Brookfield Said to Join Oi Bondholders Advised by Moelis

  • Canadian firm said to be in Moelis advised steering committee
  • New plan to restructure phone company is being prepared

Brookfield Asset Management Inc., Canada’s largest alternative asset manager, is joining a group of Oi SA bondholders being advised by Moelis & Co. amid the Brazilian phone giant’s restructuring, according to people with knowledge of the matter.

Brookfield joined the steering committee of the group last week, the people said, asking not to be identified because the decision isn’t public. The group, with backing from Egyptian billionaire Naguib Sawiris, presented a plan in December to restructure Oi, which filed for protection against creditors in Rio de Janeiro in June to restructure its $19 billion in debt. The proposal is now being revised based on suggestions received from other creditors, the group said on Tuesday.

Moelis and Brookfield declined to comment.

The addition of Brookfield strengthens the hand of the Moelis-advised group, which also has the support of China Development Bank and export credit agencies advised by FTI Consulting Inc. A rival group of bondholders advised by G5 Evercore, with Aurelius Capital Management LP among its members, is pursuing a legal strategy and won a victory in the Netherlands last month when two Dutch units of Oi were declared bankrupt. The Dutch decision has no effect on Oi’s day-to-day operations, the phone company has said.

The revised plan by the Moelis-advised bondholder group will retain the main points of the proposal presented in December, including a debt-to-equity swap, a capital injection, strong investments in the coming years and a reduction of debt, one of the people said. Besides incorporating suggestions from creditors outside the group, the plan will be adjusted to reflect new rules the government is preparing to allow intervention in regulated companies like Oi, the person said.

Other important Oi creditors include Brazilian telecom regulator Anatel; Brazilian development bank BNDES; government-owned Banco do Brasil SA and Caixa Economica Federal; and Itau Unibanco Holding SA.

Oi shares fell 2.4 percent to 3.32 reais, at 2:40 p.m. in Sao Paulo.

Brookfield has been a major investor in Latin America, particularly in Brazil in the wake of the corruption scandal there. Last month, one of its units concluded the acquisition of Brazilian water and sewage company Odebrecht Ambiental in a deal valued at 2.5 billion reais ($790 million). Also in April, it led another group that acquired a natural gas distribution network from Petroleo Brasileiro SA for $5.2 billion.

Brookfield is in talks to buy Odebrecht’s remaining stake in a Peruvian toll road concession as the troubled Brazilian builder moves to exit the South American country, people with knowledge of the matter said in March.

Other hedge funds interested in investing in Oi include Elliott Management Corp. and Cerberus Capital Management LP, which have been in talks with Oi separately to discuss options. Oi’s second-largest shareholder, Societe Mondiale Fundo de Investimento em Acoes, has been seeking potential partners to invest $2 billion in the ailing Brazilian phone company, a person close to the situation said last month.

While Oi had previously resisted proposals to inject new capital in the business, Chief Executive Officer Marco Schroeder expressed willingness last month to accept new investments in the company, drawing praise from the Moelis-advised group of bondholders.

    Before it's here, it's on the Bloomberg Terminal.