Oi collapses on the stock exchange after company approves grouping of shares

The shares of the telecommunications company Oi, in judicial reorganization since 2016, collapsed on the Stock Exchange this Tuesday (18), after the board of directors had approved the day before the grouping of common (voting rights) and preferred (which have voting rights) shares. priority in receiving dividends).

A reverse split is a process in which a company reduces the number of shares outstanding in the market, gathering a certain amount of shares into one.

The objective is to raise the value of shares to a level above R$1, in order to comply with the regulatory requirement established by B3, the Brazilian Stock Exchange, which prevents companies from having shares traded below this minimum price. The proposal still needs to be approved at a general meeting to be held on November 18.

Oi’s shares are traded at a value below R$1 — common shares closed the trading session on Tuesday (18) at R$0.32, and preferred shares were worth R$0.73. The two registered strong devaluation this Tuesday, of 11.1% and 9.9%, respectively.

Year-to-date, common shares are down approximately 58%, while preferred shares are down 42%.

The new price of the common share, with greater liquidity, should be around R$ 16 after the grouping is concluded, while the preferred share should be R$ 36.50, estimates analyst Gabriel Gracia, from Guide Investimentos.

According to the company’s announcement, the grouping of shares will be in the proportion of 50 to 1 – thus, 50 common shares (OIBR3) and 50 preferred shares (OIBR4) will be transformed into one share each. In this way, Oi’s capital stock will be divided into approximately 132 million shares, and no longer 6.6 billion shares.

“The split signaled to the market that the company does not see the value of the shares exceeding the R$ 1 mark in the short term, an amount necessary to meet the B3 regulations regarding the minimum price per share”, says Gracia.

“The fundamentals remain the same, the finances remain the same, the perspectives remain the same”, says João Frota Salles, from Senso Investimentos. However, the grouping factor of 50 to 1 may have been a little scary, as it was above what the market was expecting, but the fall was exaggerated, evaluates Salles.

The Guide analyst also explains that, after the grouping of shares, any fractions resulting from the process will be regrouped in whole numbers and sold on B3, with the amounts made available proportionally to the shareholders.

In addition to adapting the company’s share prices to the Exchange’s rules, “the implementation of the grouping will enable a healthier and fairer secondary market, an objective pursued by the B3 rule itself”, Oi said in the statement released on Monday (17) .

Oi is in the midst of a dispute with TIM, Claro and Telefônica Brasil in an impasse that involves company assets purchased by the three at auction at the end of 2020 for around R$16.5 billion.

The companies disagreed on the final value of the deal, with the buyers asking for the sale value to be reduced by R$ 3.2 billion for technical reasons. The matter will be discussed between the parties in the B3 Arbitration Chamber.

Oi entered into judicial reorganization in 2016, at the Court of Justice of Rio de Janeiro, after accumulating a gross debt of approximately R$ 64 billion, with about 55 thousand creditors.

with Reuters