| BASIS OF PRESENTATION | 1. BASIS OF
PRESENTATION Oi S.A. - Under Judicial Reorganization –
Debtor-in-Possession The Company is headquartered in Brazil, in the city
of Rio de Janeiro, at Rua do Lavradio, 71 – 2º
andar. The Company also holds: (i) through its
wholly-owned subsidiary Telemar Norte Leste S.A. - Under Judicial
Reorganization – Debtor-in-Possession Debtor-in-Possession The local and nationwide STFC long-distance
concession agreements entered into by the Company and its
subsidiary Telemar with ANATEL are effective until
December 31, 2025. These concession agreements provide for
reviews on a five-year basis and in general have a higher degree of
intervention in the management of the business than the licenses to
provide private services, and also include several consumer
protection provisions, as perceived by the regulator. On
December 30, 2015, ANATEL announced that the review to be
implemented by the end of 2015 had been postponed to April 30,
2016. Subsequently, On April 29, 2016, ANATEL decided, under a
Resolution Circular Letter, to postpone until December 31,
2016 the execution of the revised agreements. On
December 30, 2016 and under a Resolution Circular Letter,
ANATEL postponed again the execution of the new concession
agreements up to June 30, 2017. On June 29, 2017, ANATEL
informed, in an official letter, that it would no longer make any
further amendments to the concession agreements at this instance.
Note that until the end of the concession agreement on
December 31, 2025 there would still be a period for revision,
on December 31, 2020. It is worth noting that Congress Bill
79/2016 provides for a special amendment of concession agreements
to adjust them to the possibility of migrating from a public
utility regime to an STFC service provision under a private law
regime. Thus, if this bill is passed into law, the concession
agreement is subject to amendment in any date other than
December 31, 2020. Throughout the years, ANATEL initiated some
procedures aiming at monitoring the Company’s financial
situation, as well as to assess the Company’s ability to
discharge its obligations arising from the terms of the concession
agreements. In light of the approval of the Judicial Reorganization
Plan by the creditors and its subsequent ratification by the
competent court ANATEL started to monitor the Oi Group
Companies’ operating and financial positions based on the
effectiveness of said Judicial Reorganization Plan (JRP).
In Africa, the Company provides fixed and mobile
telecommunications services indirectly through Africatel Holding BV
(“Africatel”). The Company provides services in
Mozambique, and São Tomé, among other countries, notably
through its subsidiaries Listas Telefónicas de Moçambique
(“LTM”) and CST – Companhia Santomense de
Telecomunicações, SARL (“CST”). Additionally,
Africatel holds an indirect 25% stake in Unitel S.A.
(“Unitel”) and a 40% stake in Cabo Verde Telecom, S.A.
(“CVT”), which provides telecommunications services in
Angola and Cape Verde. In Asia, the Company provides fixed and mobile
telecommunications services basically through its subsidiary Timor
Telecom. The Company is registered with the Brazilian
Securities and Exchange Commission (“CVM”) and the U.S.
Securities and Exchange Commission (“SEC”). Its shares
are traded on B3 S.A. – Brasil, Stock Exchange, OTC, and its
American Depositary Receipts (“ADRs”) representing Oi
common shares and preferred shares traded on the New York Stock
Exchange (“NYSE”).
JUDICIAL REORGANIZATION On June 20, 2016, Oi, together with its direct
and indirect wholly owned subsidiaries Oi Móvel, Telemar,
Copart 4 Participações S.A. – Under Judicial
Reorganization - Debtor-in-Possession Debtor-in-Possession Debtor-in-Possession Reorganization—Debtor-in-Possession As broadly disclosed to the market, the Company had
been taking actions and conducting studies, together with its
financial and legal advisors to optimize its liquidity and debt
profile. The Company, after considering the challenges arising from
its economical and financial situation and in light of the maturity
schedule of its financial debts, threats to cash flows represented
by imminent block or pledge of amounts in lawsuits, and in light of
the urgency to adopt protection measures of the Oi Companies,
concluded that the request for judicial reorganization was the most
appropriate course of action at that time to (i) preserve the
continuity of its offering of quality services to its customers,
within the rules and commitments undertaken with the Brazilian
National Telecommunications Agency (ANATEL), (ii) preserve the
value of the Oi Companies, (iii) maintain the continuity of
operations and corporate activities in an organized manner, thus
protecting the interests of the Oi Companies, its customers,
shareholders and other stakeholders, and (iv) protect the Oi
Companies’ cash and cash equivalents. The filing of the judicial reorganization was
another step towards the Company’s financial restructuring,
who continues working to secure new customers while maintaining its
service and product sales to all market segments, in all of its
distribution and customer service channels. The installation,
maintenance and repair activities also continue to be performed on
a timely basis by the Oi Companies and their subsidiaries. All of
Company’s workforce has been maintaining the work as usual,
including sales, operating and administrative activities. Oi keeps
focusing on its investments in structuring projects aimed at
promoting the improvement of service quality to continue to
bringing technological advances, high service standards, and
innovation to its customers.
