Portugal Telecom shareholders postpone vote on asset sale
Portugal Telecom SGPS (PTC.LS) shareholders on Monday postponed until Jan. 22 a vote on the sale of its former operations by its merger partner, Brazil's Oi (OIBR3.SA), complicating the 7.4 billion euro ($9 billion) deal and possibly casting doubts on the long-agreed deal.
Shares in Oi slumped more than 14 percent in Sao Paulo as the Brazilian telecoms operator's hopes to use cash from the deal to pay down its massive debts were dented.
Portugal's securities market regulator CMVM lifted the suspension on trading in Portugal Telecom SGPS shares, in force since Friday, after the postponement. Trading in the shares that have fallen 17 percent so far this month will resume on Tuesday.
The decision is also a new stumbling block in a merger that went sour last year when a company belonging to the bankrupt Espirito Santo family defaulted on 900 million euros of loans from Portugal Telecom SGPS, about which the Portuguese company had not informed Oi.
Portugal Telecom's clout in the new, merged company was subsequently reduced and indebted Oi has now accepted a 7.4 billion euro bid by French-based Altice (ATCE.AS) for the Portuguese telecoms operations.
Oi said it supported the postponement needed to provide more information requested by Portuguese market regulator CMVM.
The vote had been called into question by a number of stakeholders as the sale would effectively unwind last year's merger, which is not yet legally finalised and left Portugal Telecom as a holding company with a 25.6 percent stake in the enlarged Oi group.
Oi's sale of the Portuguese telecoms operations to Altice still needs the approval of Portugal Telecom shareholders, prompting questions about whether the deal with Oi should be addressed in the process.
"There has already been a lot of uncertainty around this deal and now it means that it's here to stay," said Albino Oliveira, an analyst at Fincor brokers.
Earlier on Monday, the Union of Workers of Portugal Telecom (STPT), a shareholder in PT SGPS, said it wanted a new general assembly. It said a scrapping of the merger should be studied "because there are sufficient signs of breaches by Oi to advance with a claim for a breach of the contract".
About 100 Portugal Telecom workers protested against the planned deal outside the company's headquarters in Lisbon, some carrying placards saying "Leave us alone. Oi out of PT!".
Antonio Menezes Cordeiro, chairman of PT SGPS's shareholder assembly, said any attempt to break off the merger would raise the risk of litigation because the merger included a capital increase by Oi in Brazil.
Last week, Menezes Cordeiro had argued that the merger with Oi was invalid and called for a vote to decide whether to reverse the merger with the Brazilian company and, if it is upheld, whether to approve the sale of assets to Altice.
The new meeting was scheduled with only one vote on the agenda, on the Oi-Altice deal, but shareholders have the right to submit new proposals in the next few days.