By Brad Haynes and Ana Mano
SAO PAULO, June 23 (Reuters) - Brazil's biggest bankruptcy
filing ever is sending shockwaves far beyond the recession-hit
country's borders as operator Oi SA OIBR4.SA seeks creditor
protection from global telecoms suppliers and export banks
around the world.
Oi is seeking protection on over 500 million reais ($150
million) of accounts payable to international providers from
Nokia Corp NOKIA.HE and Ericsson (ST:ERICAs) ERICb.ST to IBM (NYSE:IBM) Corp
IBM.N and Alcatel-Lucent SA ALUA.PA , according to court
documents reviewed by Reuters.
The biggest Brazilian fixed-line carrier also owes about $1
billion to foreign development banks in China, Finland, Canada
and Germany, which encouraged exports to Brazil during a recent
surge in spending on wireless and broadband networks.
That cycle came crashing to a close this week with Oi's
record bankruptcy filing in a Rio de Janeiro court, punctuating
the broader slump in a sector curtailing investments to protect
profits amid Brazil's worst economic recession since the 1930s.
While those debts to suppliers are dwarfed by more than 17
billion reais in bank loans and some 34 billion reais in bonds,
they may create headaches for equipment and service providers
already struggling with slumping investments in the country.
"The focus is on keeping the company working. That's what
everybody wants," said a source close to the company. "Obviously
you don't want to affect suppliers, but that has to be discussed
in court."
Oi has refrained from making public comments while the judge
in Rio evaluates its petition.
The company was expected to be the only telecom group in
Brazil to raise capital spending this year, Credit Suisse (SIX:CSGN)
Securities analysts said last month in a note that forecast an
end to the industry's recent investment cycle driven by
fourth-generation mobile technology.
Although it did not announce an investment target for the
year, Oi invested around 1.2 billion reais in the first three
months of the year, about a quarter of the 4.5 billion reais
that Credit Suisse analysts forecast for the full year.
The question facing Oi now is how to pay for already
acquired equipment as it seeks an in-court reorganization of
65.4 billion reais in bonds, bank debt and operating
liabilities.
Oi has made no changes to its capital spending plans and is
doing everything it can to keep operations running normally,
said the source, who asked not to be named given the legal
proceedings under way.
Brazil's bankruptcy protection law allows Oi to stay current
on its bills going forward, but freezes all payments on services
rendered before the Monday filing while creditors negotiate how
to settle the debts.
Its biggest outstanding debt to a foreign supplier appears
to be 129 million reais due to Brazilian subsidiaries of
Finland's Nokia, which in 2013 bought out partner Siemens AG
SIEGn.DE in their network equipment venture.
Nokia's receivables are more than twice the 53 million reais
due to Chinese runner-up Huawei Technologies Co Ltd HWT.UL .
Asked about possible Oi-related provisions, Nokia, IBM,
Alcatel and Ericsson declined to comment. Huawei did not respond
to questions.
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FACTBOX-Global suppliers and banks hit by Oi bankruptcy filing
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