By Brazil Stock Guide – Oi SA creditors filed a petition on Monday (9) asking a Rio de Janeiro court to review the terms of the company’s planned auction of its 27.5% stake in V.tal, arguing the accelerated timeline could undermine competition and result in a “paltry” bid.
The petition claims the process resembles a “marked deck” because the schedule is too tight to attract enough qualified buyers, potentially jeopardizing proceeds needed to repay creditors as Oi undergoes its second judicial recovery process.
Oi’s stake in V.tal — a telecom infrastructure company controlled by BTG Pactual — is being offered through an auction scheduled for March 5, with a minimum bid of 12.3 billion reais payable in cash, according to the notice published on Monday (3).
The filing was submitted by UMB Bank, acting as trustee for a group of creditors that includes foreign asset managers such as Pimco, Vontobel, Arkaim and Bracebridge, which together are owed roughly 10 billion reais. The group provided emergency debtor-in-possession financing to Oi earlier in the restructuring, securing priority repayment rights backed by collateral including the V.tal shares.
In the petition, the trustee argues that the transaction is too complex for potential bidders to evaluate under the proposed timeline, noting that only 16 business days will separate the publication of the notice and the deadline for submitting bids due to the Carnival holiday.
“The asset is quite complex, and its acquisition requires the provision of information about the company, and the analysis of such information by potential interested parties, in a regular due diligence process,” the filing said.
UMB Bank also criticized the structure of the due diligence period, claiming the schedule began with the publication of the notice even though a virtual data room containing key documents had not yet been set up.
“Potential interested parties, not previously engaged, certainly will not have time and human resources to carry out their studies,” the trustee said.
The petition suggests the limited timeframe may be intentional, restricting the sale to one or a small number of bidders already familiar with the asset. “It is suspected that this evident anti-competitive characteristic of the notice, disguised as respect for speed, is purposeful,” the filing said.
“Consequently, the process may result in a paltry proposal, extremely below the minimum price set out in the notice,” it added.
The trustee said it is not trying to block the transaction, but wants a process that is transparent and competitive. “It is not about preventing the sale, but rather ensuring a transparent and competitive process, fully in compliance with the judicial recovery plan, structured and conducted in a way that maximizes the value of the V.tal unit,” the petition said.
The creditors also raised concerns about how proceeds from a potential sale would be allocated, warning the court-appointed judicial manager could redirect funds toward other creditors.
The filing includes criticism of judicial manager Bruno Rezende, who took over oversight of Oi after the company’s management was removed last year. The trustee accused Rezende of laying groundwork to portray creditors as acting abusively if they oppose a low bid.
“The judicial manager plants the seed that he intends to harvest when the same creditors reject a paltry proposal in order to claim that such rejection would be ‘abusive,’ which must be firmly rejected,” the filing said.
UMB Bank also said some creditors have been seeking for months to negotiate an alternative transaction structure, including a so-called credit bid in which Oi would sell the V.tal stake in exchange for debt reduction rather than cash.
“The purchase of V.tal through a credit bid is an alternative that would potentially be more advantageous for Oi than a paltry proposal, as it would significantly reduce its indebtedness and release several guarantees,” the trustee said.
Oi and Rezende did not immediately respond to requests for comment, according to Broadcast.
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