Portugal Telecom approves new merger terms with Oi

The shareholders of Portugal Telecom approved the new terms of the company's merger with Brazil's Oi, which were revised following the Rioforte default.

The new format was approved in a meeting held Monday in Lisbon. According to Portuguese press, nearly 99% of shareholders voted in favor of the deal. It was the last shareholders meeting to be headed by resigning CEO Henrique Granadeiro.

In a statement, Oi said its board of directors, as well as that of controller TmarPart, both greenlighted the definitive agreements.

The disclosure that the Portuguese operator invested almost 900mn euros (US$1.22bn) in debt issued by Rioforte, a unit of its second largest shareholder, the troubled Banco Espirito Santo, threatened to derail the Oi-PT marriage. Rioforte defaulted and the bank was split in two.

As a result, Oi and Portugal Telecom executives resigned, Portugal Telecom's ratings were downgraded, and Oi and its shareholders threatened with legal action.

Portugal Telecom had to accept a smaller stake in the new company that will be formed after the merger, CorpCo, to 25.6% from around 38% before the Rioforte affair.

According to the new terms, the holding PT will be maintained with the sole purpose of collecting the debt from Rioforte.