PORTUGAL TELECOM PT and Oi announce the execution of definitive agreements relating to the combination of their businesses
As an update to its press release dated October 2, 2014, Portugal Telecom, SGPS, S.A. ("PT") today announces that definitive agreements were signed yesterday ("Definitive Documents") that govern the steps necessary to implement the transaction that will culminate in the business combination of Portugal Telecom, Oi S.A. ("Oi"), Telemar Participações S.A. ("TmarPart") and the Brazilian controlling shareholders of TmarPart, with a view to creating a single, integrated Brazilian listed company, CorpCo, which the Definitive Documents have determined to be TmarPart (the "Business Combination").
On the same date, the Board of Directors of Oi approved the application for registration with the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários, or "CVM") of a public offering for the distribution of newly issued common and preferred shares of Oi, to be undertaken simultaneously in Brazil and abroad (the "Oi Capital Increase").
As announced by Oi today, the assets that PT will contribute in kind in the Oi Capital Increase, and which represent all of the operating assets of PT except its direct or indirect economic interests in Oi, Contax Participações S.A. and Bratel B.V., and the liabilities of PT on the contribution date (the "PT Assets"), were valued by an independent valuation firm, Banco Santander (Brasil) S.A. The applicable valuation report (the "Valuation Report"), which will be submitted for the approval of the shareholders of Oi at the Extraordinary General Meeting scheduled to take place on March 27, 2014, will be available on the CMVM and the PT websites on February 21, 2014, the date that the Extraordinary General Meeting of Oi will be called.
At the above-mentioned Extraordinary General Meeting of the shareholders of Oi, PT and its subsidiary Bratel Brazil will abstain from voting on the resolution approving the Valuation Report in accordance with Brazilian law.
For purposes of the subscription in the Oi Capital Increase, the Board of Directors of Oi has determined a value for the PT Assets of €1,750 million, an amount which will be converted into Reais as of the date prior to the date of the publication of the notice for the Extraordinary General Meeting of the shareholders of Oi. This amount is consistent with the range set in the Memorandum of Understanding signed on October 1, 2013 ("MoU"), corresponding to €1,900 million, when the dividends to be paid by PT before the completion of the Business Combination under its previously announced dividend policy and other costs associated with the transaction, as foreseen in the MoU, are taken into account, as both have been considered in the Valuation Report.
Following the determination of this amount, the Board of Directors of PT will request that the President of the General Assembly, in the coming days, call a General Meeting of the shareholders of PT to consider the participation of PT in the Oi Capital Increase through the contribution in kind of the PT Assets.
Based on the value assigned to the PT Assets above, it is expected that in the exchange for each PT share held, shareholders would receive a number of shares of CorpCo corresponding to the amount in Reais equivalent to 1.9979 euros (applying the Euro/Real conversion rate on February 20, 2014, the day preceding the date of first publication of the notice of the General Meeting of Oi), issued at the same price per share as in the Oi Capital Increase, to which will be added 0.6330 shares of CorpCo. In addition, and subject to approval by the General Meeting, the PT shareholders will receive, prior to the completion of the Business Combination, a dividend of 10 eurocents per share.
Prior to the merger of shares of Oi by CorpCo, and conditioned upon this transaction, a General Meeting of shareholders of CorpCo will be held to discuss the amendment of its Bylaws to conform to the rules of the BM&FBOVESPA Novo Mercado segment, to approve a new name for CorpCo and to elect new members of the Board of Directors, Executive Board and the Fiscal Council of this company.
Additionally, the Board of Directors of Oi approved the granting of an unconditional and irrevocable guarantee for the benefit of holders of debt instruments of PT, which will become effective upon the completion of the Oi Capital Increase. The agreements that will implement the guarantee of Oi are expected to be conditioned upon the completion of the Oi Capital Increase.
The subscription by PT in the Oi Capital Increase is subject to the satisfaction of several conditions, including obtaining the approval by the General Meeting of shareholders of PT, obtaining legal and regulatory approvals, obtaining consents from creditors and third parties and the complete and valid execution of the Oi Capital Increase, including the subscription of the cash portion in the amount of at least 7 billion Reais.
The press release announced today by Oi describing in greater detail the steps of the transaction of the Business Combination 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 capital increase and related public offering of common shares and preferred shares by Oi, (2) the proposed merger of shares (incorporação de ações) between Tpart ("CorpCo"), on the one hand, and Oi, on the other hand, and (3) the proposed merger (incorporação) of PT with and into CorpCo (these transactions, together with any other transactions related thereto, the "Business Combination").
Oi may file a registration statement (including a prospectus) with the U.S. Securities and Exchange Commission (the "SEC") for the offering of its common shares and preferred shares to be issued in connection with its proposed capital increase. Before you invest, you should read the prospectus in that registration statement and other documents Oi has filed with the SEC for more complete information about Oi and this offering. You may get 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.
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.
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.
Nuno Vieira - Investor Relations Director
nuno.t.vieira@telecom.pt
Tel.: +351 21 500 1701
Fax: +351 21 500 0800
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