SAO PAULO (Reuters) – Shares in Brazilian telecom firm Oi SA soared on Thursday after it revealed it was exiting bankruptcy protection, marking the closure of a restructuring process that lasted more than six years.
Oi filed in June 2016 for Brazil’s then-biggest ever bankruptcy protection after running out of time to reorganize operations and restructure a multibillion-dollar debt amid a harsh recession in Latin America’s largest economy.
The firm said the proceedings had now come to an end after a Rio de Janeiro court decision, noting that it managed to repay a 4.6 billion reais ($871.43 million) debt with state development bank BNDES as well as some other loans.
In the period, Oi also had to sell its mobile operations to rivals TIM SA, Telefonica Brasil SA and Claro, a subsidiary of Mexico’s America Movil, in a landmark 16.5 billion-real deal.
After the announcement, common shares in Oi jumped as much as 53% to 0.26 real in morning trading.
Analysts at Genial Investimentos said the move was positive for the firm, even though they still thought Oi was financially weakened.
“Despite the significant gross debt reduction, Oi is still expected to post losses due to negative financial results and has only one promising asset capable of generating cash,” Genial said, referring to Oi’s minority stake in optical fiber company V.tal.
Guide Investimentos echoed the concern and noted that despite being postponed several times, the end of the bankruptcy protection was already expected.
“The company still has around 22 billion reais in debt and creditors can legally request a repayment even after the end of the bankruptcy proceedings,” analyst Gabriel Araujo Garcia said.
($1 = 5.2787 reais)
(Reporting by Gabriel Araujo and Andre Romani; Editing by Steven Grattan)
