Oi S.A. - Em Recuperação Judicial Announces Expiration of Rights Offering

NEW YORK, July 2, 2024 /PRNewswire/ -- Oi S.A. – Em Recuperação Judicial (the "Company") announced the expiration of its rights offering previously announced on the Launch of Restructuring Plan Subscription and Option Election Process press release dated as of May 31, 2024 (the "Offers") made pursuant to that certain rights offering memorandum dated May 31, 2024 (as amended or supplemented from time to time, the "Offering Memorandum") and the Company's judicial reorganization plan, declared effective by the RJ Court on May 29, 2024 ("RJ Plan"). The Offers expired at 5:00 p.m., New York time, on July 1, 2024 (the "Expiration Time"). Capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them in the Offering Memorandum.

Pursuant to the Offers, the Company's "Class III" financial creditors holding U.S. denominated claims had the right to either:

(a) subscribe for up to its applicable pro rata portion of U.S.$505,000,000 aggregate principal amount of the new 10.000% / 13.500% PIK Toggle Senior Secured Notes due 2027 to be issued by the Company (the "New Priority Notes"); and, upon the valid purchase of its proportional allocation of New Priority Notes by such eligible creditor, its existing claims shall be novated and replaced with (1) an aggregate principal amount equal to the lesser of (x) the aggregate amount of its existing claims and (y) an applicable pro rata portion, of the U.S. Dollar equivalent amount of R$6.75 billion aggregate principal amount of the Company's new 8.50% PIK Subordinated Secured Notes Units (the "Roll-Up Notes"); and (2) an applicable residual portion of common shares to be issued by the Company representing up to 80% of the total capital stock of the Company (the "New Shares" and together with the Roll-Up Notes, the "Option 1 Recovery"); or

(b) have its existing claims novated and replaced on a dollar-for-dollar basis for new loans, consisting of (1) an aggregate principal amount (equal to 8% of such eligible creditor's existing claims) of Subordinated Loans due 2044 (the "2044 Loan") and (2) an aggregate principal amount (equal to 92% of such eligible creditor's existing claims) of Subordinated Loans due 2050 (the "2050 Loan", and together with the 2044 Loan the "Option 2 Recovery"); or

(c) receive an entitlement to a payout under the RJ Plan as consideration for such eligible creditor's full amount of existing claims (each, a "Payout Recovery") of one of the following (1) solely in the case of a creditor holding no more than R$5,000 (or US$988.79) of existing claims, a full cash payment of such existing claims up to R$5,000 (or the equivalent amount thereof); (2) solely in the case of a creditor holding more than R$5,000 of existing claims, a cash payment of R$5,000 (or the equivalent amount thereof) (and an automatic waiver of any amount of existing claims in excess of R$5,000); (3) solely in the case of a creditor holding existing claims under the NQB Facility and holding no more than U.S.$10,000 of total existing claims, a full cash payment of all of such creditor's existing claims up to U.S.$10,000 on December 31, 2024; and (4) solely in the case of a creditor holding existing claims under the NQB Facility and holding more than U.S.$10,000 but no more than U.S.$20,000 of total existing claims, a full cash payment of all of such creditor's existing claims up to U.S.$20,000 on December 31, 2026.

Any Eligible Creditor (other than a DIP Roll Holder to the extent of its applicable DIP Obligations) that validly elected to subscribe for New Priority Notes pursuant to the Offers, is required to fund the cash purchase price of such subscribed for New Priority Notes such that such funds are received by the Subscription Agent within two Business Days (and prior to 5:00 P.M., New York City time, on such second Business Day) following receipt of e-mail confirmation of such eligible creditor's subscription amount from the Subscription Agent, unless extended by the Company in its sole discretion (such time and date, as the same may be extended, the "Subscription Time"), which Subscription Time shall for all such Eligible Creditors shall be no later than 5:00 P.M., New York City time on July 8, 2024.

