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04.25.08
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BNDES supports merger in telecommunication sector
The management of the Development Bank’s equity arm, BNDESPAR, approved its support to Telemar Participações S/A (TmarPART) corporate reorganization in the amount of R$ 2.569 billion.
“The shareholding reorganization will be critical for the merger of two operators, Oi and Brasil Telecom, which will result in the setup of a minimum efficient-scale group, delivering aligned business strategy, growth capacity, and large enough to compete internationally in the telecommunication sector”, said BNDES President, Luciano Coutinho. “Additionally, a new competitor providing a nationwide integrated network in mobile telephoning and data transmission, increasing competition in the Brazilian market, for the benefit of consumers and users. That will obviously depend on the approval of regulatory changes by Anatel, after a long process of public hearing and discussions with society”, said Coutinho.
BNDES, through its subsidiary BNDESPAR, holds shares in that company since it was setup, in 1999, outcome of Telebrás group privatization. As a partner of this enterprise, BNDES supports its reorganization process.
The bank’s support, then, is a typical operation of BNDESPAR’s equity share management process. At the end, BNDES’ equity arm will hold 16.89% of the company's capital stock, smaller than the current 25%. Also, the Bank's participation in the operation is an opportunity for valuation and generation of liquidity for the company and consequently for BNDESPAR’s investment.
“As it consist in a variable income operation, we will not use funds from Fundo de Amparo do Trabalhador (Workers' Assistance Fund), nor other institutional funding sources in Telemar’s corporate reorganization process. This support, thus, will not impair BNDES’ credit capacity for new infrastructure and industry investment projects. BNDESPAR’s goal is to strengthen Brazilian companies, their capacity to grow, innovate and improve their management style”, Coutinho stressed.
The reorganization – The operation will result in the withdrawal of three shareholding groups from the holding, Asseca (GP Investimentos), Lexpart (Citibank and Opportunity) and Alutrens (Banco do Brasil and private insurance companies). The final outcome will also consist in the TmarPART split-off, such that its share in Contax, currently controlled by TmarPART, is separately set in a new company.
BNDESPAR’s interest will consist in a subscription of R$ 1.239 billion in redeemable nominative preferred shares, issued by TmarPART. With these funds, the holding will buy Lexpart Participações S/A and Alutrens Participações S/A interest in Telemar Participações, corresponding to 10.275% and 10%, respectively. BNDESPAR will also subscribe securities amounting to R$ 1.330 billion, issued by AG Telecom (of Andrade Gutierrez group) and LF TEL (of La Fonte group).
Last but not least, BNDESPAR will be able to sell about 45% of its current interest TmarPART’s capital stock (around 11% of the holding’s capital stock) through a public auction, to rebalance the interests in the controlled companies. In this auction, three pension funds - Petros, of Petrobras employees, Funcef, of Caixa Econômica Federal, and Previ, of Banco do Brasil, will be able to increase their interest in TmarPART capital stock.
Shareholders’ Agreement – As a usual practice in their shareholding interests, the Bank’s equity arm managed to ensure several protections in the new shareholders’ agreement it will participate.
Without BNDESPAR’s vote, for instance, the company cannot perform operations that may endanger control stability. BNDESPAR will also keep a qualified veto on relevant matters, such as mergers, split-offs and general corporate reorganizations.
If the shareholding control is sold to third parties, BNDESPAR will be entitled to preemptive and tag along rights. That means in the event of sale, it may choose to exercise its preemptive rights on the sale, or even trade its shares for the same price adopted by the holding, which was not allowed so far.
The shareholders’ agreement, signed by BNDESPAR, also ensures that both companies keep their staff. The document sets forth that Oi and Brasil Telecom must keep the same number of job positions recorded on February 1, 2008, for a three-year period.
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