On June 22, 2016, the United States Bankruptcy
Court for the Southern District of New York (“U.S. Bankruptcy
Court”) entered an order granting the provisional relief
requested by the Company, Telemar, Oi Holanda and Oi Móvel
(all four collectively referred to as “Debtors”) in
their United States bankruptcy code Chapter 15 cases that were
filed on June 21, 2016. The Provisional Relief prevents creditors from
initiating actions against the Debtors or their property located
within the territorial jurisdiction of the United States and
parties from terminating their existing U.S. contracts with the
Debtors. On June 23, 2016, the High Court of Justice of
England and Wales issued orders recognizing the judicial
reorganization request in respect of the Company, Telemar and Oi
Móvel filed in Brazil pursuant to Law 11101/2005, as a foreign
main proceeding in accordance with the United Nations Commission on
International Trade Law (UNCITRAL) Model Law on Cross-Border
Insolvency, as set out in Schedule 1 to the Cross-Border Insolvency
Regulations 2006 (S.I. 2006 No. 1030) (“Recognition
Orders”). The Recognition Orders establish that the
commencement or continuation of proceedings (including enforcement
actions) in England and Wales relating to the Company’s,
Telemar’s and Oi Móvel’s assets, rights,
obligations or liabilities are stayed from June 23, 2016. On June 29, 2016, the Judge of the
7 th The decision granting the processing of the
judicial reorganization of the Oi Companies determined that all the
procedural time limits are counted in business days. To this
regard, even though the decision has determined that the Judicial
Reorganization Plan (“JRP” or “Plan”) be
filed within 60 business days, the Public Prosecution Service filed
an interlocutory appeal requesting that this time limit be counted
in calendar days. In light of the interlocutory appeal filed by the
Public Prosecution Service, the Judicial Reorganization Court
revised its decision, establishing that the JRP be filed within 60
calendar days, counted from the issuance of the decision granting
the processing of the judicial reorganization. On July 21, 2016, the U.S. Bankruptcy Court
held a hearing to judge the Debtors’ requests and since no
objection to the recognition was filed, the U.S. Bankruptcy Court
recognized the judicial reorganization as a main foreign proceeding
with regard to each of the Debtors. As a result of this
recognition, a stay was automatically applied, preventing the
filing, in the United States, of any actions against the Debtors or
their properties located within the territorial jurisdiction of the
United States and parties from terminating their existing U.S.
contracts with the Debtors. On July 22, 2016, the judicial reorganization
request was ratified by the shareholders at the Company’s
Extraordinary Shareholders’ Meeting.
The shareholders also authorized the
Company’s management to take all the actions and practice all
the acts necessary with regard to the judicial reorganization of
the Oi Companies and ratified all the actions taken up to that
date. On July 22, 2016, the Judicial Reorganization
Court appointed PricewaterhouseCoopers Assessoria Empresarial Ltda.
