| Economy
The CMVM’s decision comes after the clarifications provided by Pharol, still on Tuesday, in a statement, said that the request for judicial recovery Hi is the measure “most appropriate” to “preserve the continuity of supply of quality services to its customers (…), to preserve the value of the Companies Hi, maintain the continuity of your business and its social function (…) and protect the Treasury Enterprise” .
Pharol, which holds 27.2 percent of the capital of Hi, admits that the recovery request takes into account “the obstacles faced by the management of Hi in trying to find a viable alternative among its creditors “, which allows” facilitate the adequate protection of the companies Hi from creditors while preserving the continuity of business activities of these same companies. ”
The actions of Pharol were suspended before the opening of Tuesday’s session. Yesterday closed the worth 0.128 euros, a decline of 4.47 percent compared to the last trading.
The company returned to trading this Wednesday at 10h00 with significant drops, which oscliam between 25 and 40 percent, trading at around seven cents.
Plan against bankruptcy
The recovery plan is seen as the only measure able to avoid immediate bankruptcy of Hi, which accumulates a higher debt to EUR 17 billion. As advanced after missing the debt restructuring plan, which exceeds EUR 13 billion.
The Brazilian company Hi came on Monday with a request for judicial worth 65.4 billion reais, equivalent to EUR 17 billion, which is already largest ever in the history of Brazil. The request was approved unanimously by the Board of Directors of Hi where Pharol is represented by four directors.
The application for bankruptcy protection will have to be ratified by the General Assembly Hi, convened for July 22, and then approved by a judge. If it receives green light, Hi will have 60 days to deliver the detailed plan, which must include an estimate of the value of the company’s assets and a list of concrete measures of financial recovery.
The lenders will then have 30 days to approve or reject the plan, and any requested or suggested change must be approved by management Hi. The negotiation between the two parties can be extended to a maximum of six months and is mediated by a trustee. If there is no agreement, the bankruptcy of the company is enacted. If the plan is approved, Hi will have two years to follow to the letter.
In a statement justifying the request for recovery, Hi claims to have made efforts to “optimize liquidity and debt profile” of the company but against the maturity schedule of debts and threats of liens and processes legal in parts of creditors had no “viable alternative”.
Since the application for bankruptcy is submitted, all requests for the enforcement of creditors against Hi are automatically suspended for at least 180 days.
The company believes that the bankruptcy process “is another step towards the financial restructuring”. The Hi continue to operate in full throughout the process and are not, for now, unforeseen changes in staff management.
The measure of last resort comes after the company had tried to approve a restructuring plan providing for the exchange of bonds for shares and the repayment of the remaining amount over six years. The plan failed because it implied change 95 percent of the shareholder structure.
Hi depreciated nearly five billion euros on the stock market in the last four years. In the golden age, in April 2012, before the merger with Portugal Telecom, the operator was listed at 5.5 billion euros. Today the market assesses the company at EUR 210 million.
The company closed 2015 with a loss of 1.3 thousand million euros. Last Friday, the rating agency Fitch cut the rating of Hi from “CCC” to “C”, the last level before waste, considering that the company’s debt is unsustainable.
Regulatory does not intervene
Anatel, regulator of the Brazilian telecommunications sector, reacted to the request of Hi only the suspension of the sale of movable and immovable property of the operator.
In a statement the regulator said track “carefully (…) the development of events concerning the companies Hi and decided this time not to intervene in the conduct made by Group executives to believe in the possibility of an outcome which means the effective recovery of the economic and financial balance “of the company.
the FCC will take further measures” if make necessary “to protect the” public interest and the rights of consumers and the systemic stability of the Brazilian telecommunications sector. “
Bondholders prepare battle
Who can not escape the loss of most of the investments are the customers that bet on debt securities of PT / Hi.
According to the edition of Wednesday’s Business Journal , the bondholders PT / Hi already be on the ground preparing a legal battle, which aims to prevent further damage. The daily reveals that is being prepared injured one movement, similar to what happened with the BES.
About 20 investors have will be meeting on Monday to trace the movement of lines of action, which aims to advance to street protests, with the companies themselves, the market regulators and even political power.
Just released after the recovery plan is that creditors will know the volume of losses.
There are thousands of clients that should no longer be repayable on July 26, when it overcame retail issuance of securities related to an operation carried out in 2012. At the time PT issued 400 million euros, signed by 20 000 investors, and those securities were transferred to Hi when the PT was sold to Brazilian operator.
At this point, the operator gave investors the opportunity to obtain early repayment, which many accepted and is to repay this time around EUR 200 million. The bonds now worth about half of what they were worth in 2012.
Hi sold PT Portugal to the French Altice in 2015. The company is the largest fixed telephone operator in Brazil and the fourth in the mobile segment.
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