Aurelius Said to Appeal Ruling Letting Oi Borrow From Dutch Unit

  • Fund trying to block Brazilian phone company from taking loan
  • Capricorn fund holds PTIF bonds valued at 100 million euros

An Aurelius Capital Management LP fund is appealing a court decision that rejected its effort to stop struggling Brazilian telephone company Oi SA from borrowing from its Dutch unit, said a person familiar with the matter.

The Amsterdam judge’s decision this month dealt a blow to the fund, Capricorn Capital Ltd., which had argued that Oi is unable to repay 2.8 billion euros ($3.1 billion) it borrowed from Oi Brasil Holdings Cooperatief UA because of its worsening financial situation. Capricorn said the money mostly came from a loan the Dutch unit took out in June 2015 from another Oi subsidiary, Portugal Telecom International Finance, or PTIF. Capricorn owns PTIF bonds with a face value of more than 100 million euros, according to its lawsuit.

Oi argued that its Dutch unit is free to use borrowed funds to lend to the parent company because individual lenders don’t have the right to question it, a person with knowledge of the matter said last month, asking not to be identified discussing private information.

Bloomberg obtained a copy of the appeal, and a spokesman for Aurelius at Prosek Partners confirmed the contents of the document. He declined to comment further. Oi declined to comment.

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