as the court-appointed financial administrator, and the law firm
Arnoldo Wald to act as the court-appointed legal administrator
(collectively, “Judicial Administrator”) of the Oi
Companies. Considering that the Judicial Reorganization Court
changed the way the deadline to file the plan is counted, as
referred to above, on September 5, 2016 the Oi Companies filed
the JRP, which establishes the terms and conditions for the
restructuring of the Oi Companies’ debt, and the main actions
that could be adopted to overcome the current financial situation
of the Oi Companies and their continuity as going concerns,
including by (i) restructuring and balancing their
liabilities; (ii) prospecting and adopting actions during the
judicial reorganization aiming to obtain new funds; and
(iii) potential sale of capital assets. The first list of creditors submitted by the Oi
Companies was published on September 20, 2016 (“First
List of Creditors”). Payables to parties not controlled by
Oi, according to the First List of Creditors, totaled approximately
R$65.1 billion. As from the date of this publication, the
creditors had fifteen (15) business days to file with the
Judicial Administrator (i) a proof of claim (the “Proof
of Claim” or “Claim”), if their receivables were
not included in the First List of Creditors, or (ii) the
discrepancy (the “Discrepancy”) if, according to the
creditor, the amount in the First List of Creditors is incorrect or
its credits were incorrectly classified. The deadline for creditors
to file a Claim and/or a Discrepancy was October 11, 2016. On March 2, 2017, the 3 rd On March 22, 2017, the Company’s Board
of Directors approved the basic financial conditions to be adjusted
in the JRP and authorized the Company’s Executive Officers
and advisors to file, as soon as possible, an amendment to the JRP
with the Judicial Reorganization Court, as disclosed by Oi in a
Material Fact Notice on the same date, and these conditions were
presented in court on March 28, 2017. The amended JRP was
filed with the court on October 11, 2017. On March 31, 2017, the Judicial Reorganization
Court issued a decision replacing PricewaterhouseCoopers Assessoria
Empresarial Ltda. as financial administrator for the BDOPro
Consortium, which declined the appointment. Thus on April 10,
2017, the law Firm Arnoldo Wald was appointed as the sole judicial
administrator of the Oi Companies’ Judicial
Reorganization. The judicial administrator reviewed the First List
of Creditors and after reviewing this List, taking into
consideration the Claims and Discrepancies, submitted the list of
creditors published in the Notice of May 29, 2017 (“List
of Creditors”).
The publication of the List of Creditors set two
deadlines for the creditors: (i) a ten-business On August 23, 2017, the Judicial
Reorganization Court scheduled the date of the first
Creditors’ General Meeting (“CGM”) for
October 9, 2017 (on its first notice to convene) and
October 23, 2017 (on its second notice to convene). On September 27, 2017, in light of the
negotiated decisions to ensure the approval of the JRP and the
procedural aspects related to holding the General Creditors’
Meeting (“CGM”), which could result in changes in the
voting system, the Oi Companies requested to the Judicial
Reorganization Court the postponement of the CGM to
October 23, 2017, on its first notice to convene, and
November 27, 2017, on its second notice to convene, at
Riocentro. The Judicial Reorganization Court approved this request
on the same day, seconding the favorable opinions of the judicial
administrator and the Rio de Janeiro State’s Public
Prosecution Office. On October 10, 2017, the majority of the
members of the Company’s Board of Directors approved the new
version of the JRP. On October 11, 2017, the RJ Debtors filed a
new, joint version of the JRP with the Judicial Reorganization
Court, to be reviewed and approved at the CGM on the dates referred
to above, as well as the report of the independent appraiser. On October 20, 2017, in response to the
requests made by certain creditors, the Judicial Reorganization
Court determined the postponement of the GCM for November 6,
2017, on its first notice to convene, and November 27, 2017,
on its second notice to convene. In compliance with the provisions of Article 36 of
Law 11101/2005, the Judicial Reorganization Court, in response to a
request from the Judicial Administrator, determined the
postponement of the CGM date, firstly scheduled for
November 6, 2017, on its first notice to convene, for
November 10, 2017, and maintained November 27, 2017 to
hold the CGM, on its second notice to convene. On November 9, 2017, in response to the new
requests made by certain creditors, the Judicial Reorganization
Court determined once again the postponement of the CGM to
December 7, 2017, on its first notice to convene, which may
continue on December 8, 2017, if necessary, and
February 1, 2018, on its second notice to convene, which may
continue on February 2, 2018, if necessary. Again, on November 29, 2017, the Judicial
Reorganization Court determined once again the postponement of the
CGM to December 19, 2017, on its first notice to convene,
which may continue on December 20, 2017, if necessary, and
February 1, 2018, on its second notice to convene, which may
continue on February 2, 2018, if necessary. On December 19, 2017, after confirming that
the required quorum of classes I, II, III, and IV creditors was in
attendance, the CGM was held and the JRP was approved by a vast
majority of creditors on December 20, 2017.