Pursuant to the RJ Plan, a (i) failure by a Creditor to make a valid election in an Offer with respect to existing claims in accordance with the terms of the Offers or (ii) any Creditor who fails to fund (or, in the case of DIP Roll Holders, convert pursuant to and subject to the conditions in the Note Purchase Agreement) or whose funds are not timely received by the Subscription Agent, will, in each case, result in such Creditor have its existing claims automatically cancelled and novated with a right to receive from the Company the payment in full of such existing claims in five equal annual installments commencing with the first installment on the last business day of December 2048 and continuing on each one-year anniversary thereof (the "Default Recovery"). Such holders shall receive an escrow CUSIP (P73ESCAA6) evidencing its entitlement to the Default Recovery under the RJ Plan.

Concurrently with the Offers and pursuant to the RJ Plan, the Company also offered to creditors holding "Class III" financial credits denominated in Brazilian Reais, the right to (i) subscribe for new priority securities (and receive the Option 1 Recovery) or (ii) elect to receive the Option 2 Recovery or (iii) elect to receive the Payout Recovery, on terms consistent with those set forth in the Offering Memorandum. The subscription and election process for such creditors was being run in Brazil via the online platform https://credor.oi.com.br, and such process has also expired.

The Company's obligation to accept Subscriptions and/or existing claims for novation and replacement is subject to, and conditioned upon, the satisfaction or waiver of certain conditions set forth in the RJ Plan and the Note Purchase Agreement. Subject to the satisfaction or waiver of such conditions, the Company currently expects that the settlement date will occur on July 15, 2024. However, no assurance can be given that any such conditions will be satisfied or waived.

Neither the Offering Memorandum nor any related documents have been filed with the U.S. Securities and Exchange Commission, nor have any such documents been filed with or reviewed by any federal or state securities commission or regulatory authority of any country. No authority has passed upon the accuracy or adequacy of the Offering Memorandum or any related documents, and it is unlawful and may be a criminal offense to make any representation to the contrary.

This press release does not constitute an offer to sell or exchange, as applicable, or a solicitation of an offer to sell or exchange, with respect to, the New Priority Notes, Option 1 Recovery, Option 2 Recovery or Payout Recovery. No offer, solicitation, purchase, sale or exchange will be made in any jurisdiction in which such an offer, solicitation, purchase, sale or exchange would be unlawful. The Offers were made solely pursuant to the Offering Memorandum and the RJ Plan and only to such persons and in such jurisdictions as is permitted under applicable law.

Forward-Looking Statements

This press release contains forward-looking statements. Statements that are not historical facts, including statements of the Company's beliefs and expectations, business strategies, future synergies, cost savings, future costs and future liquidity, are considered forward-looking statements. The words "will", "shall", "would", "should", "anticipates", "intends", "believes", "estimates", "expects", "anticipates", "plans", "targets", "purpose", "projects", "forecasts" and similar expressions, as they relate to the Company or its management, are intended to identify forward-looking statements. There is no guarantee that the expected events, tendencies or expected results will actually occur. Such statements reflect the current view of the Company's management and are subject to various risks and uncertainties. These statements are based on several assumptions and factors, including general economic and market conditions, industry conditions, corporate approvals, operating factors and other factors. Any changes in such assumptions or factors could cause material differences between the actual results and current expectations. All forward-looking statements attributable to the Company or its affiliates, or people acting on their behalf, are expressly qualified in their entirety by the cautionary notices set forth in this paragraph. Undue reliance should not be placed on these statements. Forward-looking statements only speak as of the date on which they were made. Except as otherwise required by the Brazilian securities legislation and the rules and regulations of the CVM, or applicable regulatory authorities of other countries, the Company and its affiliates do not have any intention or obligation to update or publicly announce the results of any revisions to any of its forward-looking statements to reflect actual results, future events or developments, changes in assumptions or changes in other factors affecting forward-looking statements. However, it is advisable to consult other disclosures made by the Company on matters related to reports and communications filed by the Company within the CVM.

CONTACT: Oliver Slyfield - Thomas Choquet; tel: +44 2077040880

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