Oi Shareholder Calls for Vote to Take Action Against CEO, CFO

Oi SA’s largest equity investor called for a shareholders’ meeting to decide whether to take legal action against the CEO and CFO and to scrutinize parts of the Brazilian phone company’s restructuring plan.

Chief Executive Officer Eurico Teles and Chief Financial Officer Carlos Brandao exceeded their authority by negotiating the plan with creditors without the board’s approval, and investors should decide whether to file a civil liability claim against them, Pharol SGPS SA said in a letter published Friday in a filing. 

The plan’s installment of new board members and a capital increase also require shareholders’ approval, said Pharol, a publicly traded holding company based in Lisbon.

Oi rebuffed the call, saying in a statement: “There’s no support for any allegation of supposed illegal behavior or violations of corporate bylaws by an Oi executive. The plan presented and approved -- by an ample majority of one class of creditors and practically unanimously by the three other classes -- adhered to the highest corporate governance standards and established legal precepts.”

Along with another major investor, Societe Mondiale, Pharol has agitated against the restructuring plan, which would dilute the holdings of shareholders and hand control of the company to creditors. The bankruptcy court overseeing Oi’s restructuring gave Teles full authority to negotiate with creditors without requiring the board’s approval, but that hasn’t stopped the shareholders from threatening legal action to keep the deal from going forward.