China Development Bank provides $500 million credit facility to Telemar Norte Leste SA to meet loan repayment obligations

Project narrative

In June 2011, China Development Bank (CDB) entered into a $500 million stand-by credit facility agreement with Telemar Norte Leste SA (TMAR), a Brazil-based telecommunications company and subsidiary of Oi SA., in order to meet other debt repayment obligations. The borrowing terms included a 2.898% interest rate (LIBOR plus 230 basis points), a 5-year maturity, and no grace period. Interest would be payable semi-annually through maturity in June 2016. The principal of these loans is payable commencing in October 2014. In July 2011, CDB disbursed $380 million. As of December 31, 2012, the outstanding principal amount under this credit facility was $380 million. This is not the first time CDB has lent to TMAR or its parent company Oi. In 2009, CDB provided a $300 million loan to Oi to purchase Huawei equipment (see Record ID#38142). In 2011, CDB provided a $500 million credit facility for debt repayment purposes (see Umbrella Record ID#59418). In 2015, CDB provided two separate $600 million loans to Oi: one for purchasing more Huawei equipment (see Record ID#59744) and another to help refinance TMAR's debts (see Record ID#59611). In June 2016, Oi SA filed Brazil's largest ever bankruptcy. Consequently, they were not able to meet their repayment obligations to CDB. On June 29, 2016, the request for processing the Judicial Reorganization of Oi Group was granted by the Judicial Reorganization Court and the respective Judicial Reorganization Plan ("PRJ") was approved by Oi Group creditors at the Creditors’ General Meeting held on December 19 and 20, 2017 and ratified by the Judicial Reorganization Court by decision issued on January 8, 2018. This plan described the different conditions and measures to be adopted to reverse Oi Group’s momentary crisis, having demonstrated its economic-financial and operational feasibility, as well as the profitability of its activities.