Oi (OIBR3) on brink of default, says Standard & Poor’s

The company’s interest payment due February 5, 2023 totals $82 million, along with other smaller liabilities (Image: Gustavo Gomes/Bloomberg)

THE Standard & Poor’s downgraded, this Friday (3), the rating of Hey (OIBR3;OIBR4) in local currency from CCC to D, which means default.

According to the credit rating agency, the ‘D’ ratings “reflect our view that the injunction granted to the Hey It is similar to a standstill, as it allows the company not to pay any of its financial obligations in the next 30 days”.

sooner, aa Justice of Rio de Janeiro accepted the request for precautionary relief, on an urgent basis. The purpose of the injunction is to protect the telecommunications company’s cash from creditors, since it came out of judicial recovery at the end of last year and has no cash to pay off debts.

The company’s interest payment due February 5, 2023 totals $82 million, along with other smaller liabilities.

A S&P says that another possibility would be for the company to reach an agreement with creditors to restructure its debt, which we would consider a de facto default, given Oi’s stressed financial position.

“A Hey has been presenting credit metrics below average, with weak cash flows and interest coverage by Ebitda, which measures the operating result, below 1x”, he says.

In November 2022, the Hey hired a financial consultant to help negotiate with creditors and adjust its capital structure, which was still highly leveraged.

“The request for interim relief from the Hey suggests that negotiations took longer than expected, prompting the company to act to protect its cash position and operations,” he says.

Understand what happened to Oi

On Thursday, Oi filed a request for an urgent precautionary measure. The media was intended to preemptively protect the telecommunications company from creditors.

The request requested the suspension of the enforceability of certain obligations of the Heyaiming to protect your cash.

In addition, it allowed the company to continue negotiations with its creditors, with whom it has approximately R$ 29 billion in debtincluding banks and bondholders.

The company also said it had tried to reach an agreement with creditors to refinance its debt, but to no avail. According to Oi, its debts add up to R$ 29 billion.

Source: Moneytimes

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