Telemar Secures Loan for M&A

Brazil’s Telemar Norte Leste has obtained BRL4.3bn in 8-year CCBs, or bank credit certificates, from Banco do Brasil to help fund its acquisition of Brasil Telecom. The facility expires in 2016 and pays DI plus 1.30%, beginning May 2010. The CCB can be registered at Brazil’s clearing house Cetip and reoffered to other bank lenders in the secondary market. Telemar would retain its debtor status to Banco do Brasil, but the latter would be able to offload the risk by transferring ownership of the CCBs to third-party lenders, a likely scenario given the size of the transaction. The company, known now as Oi, is expected to fund the balance of the Brasil Telecom purchase, signed in April, by tapping different points on its yield curve. Total cost will be at least BRL12bn. Earlier this month Telemar approved the sale of BRL3.6bn in 1-year promissory notes to help fund the acquisition.