Brazil Court Accepts Telecom Oi Request for Bankruptcy Protection

SÃ O PAULO—A Brazilian court on Wednesday granted bankruptcy protection for troubled telephone company Oi SA in the largest request of its kind in the country's history.

The company now has 60 days to present a recovery plan for creditors.

Oi filed the largest bankruptcy protection request in Brazil's history on June 20, just days after debt restructuring talks with creditors collapsed. The filing by Oi and six subsidiaries lists 65.4 billion reais ($20.19 billion) in debt.

The company's total debt includes 15.4 billion reais in liabilities with regulators and tax authorities.

The rest of Oi's debt, or 50 billions reais, is owed to international bondholders and local banks. The bondholders are owed around 34 billion reais, while the banks, including Banco do Brasil SA, the Brazilian Development Bank and Itaú Unibanco Holdings SA, are owed 16 billion reais.

Since 2009, the company has accumulated a huge amount of debt to complete two mergers, first with Brasil Telecom and later with Portuguese company Portugal Telecom. Those deals failed to generate enough cash flow to fund the company's investment needs.

Oi has low penetration in the mobile phone and broadband markets, the most critical and profitable segments of the telecommunications sector in Brazil, according to analysts.

Write to Rogerio Jelmayer at [e-mail]

(END) Dow Jones Newswires

June 29, 2016 21:05 ET (01:05 GMT)

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