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Terms of the Exchange of Credits for Shares of Oi/TmarPart and the Option for the Purchase of Shares in Treasury to be Submitted to the Governing...

August 16, 2014



Terms of the Exchange of Credits for Shares of Oi/TmarPart and the Option for the Purchase of Shares in Treasury to be Submitted to the Governing Bodies of the Companies

By a News Reporter-Staff News Editor at Investment Weekly News -- Oi S.A. ("Oi," Bovespa: OIBR3, OIBR4; NYSE: OIBR and OIBR.C) and Telemar Participacoes S.A., ("TmarPart") in compliance with art. 157, 4 of Law No. 6,404/76 (the "Brazilian Corporation Law") and the Brazilian Securities and Exchange Commission (Comissao de Valores Mobiliarios - CVM) Instruction No. 358/02, in addition to the Material Fact dated July 15, 2014, notifies their shareholders and the market in general of the following regarding the terms of the agreements that may be entered into between Oi, TmarPart and Portugal Telecom SGPS S.A. ("PT SGPS") in relation to the financial investments in commercial paper of Rio Forte Investments, S.A. (the "Commercial Paper").

On this date, Oi and PT SGPS determined the terms that will be included in the definitive agreements and that will be submitted to the Board of Directors of Oi and the shareholders' meeting of PT SGPS for approval, which, once such approval has been obtained, will be entered into by PT SGPS and the companies that became subsidiaries of Oi as a result of the transfer of PT SGPS assets on May 5, 2014, that is, PT International Finance B.V. ("PT Finance") and PT Portugal SGPS, S.A. ("PT Portugal" and, together with PT Finance, the "Oi Subsidiaries"), as well as Oi and TmarPart and will establish the terms and conditions that may govern the transactions agreed upon by Oi and PT SGPS in connection with the financial investments in the Commercial Paper (the "Definitive Agreements").

The Definitive Agreements provide for: (i) an exchange whereby the Oi Subsidiaries will transfer to PT SGPS the Commercial Paper, and in exchange PT SGPS will transfer to the Oi Subsidiaries common and preferred shares of Oi (or of TmarPart, in the event that the exchange occurs after the merger of shares of Oi into TmarPart (the "Merger of Shares")); and (ii) the granting by the Oi Subsidiaries to PT SGPS of a call option to repurchase shares of Oi.

Main terms of the Exchange Agreement and Other Covenants (the "Exchange Agreement")

The Oi Subsidiaries and PT SGPS will conduct an exchange whereby PT SGPS will transfer to the Oi Subsidiaries unencumbered shares of Oi corresponding to 474,348,720 Oi common shares and 948,697,440 Oi preferred shares (the "Exchanged Shares"); and Oi, as compensation, will transfer the Commercial Paper to PT SGPS, in the total principal amount of EUR897 million, with no additional consideration (the "Exchange").

Because this transaction involves shares that will be placed in Oi's treasury, the implementation of the Exchange is subject to CVM authorization of (a) the receipt of the Exchanged Shares by the Oi Subsidiaries; (b) the maintenance of Oi shares (and, after the Merger of Shares, of TmarPart shares) in treasury, in an amount equal to the maximum number of Exchanged Shares; and the granting of the call option by the Oi Subsidiaries to PT SGPS, in an amount equal to the maximum number of Exchanged Shares.

The Exchange, which includes the transfer of the Exchanged Shares to the Oi Subsidiaries and the transfer of the Commercial Paper to PT SGPS, shall be concluded in up to three business days after the date of CVM approval.In accordance with the Definitive Agreements, in the event that the Exchange is not approved by March 31, 2015, none of the parties will be obligated to consummate the Exchange.

Main terms of the Call Option for the Purchase of Shares ("Option Contract")

Pursuant to the Option Contract, the Oi Subsidiaries will grant to PT SGPS an option (the "Option") to acquire 474,348,720 common shares and 948,697,440 preferred shares of Oi (or the corresponding number of shares of TmarPart after the Merger of Shares (the "Shares Subject to the Option")).

Keywords for this news article include: Oi S.A, Mergers, Acquisitions, Investment and Finance.

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Source: Investment Weekly News


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