oi's two Netherlands-based finance subsidiaries, Portugal Telecom International Finance and Oi Brasil Holdings Cooperatif UA

"The group is still forming and it is early to say whether Aurelius will be its leader," the source said, adding that investors with different backgrounds and ideas were taking part in the initiative.

The first organized bondholder group to attempt to negotiate collectively with the carrier is being advised by New York-based Moelis & Co, which says it represents bondholders owning about $4.5 billion of face amount.

Meanwhile Egyptian billionaire Naguib Sawiris and the Moelis-led Oi creditors last week renewed their ties and are working on an alternative reorganization plan that could be ready within 30 days.

The Moelis-led group rejected Oi's original reorganization plan presented on Sept. 5 that would impose a 70 percent haircut on unsecured claims including on Oi's bond debt.

(Editing by Jeffrey Benkoe)