Tomahawk, WI 07/11/2014 (Basicsmedia)  Disclosing The Debt

Oi SA (NYSE:OIBR) has come on the merger agreement with the Portugal Telecom (NYSE:PT) which was otherwise delayed because of the recent dispute of the acquisition by Luxembourg banking giant Espirito Santo Financial Group (NASDAQOTH:ESFOF), regarding the commercial debts.

The Rioforte Dispute

The controversy has been continuing from a long time when Portugal Telecom purchased the $1.22 billion debt from Espirito Santo Rioforte, a holding company with most of its roots in Portugal, Spain and Brazil. The dispute came into picture due to a couple of reasons. The prominent one is that the Portugal Telecom disclosed the purchases when the fusion contract with Oi SA was reached. The second one being that some of the Espirito Santo holding companies are still under analysis in Luxembourg. The battle has already slowed the costly merger process and is hurting both the companies for quite a long time.

A Not So Good Case

Although there have been a lot of fright selling, still has not proved a real threat to neither the merger nor to the change of the conditions of the merger terms. The only drawback regarding the deal is that it has slowed down the things and is adding only to the merger costs. Portugal Telecom alone has a huge amount of $3 billion cash and its equivalents, so even if the Rioforte dispute is not so real and is all a rumor, than it is not a real threat for the continuing operations of the company.

The Actual Insight

The merger of Oi SA and Portugal Telecom has already made a lot of sense and it still does. Therefore, the merger seems almost certain to be done, as the companies are getting stronger into it. Although, the companies are considering some damage to their earnings, so even if the merger process is finished, it might take some time for them to come into combined smooth functioning.

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