Telemar Goes Short to Complete BT Buy

The board of Telemar has approved the issue of BRL2bn in promissory notes to complete its takeover of Brasil Telecom. The 1-year notes will pay DI plus 3%. Bradesco is managing the operation, with Itau and Santander as co-managers. The telecom provider also known as Oi has already this year sold BRL3.6bn in 1-year promissory notes and borrowed BRL4.3bn in the form of 2016 CCB credits from Banco do Brasil to fund the BRL13bn purchase. The need for additional notes comes after a $1bn dollar bond issue failed in September. Last week, Brazil’s government made the necessary legal changes to clear the way for the purchase of BT, which now awaits final regulatory approval. Telemar and BT set a closing deadline of December 21, with the former having to pay the latter a BRL500m fine if it not closed by then. HSBC expects BRL3.8bn in synergies from the tie-up, from workforce reductions, consolidation of IT and operations systems, longer-term capex savings and revenue synergies from the combination of fixed line assets. The shop adds it expects the deal to be approved before December 21.