On January 8, 2018, the Judicial
Reorganization Court issued a decision that ratifies the JRP and
grants the judicial reorganization to the Oi Companies. Said
decision was published on February 5, 2018, initiating the
period for the creditors of the RJ Debtors to elect one of the
payment options to recover their claims, as provided for in the
JRP, which ended on February 26, 2018, except for bondholders,
whose deadline was extended to March 8, 2018, as decided by
the Judicial Reorganization Court on February 26, 2018. In the course of the preparation of the JRP, the
Company assessed a significant set of scenarios and forecasts for
the evolution of its operations and financial, and conducted
discussions with creditors and partners affected by the JRP. This
preparatory work was in line with the complexity and sheer size of
the Company’s business, the existing high number of operating
and financial processes and controls with an impact on the
assumptions used by Management, and the volume and diversity of the
information used. The Company’s management identified, during
the preparation of the JRP, that there were weaknesses in some of
these processes and controls and an opportunity to obtain further
information from the entities involved in the process. In light of the identification of weaknesses in
controls, the Company’s management immediately took the
necessary actions to measure possible impacts of the JRP on cash
flows and the Company’s historic financial statements, namely
with regard to the realizable value of assets. In a short period of
time, Management initiated the procedures aimed at identifying the
root cause of the weaknesses, the design, and the implementation,
within a short and, appropriate time horizon, of new and improved
controls. Finally, this work allowed Management to conclude that
there should not be any impact on the Judicial Reorganization
Plan’s Cash Flows and make the corresponding corrections of
accounting errors (Note 2). The prepetition liabilities subjected to compromise
will be recovered by the creditors in accordance with the JRP
approved at the CGM on December 19 and 20, 2017 and ratified
by the Judicial Administrator Court on January 8, 2018, which
was submitted on December 22, 2017 by the Trustee, in the
records of digital case No. 0203711-65.2016.8.19.0001,
Creditors Settlement Program On June 23, 2017, the Company disclosed a
Notice to the Market informing that, as authorized by the Judicial
Reorganization Court, the Company was going to initiate a program
to enter into settlements with the Oi Companies’ creditors
listed in the Judicial Administrator’s List of Creditors,
published on May 29, 2017 (“Oi Creditor” and
“Creditors Settlement Program” or
“Program”, respectively), and creditors could join the
program via the website www.credor.oi.com.br The Creditors Settlement Program was applicable for
creditors with claims amounting to R$50,000 or lower, and allowed
the prepayment of 90% of the claim on the acceptance of the
creditor and the remaining 10% of the claim after the approval of
the JRP, to be paid under the terms and conditions of the Creditors
Settlement Program. A Oi Creditor whose claim was higher than
R$50,000 would be entitled to join the Creditors Settlement Program,
in which case they would receive a R$50,000 prepayment, upon
acceptance by such Oi Creditor of the settlement under the terms
and conditions set out in the Creditors Settlement Program and the
exceeding amount will be paid as set out in the Plan. The Creditors
Settlement Program benefited the participating Oi Creditors as it
allowed for the prepayment of part of the amount under the
Program. The Program was temporarily suspended by force of a
judicial decision but on August 29, 2017 the Rio de Janeiro
State Court of Justice overturned this decision and upheld the
validity of the Creditors Settlement Program. Accordingly, the
Creditors Settlement Program was implemented as from this date, and
ended in December 8, 2017. Approximately 35,000 creditors jointed the
Creditors Settlement Program, of which about 30,000 in Brazil and
5,000 in Portugal, and approximately R$360 million were made
available for the prepayment of the settlements entered into under
the Program.
