Obbligazioni societarie La saga della famiglia Espírito Santo: cosa succederà alle obbligazioni BES ed ESFG?

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Portugal Telecom Faces Espírito Santo Default

Default Could Damage Planned Merger With Brazil's Oi



By Patricia Kowsmann


July 15, 2014 6:41 a.m. ET



LISBON— Portugal Telecom PT +2.01% SGPS SA could be hit Tuesday by a default from an investment it made with Espírito Santo International SA, in a development which could damage the telecom giant's planned merger with Brazil's Oi SA OIBR4.BR -3.11% .

Portugal Telecom disclosed late last month that it had €897 million euros ($1.22 billion) in commercial paper from Rioforte, a unit of Espírito Santo International. The Portuguese bank was found to be in a "serious financial condition" by the country's central bank. The majority of the debt expires Tuesday.

Oi has said it wasn't aware of the investment made by Portugal Telecom. A person familiar with the situation said the Portuguese company agreed to buy the debt in April. While Espírito Santo International's woes were made public in May, the news it was facing some problems was already widespread.

Banco Espírito Santo SA, BES.LB -10.56% which is partly owned by a unit of Espírito Santo International, is a Portugal Telecom shareholder.
Officials for the two telecom companies couldn't be immediately reached for comment. A representative for Espírito Santo International declined to comment.

According to a person familiar with the situation, officials from both Portugal Telecom and Oi held meetings Monday to discuss the merger and the debt issue. Analysts say Portugal Telecom may agree to extend the maturity date for the debt to avoid a default from the Espírito Santo International unit, called Rioforte.

People familiar with the situation said that while Portugal Telecom and Oi want the merger to close, Oi could demand that terms of the deal be revised to give the Portuguese company a stake smaller than the currently agreed 38% in the new company.

Write to Patricia Kowsmann at [email protected]
 

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