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SAO PAULO-The merger between Brazilian telecom giant Oi SA and Portugal Telecom (PT) will go ahead, despite a court rejection of a creditor-protection request from the main holding companies of the Espirito Santo empire.
At the start of October, then Oi's chief executive Zeinal Bava resigned from his post after major Oi shareholders began to have doubts about Mr. Bava's leadership in the wake of news that the Portuguese firm he used to run lent EUR897 million ($1.22 billion) to a firm called Rio Forte, which was a unit of Espírito Santo International, part of the troubled Portuguese financial group of the same name.
Last week, a court in Luxembourg has denied a creditor-protection request by Espirito Santo International SA (001190440.LU) and Rioforte Investments SA, which filed the request in July after they were unable to meet debt obligations. The rejection paved the way for a liquidation of all its assets.
"A possible liquidation of the assets of Rio Forte Investments S.A., as a result of the rejection of the request for controlled management for Rio Forte, shall have no impact on the development of the business combination and the merging of the shareholder bases of Oi, Portugal Telecom SGPS S.A. and TmarPart," said Oi, highlighting that the merger of shares is likely to take place until the end of the first quarter of 2015.
Oi's statement came after a drastic decline of company's shares. On Monday, Oi's shares dropped 7.63% in Sao Paulo, while the main stock market index, the Ibovespa, fell 2.55%.