Pre-petition The Company has reported that it has knowledge of
regulatory punitive administrative proceedings and lawsuits that
could amount to approximately R$14.5 billion as at
June 30, 2016, including fines imposed, expected fines to be
imposed and corresponding inflation adjustments. The Company
disagrees and is challenging a material portion of the
noncompliance events pointed out by ANATEL and it is also
challenging the disproportionateness of the punitive actions taken,
emphasizing their unreasonableness. It is worth noting that in the context of the
judicial reorganization of the Oi Companies, ANATEL challenged,
amongst others, the decision that approved the processing of the
judicial reorganization, as well as the beginning of a mediation
proceeding between the RJ Debtors and itself, by filing bills of
review No. 0043065-84.2016.8.19.0000 No. 0060963-13.2016.8.19.0000. No. 0043065-84.2016.8.19.0000, th It is worth noting that ANATEL also challenged the
submission of its claims to the judicial reorganization proceeding,
by filing interlocutory appeal No. 0057446-63.2017.8.19.0000 pre-petition th In addition to the appeals referred to above,
ANATEL filed interlocutory appeal No. 0048971-21.2017.8.19.0000 th Sub-clauses pre-petition pre-petition th ANATEL also filed interlocutory appeal No. 0055283-13.2017.8.19.0000 th The JRP submitted to and approved at the CGM on
December 20, 2017, which was ratified by the Judicial
Reorganization Court on January 8, 2018, lays down the payment
method Pre-petition non-tax
(i)
Payment of nontax pre-petition st th st th st th st th th Because the other nontax pre-petition The Plan also provides for the possibility of the
Company adopting a general statutory rule to be published in the
future in order to regulate the non-tax
Note, however, that ANATEL filed interlocutory
appeal No. 001068-32.2018.8.19.0000 Accordingly, the court decisions in effect
establish that ANATEL’s non-tax Pre-petition
Payment proposals in the JRP approved at the CGM on
December 20, 2017 and ratified by the Judicial Reorganization
Court on January 8, 2018 The Oi Group’s creditors shall become
creditors of the debt(s) issued by the RJ Debtor that was their
original debtor.
Plan for Creditors (Note 28) This section presents a summarized version of the
key terms of the repayment Plan to Oi Group Creditors, including
certain information on the financial terms and conditions included
in the JRP. Note that, as defined in Appendix 1.1 to the JRP,
the publication date of the Judicial Reorganization Court’s
decision ratifying the JRP, i.e., the lower court decision granting
the judicial reorganization, against which no appeal with a
suspensory effect is upheld, which is January 8, 2018,
published on the Official Gazette on February 5, 2018, is
taken into consideration for purposes of the way the time limit in
the payment terms is counted.
Class I – Labor Claims The payment of Labor Claims is described below: General rule: labor claims shall be paid in five
(5) equal monthly installments, with a 180-day six-month Labor Claims that are collateralized by judicial
deposits:
•
Shall be paid through the immediate withdrawal of
the amount deposited in court.
•
If the deposited amount is lower than the debt
listed by the Oi Companies, the deposit shall be used to pay part
of the debt and the outstanding balance shall be paid after a
decision is issued by the Court that ratifies the amount due in
five (5) equal monthly installments, with a 180-day
Labor Claims not collateralized by judicial
deposits shall be paid via judicial deposits attached to the court
records of the related case. Fundação Atlântico (pension fund)
claims:
•
Payable in six (6) annual, equal installments,
with a five-year grace period as from the Court Ratification of the
Plan.
•
Interest/inflation adjustment: five-year grace
period for interest. National Consumer Price Index (INPC) + 5.5%
per year, levied as from the Court Ratification of the Plan,
annually accrued during the grace period and payable annually, as
from the sixth year, together with the principal installments.
Class II – Collateralized Payables Class 2 claims shall be paid as follows: Each creditor shall receive the original debt
amount, as disclosed in the List of Creditors, adjusted by the
interest/inflation adjustment rate, as follows: Principal shall be repaid as follows:
•
72-month
•
Principal shall be repaid in 108 monthly
installments, as described in the table below:
Months
Percentage of the amount to be repaid per month
0 a 72 nd 0.0%
73 rd nd 0.33%
133 rd th 1.67%
180 th 1.71%
•
Four-year grace period on interest. Interest: Long-term Interest Rate, released by the
Central Bank, plus spread of 2.946372%, where the interest levied
in the first four (4) years shall not be paid and shall be
accrued annually and added to the principal.
Classes III and IV – Unsecured Creditors and
MBOs/SBs The payment proposal for claims of Unsecured
Creditors and Micro-business Owners (“MBOs”) and Small
Businesses (“SBs”) is described below, according to the
thresholds established in the JRP:
Linear payment to Unsecured Creditors:
•
Linear payment to Unsecured Creditors: Unsecured
Creditors’ and MEs/EPPs’ claims of amounting up to
R$1,000 were paid in a single installment within 20 business days
after the Court Ratification of the Plan.
