Oct. 29 (Bloomberg) -- Organizacoes Globo, Latin America's largest media group, proposed restructuring $1.5 billion of defaulted debt with cash and new bonds as it trims unprofitable cable and satellite investments to focus on TV production.

Globo Comunicacoes e Participacoes SA, the Brazilian group's debt finance and holding company unit, is ready to pay $200 million to repurchase bonds and will offer new bonds for other debt, the company said in statement. Holders of $157 million of bonds and banks representing $263.5 million in loans agreed to the plan, Globopar, as the unit is known, said.

``This plan, if approved, will allow us to focus on what we do best, focus on the production of top-quality media content,'' said Leonardo Pereira, Globopar's chief financial officer in a phone interview from the Rio de Janeiro-based company's offices. ``If we get approval from creditors we should be able to complete this deal sometime by the middle of next year.''

The Globo group, which borrowed in the late 1990s to fund expansion of its television, cable, printing and Internet businesses, needs to restructure its obligations to reduce debt payments that are limiting its ability to invest in TV production, its main source of revenue, Pereira said.

The Rede Globo TV network's news, sports, variety and dramatic programming regularly draw half or more of viewers in Brazil, a country of 170 million, according to the Ibope public opinion research agency. Its shows reach places as diverse as Amazonian Indian villages, Sao Paulo slums and Mato Grosso soybean farms.

Its programming, particularly telenovelas, or nightly soap operas, are sold around the world and can be seen in countries across Latin America, in Europe and in Asia.

Ad Decline

Grupo Globo is the largest single recipient of national advertising revenue in Brazil, selling time to companies such as Cia. de Bebidas das Americas, a unit of Brussells-based InBev, the world's second-largest brewer and Petroleo Brasileiro SA, the state-controlled oil company.

A decline in advertising revenue during the economic slowdown of 2002 contributed to Globo group company defaults. Subsidiaries such as cable television operator Net Servicos de Comunicacao SA, then known as Globo Cabo, had already been hurt when Brazil devalued its currency, the real, in January 1999, boosting the cost of servicing debt that was about 90 percent in dollars.

The offer today follows efforts by Net Servicos to restructure $410 of defaulted debt. Net Servicos shares, which traded as high as 43.10 reais in February 2000, traded in Sao Paulo at 53 centavos, up 2 centavos, or 3.9 percent, at 2:29 p.m. New York time.

Family

To raise money for debt payments, the company last year sold part of its stake in satellite TV company Sky Brasil Servicos Ltda. to its partner News Corp. and has agreed to sell as much as 60 percent of Net Servicos, Brazil's largest cable TV provider to Telefonos de Mexico SA. The Telmex purchase is part of a plan by Net Servicos to refinance about 1.4 billion reais ($490 million) of defaulted debt.

Under the plan, Globo will pay as much as $200 million in cash for outstanding debt, offering holders of debt guaranteed by TV Globo between 50 cents to 70 cents per dollar of bonds held, the price to be determined by Dutch auction. Globopar will also offer holders of dollar-denominated and real-denominated debt six different bonds maturing in 2011 for other defaulted debt. The company said that about 90 percent of its obligations are in dollars.

Globopar said the plan also calls for merging the holding company with TV Globo, whose cash is used to pay Globopar's debt.

'Better for Everyone'

Organizacoes Globo, the name used for the holdings of Rio de Janeiro's Marinho family, runs the Globo TV network, Latin America's largest and owns radio and TV stations. The family also operates Latin America's largest television production facilities, and publishes several daily newspapers, including O Globo in Rio de Janeiro. It also owns a book-publishing unit and the weekly newsmagazine Epoca.

Because of Brazilian media laws, the newspapers, television stations and radio networks are owned directly by members of the Marinho family. Cash flow from several TV stations were used to guarantee much of the Globpar debt.

``In the end Globo and creditors in the end decided it will probably be better for everyone to accept a debt restructuring than to exercise the guarantees,'' Pereira said.

Under the plan TV Globo, Organizacoes' main source of cash, will merge its operations with Globopar, making the TV operations directly liable for the new debt, Perreira said.

To contact the reporter on this story: Jeb Blount jblount@bloomberg.net

Last Updated: October 29, 2004 14:34 EDT