PORTUGAL TELECOM : Oi capital increase

Oi capital increase

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Portugal Telecom, SGPS, S.A ("PT") hereby announces that the period for the subscription of shares under the share capital increase of Oi S.A. ("Oi") ended.

The settlement of the share capital increase is expected to occur on the 5 May 2014. On such date PT will settle the purchase of the shares to which it subscribed under the share capital increase.

In the share capital increase 2,142,279,524 ordinary shares will be issued at the price of R$2.17 per share and 4,284,559,049 preferred shares (PN) will be issued at a price of R$2.00 per share, resulting in total proceeds of c. R$13.1 billion, after underwriting discounts and commissions (before expenses).

Based on the value of the PT Assets resulting from the independent valuation carried out by Banco Santander (Brasil), S.A, i.e. R$ 5,709.9 million, PT subscribed for 1,045,803,934 common shares and 1,720,252,731 preferred shares issued by Oi.

As a result, immediately following the settlement of the share capital increase, PT will own, directly and indirectly, 37.4% of Oi's issued and outstanding share capital, including 40.7% of Oi's voting share (excluding Portugal Telecom's interest in the shares of Oi owned by Telemar Participações S.A. ("TmarPart"), AG Telecom Participações S.A. and LF Tel S.A. On a fully diluted basis pro forma to the conclusion of the several announced corporate actions aiming at the merger of PT, Oi, TmarPart and the Brazilian controlling shareholders of TmarPart ("the Business Combination"), including the incorporation of Oi shares into TmarPart, and immediately after the merger by incorporation of PT into TmarPart, PT will own, directly and indirectly, ("Resulting Stake") a minimum stake of 37.3% of Oi's capital.

The Resulting Stake complies with PT subscription commitment conditions, being within the range agreed in the Memorandum of Understandings executed on 1 October 2013. 

PT shares will continue to trade until the conclusion of the merger with TmarPart. As a result of the merger, PT shareholders will receive 3.64 shares of TmarPart per each PT share. Additionally, and subject to approval by its General Meeting, PT shareholders will receive, before completion of the Business Combination, a dividend of Euro 10 cent per share.

The press release announced today by Oi describing in greater detail the results of the share capital increase is attached hereto.

IMPORTANT NOTICE

This communication is not an offering document and does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval in any jurisdiction in which distribution of an offering document or such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of that jurisdiction.
This communication contains information with respect to (1) the proposed transfer to Oi S.A. ("Oi") of the shares of PT Portugal, SGPS, S.A. in connection with a capital increase by Oi (the "Oi Capital Increase"), (2) the proposed merger of shares (incorporação de ações) between Telemar Participações S.A. ("CorpCo"), on the one hand, and Oi, on the other hand, and/or (3) the proposed merger (incorporação) of Portugal Telecom, SGPS, S.A. ("PT") with and into CorpCo (these transactions, together with any other transactions related thereto, the "Business Combination").
Important information for investors in the Oi Capital Increase:  The offering by Oi in connection with the Oi Capital Increase is being made pursuant to an effective shelf registration statement. A preliminary prospectus supplement with further information about the proposed offering has been filed by Oi with the U.S. Securities and Exchange Commission ("SEC"). Before you invest, you should read the preliminary prospectus supplement and other documents Oi has filed with the SEC for more complete information about the company and the Oi Capital Increase. When available, you may access these documents for free by visiting EDGAR on the SEC web site at www.sec.gov . Alternatively, Oi will arrange to send you the prospectus after filing if you request it by calling toll-free 1-855-672-2332.
Important information about the Business Combination:  In connection with the proposed merger of shares between CorpCo and Oi and the proposed merger of PT with and into CorpCo, CorpCo or one of its affiliates plans to file with the SEC (1) one or more registration statements on Form F-4, containing a prospectus or prospectuses which will be mailed to shareholders of Oi and/or PT, as applicable (other than non-U.S. persons as defined in the applicable rules of the SEC), and (2) other documents regarding the proposed Business Combination.
We urge investors and security holders to carefully read the relevant prospectuses and other relevant materials when they become available as they will contain important information about the proposed Business Combination.
Investors and security holders will be able to obtain the documents filed with the SEC regarding the proposed mergers, when available, free of charge on the SEC's website at www.sec.gov or from PT, Oi or CorpCo.
Forward-looking statements:  This communication contains forward-looking statements. Statements that are not historical facts, including statements regarding the beliefs and expectations of PT, Oi or CorpCo, business strategies, future synergies and cost savings, future costs and future liquidity, are forward-looking statements.  The words "will," "may," "should," "could," "anticipates," "intends," "believes," "estimates," "expects," "plans," "target," "goal" and similar expressions, as they relate to PT, Oi or CorpCo, are intended to identify forward-looking statements and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, tendencies or results will actually occur. Such statements reflect the current views of management of PT, Oi and CorpCo, and are subject to a number of risks and uncertainties. These statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, corporate approvals, operational factors and other factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations. All forward-looking statements attributable to PT, Oi, CorpCo or their affiliates, or persons acting on their behalf, are expressly qualified in their entirety by the cautionary statements set forth in this paragraph.  Undue reliance should not be placed on such statements.  Forward-looking statements speak only as of the date they are made.  Except as required under the U.S. federal securities laws and the rules and regulations of the SEC or of regulatory authorities in other applicable jurisdictions, PT, Oi, CorpCo and their affiliates do not have any intention or obligation to update or to publicly announce the results of any revisions to any of the forward-looking statements to reflect actual results, future events or developments, changes in assumptions or changes in other factors affecting the forward-looking statements. You are advised, however, to consult any further disclosures PT, Oi or CorpCo makes on related subjects in reports and communications PT, Oi and CorpCo file with the SEC.

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