Oi to Sell Africatel Stake Amid Investor Disagreement

Oi SA, Brazil’s fourth-biggest wireless carrier, plans to sell its stake in Africatel Holdings BV amid a dispute with the business’s minority shareholder.

Oi, which holds 75 percent of the unit, will lead the sale process, the Rio De Janeiro-based company said today. It will attempt to coordinate the transaction with Samba Luxco S.a.r.l, an affiliate of Helios Investors LP that holds the remaining 25 percent, according to the statement.

A sale would produce cash to help Oi contend with its debt load and make potential acquisitions. The company ended last quarter with net debt of almost $20 billion, or more than four times its earnings before interest, tax, depreciation and amortization -- making it Brazil’s most indebted phone company.

Oi values the entire Africatel business at about 5 billion reais ($2.1 billion), said a person familiar with the matter, who asked not to be identified because the information is private. Africatel holds stakes in several African phone companies, including Angola’s largest wireless carrier Unitel SA. Oi had been in talks to sell its stake Unitel, people familiar with the plans said last month.

Oi shares jumped 2.4 percent to 1.68 reais in Sao Paulo, the highest closing price since July 16.

The Brazilian company acquired Africatel this year as one of the steps in its merger with Portugal Telecom SGPS SA. The deal has caused a conflict between Oi and Samba Luxco, which alleges that the transfer of the asset from Portugal Telecom to Oi has triggered a put option in the Africatel shareholder agreement -- meaning Oi would be required to acquire Samba Luxco’s stake in Africatel.

‘Coordinated Manner’

Oi said Santa Luxco informed it yesterday of plans to exercise the option to sell Africatel shares. The Brazilian carrier is challenging Samba Luxco’s plan, saying no event has occurred that would give Samba Luxco the right to exercise the option.

“Oi believes that it is in the interest of both shareholders of Africatel to maximize the value of their investments that such sale is executed in a coordinated manner,” Oi said.

A press official for Helios, Samba Luxco’s owner, had no immediate comment.

In Brazil, Oi is planning to boost its position by pursuing a stake in Telecom Italia SpA’s local unit. The Italian carrier in turn is weighing a takeover of Oi, people familiar with the discussions said this week. Oi is open to any transaction that reduces the number of major wireless carriers in Brazil to three from four, the person familiar with the matter said today.

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