•
Unsecured Creditors and MEs/EPPs with claims above
R$1,000 can elect to receive their claims in a single installment,
providing that they agree to receive only R$1,000 as the full
payment of their claims an related costs, payable within 20
business days after the end of the period to elect the payment
option. Unsecured Creditors with Judicial Deposits:
Claim Amount Interval
Discount %
Up to R$1,000.00 0%
R$1,000.01 to R$5,000.00 15%
R$5,000.01 to R$10,000.00 20%
R$10,000.01 to R$150,000.00 30%
Over R$150,000.00 50%
•
Shall be paid through the withdrawal of the
deposited amount;
•
If the deposit is lower than the debt (after the
discount above, as applicable), the deposit shall be used to pay
part of the debt and the outstanding balance shall be paid after a
decision issued by the competent court that ratifies the amount due
according to the General Payment Method described below;
•
If the deposit is higher than the debt (calculated
after the discount above, as applicable), The Oi Companies shall
withdraw the difference. Unsecured Creditors and MEs/EPPs that are not paid
as provided for above can opt for payments using one of the method
described below, limited to a maximum amount per offer.
Restructuring Option 1:
•
Part of Classes 3 and 4 claims shall be denominated
in Brazilian reais by the amount of Classes 3 and 4 Creditors that
elected this option, up to a ceiling of R$10,000,000,000; these
Creditors can elect one of the following methods: (i) claim
restructuring; (ii) private debentures, or (iii) public
debentures.
•
Part of Classes 3 and 4 claims shall be denominated
in US dollars by the amount claimed of Classes 3 and 4 Creditors
that elected this option, up to a maximum of US$1,150,000,000.
•
60-month
•
Principal shall be repaid in 24 semiannual,
successive installments, as shown in the table below:
Six-month
Percentage of the amount to be repaid
per six-month
0 to 10 th 0.0%
11 th th 2.0%
21 st rd 5.7%
34 th 5.9%
•
The interest rate shall be (i) an annual rate
equivalent to 80% of the interbank deposit rate (CDI) for
claims denominated in Brazilian reais and (ii) 1.75% per year for
claims denominated in US dollars; interest shall be annually
accrued to the principal and paid semiannually as from the
66 th
•
Once this offer’s maximum amounts are
reached, the outstanding balances of the claims payable under this
offer shall be paid according to the General Payment Method
described below.
Restructuring Option 2:
•
The claims of the Creditors that elect this payment
method shall be restructured in US dollars within up to six
(6) months after the Court Ratification of the Plan, limited
to a maximum of US$850,000,000.
•
60-month
•
Principal shall be repaid in 24 semiannual,
successive installments, as shown in the table below:
Six-month
Percentage of the amount to be repaid
per six-month
0 to 10 th 0.0%
11 th th 2.0%
21 st rd 5.7%
34 th 5.9%
•
Interest of 1.25% per year, annually accrued to the
principal and paid semiannually as from the 66th month after the
Ratification of the Judicial Reorganization Plan, where:
•
During the principal grace period, 10% of total
interest shall be paid semiannually, while the remaining 90% shall
be accrued to the principal annually. After this period, 100% of
total interest shall be paid semiannually.
•
Once this offer’s maximum amounts are
reached, the outstanding balances of the claims payable under this
offer shall be paid according to the General Payment Method
described below.
•
The creditors’ rights granted under this
offer can only be assigned with the prior consent of Oi.
Bond restructuring Option 3:
Restructuring of unqualified bonds:
•
This offer is available only to bondholders with
claims up to US$750,000, and it is limited to a maximum of
US$500,000,000.
•
50% discounts, firstly applied to interest and
subsequently to principal.
•
Grace period on principal: six years as from the
Ratification of the Plan.
