- Magnate seeks to oust directors affiliated with holder Pharol
- Tanure pursues shakeup amid $20 billion bankruptcy case
Brazilian magnate Nelson Tanure called for investors to vote Sept. 8 on whether to replace part of Oi SA’s board with his nominees and consider legal action against its top shareholder, escalating a fight for control of the beleaguered phone carrier.
Through his Societe Mondiale Fundo de Investimento em Acoes, Tanure nominated a slate of eight directors to replace six board members and two others who recently left, according to filings published in local newspapers Tuesday. He seeks to oust board members affiliated with Pharol SGPS SA, Oi’s largest shareholder, which he has accused of overburdening the phone company with debt.
Oi said it wouldn’t comment on the filings. Pharol said calling the shareholders meeting is a “clear attempt to disrupt” the bankruptcy recovery process, according to an e-mailed statement. “The recent proliferation of administrative and judicial maneuvers, promoted by a specific group of shareholders, brings instability to the company right when it is building its recovery plan.”
Oi preferred shares fell less than 1 percent to 2.32 reais in Sao Paulo trading.
Tanure is one of several parties seeking different ways to sway the outcome of the bankruptcy proceedings of Oi, which is struggling under about $20 billion in debt. He called for two meetings on Sept. 8 -- one to replace the board members and a separate one to annul a shareholder meeting last year that cemented terms of a transaction between Oi and Pharol, which was then known as Portugal Telecom. Investors would also consider in the second meeting whether to sue Pharol or seek arbitration, among other measures.
Tanure is pressing ahead by scheduling the shareholder meetings under Brazilian corporate law, which lets holders of a stake of at least 5 percent call for a vote. He had originally asked Oi to call the meeting, but the phone carrier referred the matter to a bankruptcy judge and said it would seek legal advice before proceeding.
Since Oi and Pharol own minority stakes in each other and share several board members, the companies are exerting control over each other and not giving voice to other shareholders, Tanure has said. The fund holds a stake of 6.2 percent in Oi, while Pharol has about 22 percent.
Pharol has disputed Tanure’s interpretation of the law and said its board members always act in the best interest of the company. Brazilian law only prohibits board members from voting when they have personal conflicts of interest, not when they may be representing the interests of a shareholder, Pharol said last month in a statement. The Portuguese company noted its board members were elected last year with more than 88 percent of the vote. The directors are committed to Oi’s economic and financial recovery, Pharol said.
Tanure, who has made investments in oil, gas and telecommunications, wants to give Oi a fresh start by getting rid of Pharol’s influence, two people familiar with the matter said last month. His next steps would be proposing a series of more than 10 spinoffs of digital services, such as mobile-payment provider Oi Paggo and pay-TV operator Oi TV, to persuade creditors to renegotiate debt, the people said.
Ownership of the debt-free spinoffs -- known as isolated productive units under Brazilian bankruptcy law -- would be split between the company and creditors, with control remaining with Oi, the people said.
Tanure would also negotiate how to replace the payment of at least 10 billion reais ($3.15 billion) in regulatory fines with investments in Oi’s network, while fighting for regulatory changes to benefit the company, they said.