Oi, described as the largest landline telephone operator in Brazil, has reportedly filed its second request for judicial recovery with the aim of protecting cash resources and avoiding bankruptcy.
On Thursday 2 February Oi and its subsidiaries Portugal Telecom International Finance and Oi Brasil Holdings Cooperatief apparently asked a business court in Rio de Janeiro for "urgent precautionary protection" to suspend some payments.
The order aims to suspend the enforceability of certain obligations and allow the company to continue negotiations with its creditors.
According to Brazilian press reports, the company’s request refers to “the unquestionable success of the first judicial reorganization". This took place in 2016. However, the company also admits that its financial situation has worsened "due to various unpredictable and uncontrollable factors", which are not detailed in the request. Thus it is again resorting to judicial protection.
The company's current debt is said to be 29 billion reais (about US$5.7 billion), of which a payment of 600 million reais is due this Sunday.
As we noted in December, although the obligations related to the original recovery plan were deemed by the Seventh Business Court of Rio de Janeiro to have been met, unpaid creditors will still be able to continue to make claims. Oi faced claims from some 65,000 creditors, and not all cases have been settled to date.
Oi has sold many of its assets, notably its mobile operations, a submarine cable company, a fibre optic company and thousands of fixed telephone towers, to deal with its debts. However, it seems as though it may still have some tricky debt management ahead.