•
Principal shall be equivalent to 50% of the
unqualified bondholders’ claims, capped at US$250,000,000,
and shall be repaid in twelve (12) semiannual, successive
installments, as shown in the table below:
Six-month
percentage of the amount to be repaid
per six-month
0 to 12 th 0.0%
13 th th 4.0%
19 th rd 12.66%
24 th 12.70%
•
Interest: 6% per year in US dollars, annually
accrued to the principal as from the 78 th
Restructuring of qualified bonds:
•
This offer is available only to bondholders with
claims in excess of US$750,000, which will receive the
following:
•
Common shares issued by Oi and currently held by
PTIF;
•
New notes;
•
New I Common Shares; and
•
Subscription Warrants
•
Exchange ratios: for each US$664,573.98:
•
9,137 common shares issued by Oi and currently held
by PTIF;
•
New Notes, issued at the overall price of
US$145,262, which consists of a par value of US$130,000 and an
issue premium of US$15,262;
•
119,017 New I Common Shares;
•
9,155 Subscription Warrants. Note: the exchange ratios assume that the number of
Oi common shares and Oi preferred shares is 825,760,902.
•
The New Notes shall be issued in US$1,000 multiples
and shall have a maximum par value of R$6,300,000,000, equivalent
to a maximum par value of US$1,918,100,167.
•
Maturity: 7 th
•
Principal: shall be repaid in a bullet payment
maturing on the 84 th
•
Interest: can be paid under one of the following
two methods:
•
10% per year, paid semiannually; or
•
During the first three (3) years as from the
plan’s ratification, 12% interest paid semiannually, of which
8% of the annual interest paid is in cash semiannually and 4%
compounded semiannually and paid in the 36 th th
•
The New I Common Shares shall be due as a result of
the capital increase, through the capitalization of the claims:
•
Up to 1,756,054,163 New I Common Shares shall be
issued with par value ranging from R$6.70 to R$7 to a total ranging
from R$11,756,562,892.10 to R$12,292,379,141.
•
Subscription warrants: Oi shall issue up to
135,081,089 subscription warrants.
Restructuring Option 4: General Payment Method This offer applies to creditors that do not meet
the terms and conditions of the previous offers or if the offers
highlighted above exceed their maximum amounts and the creditor
still holds an outstanding balance.
•
Principal shall be repaid in five (5) equal
annual, successive installments after the 20-year
•
Interest/inflation adjustment:
•
Interest equivalent to TR, a benchmark rate, per
year in the case of unsecure claims whose holders elect to receive
payment for their claims in Brazilian reais; this interest shall be
levied as from the Court Ratification of the Plan, and total
interest and inflation adjustment accrued in the period shall be
paid only and together with the last principal installment.
•
No interest, in the case of unsecured claims whose
holders elect to receive payment for their claims in US
dollars.
•
The Company shall have an early repayment option
consisting of the payment of 15% of principal and accrued
interest.
•
Payment maximum: R$70,000,000,000, minus the amount
of pre-petition
Restructuring Option 5: Strategic Supplier Creditors
•
The claims of Strategic Supplier Creditors,
suppliers of goods and/or services that kept the terms and
conditions practiced prior to the filing of the Judicial
Reorganization Plan, that do not arise from loans or financing
facilities granted to the Oi Companies, shall be paid, up to a
maximum of R$150,000, within up to 20 business days after the end
of the period to elect the payment option. If these suppliers have claims in excess of
R$150,000, they shall receive the outstanding amount minus a 10%
discount in four (4) equal annual, successive installments,
plus (i) TR + 0.5% in the case of real-denominated claims and
(ii) 0.5% per year in the case of US dollar- or euro-denominated
claims.
Claims of related parties Claims that refer to intragroup loans among the RJ
Debtors, by using cash generated by transactions conducted in the
international market by the RJ Debtors, shall be paid as described
below:
•
Principal shall be repaid beginning on the
20 th
•
Interest/inflation adjustment: TR for
real-denominated intragroup claims 0.5%, levied as from the Court
Ratification of the Plan. Total interest and inflation adjustment
accrued in the period shall be paid only and together with the last
principal installment. No interest, in the case of dollar- or
euro-denominated intragroup claims.
The Oi Companies may mutually agree an alternative
method for the settlement of intragroup claims, under the
originally agreed terms and conditions, including, but not limited
to, by netting their payables and receivables, as provided for by
the law.
Cash Sweep Unsecured Creditors, MEs/EPPs, and Secured
Creditors can acc |
