OAS S.A. Announces Information Regarding Negotiations With Certain Holders Of OAS Investments GmbH's 8.25% Senior Notes Due 2019, OAS Finance Limited's 8.00% Senior Notes Due 2021 And OAS Finance Limited's 8.875% Perpetual Notes And Brookfield Asset Management Inc. And Approval Of Its Plan Of Reorganization

SAO PAULO, Dec. 18, 2015 /PRNewswire/ -- OAS S.A. (together with certain of its affiliates also subject to Brazilian insolvency proceedings, the "Company") announced today that it has engaged in additional discussions and reached an agreement with certain holders of, or managers of entities holding beneficial interests in, the above-captioned notes (the "Notes," such holders of the Notes, together with the managers of entities holding beneficial interests in the Notes, the "Noteholders") and Brookfield Asset Management Inc. (together with its affiliates and their respective managed vehicles, "Brookfield"), regarding a plan of reorganization for the Company and that the Company's plan of reorganization presented at the creditors' meeting that occurred on December 17, 2015 was approved at such creditors' meeting.

On October 19, 2015, the Company, the Noteholders and Brookfield executed confidentiality agreements (as amended, the "Confidentiality Agreements") to facilitate discussions among the Noteholders, the Company and Brookfield concerning the Company's potential alternatives for a proposed restructuring of the Company (the "Restructuring") and the terms and conditions pursuant to which the Company would implement a judicial sale process before the Bankruptcy Court (the "Invepar Auction") in which Brookfield would participate offering to buy all of the shares of Investimentos e Participacoes em Infraestrutura S.A. ("Invepar" and, such shares of Invepar, the "Invepar Shares") owned by the Company (the "Potential Transaction").

Pursuant to the Confidentiality Agreements, as amended, the Company agreed to disclose publicly, upon the expiration of a period of time set forth in the Confidentiality Agreements, certain information regarding the discussions that have taken place between the Company, the Noteholders and Brookfield concerning the Restructuring and the Potential Transaction (the "Confidential Information").

The information included in this press release and certain information posted on the Company's website referenced herein is being furnished to satisfy the Company's public disclosure obligations of all material and certain other Confidential Information under the Confidentiality Agreements.  The Confidentiality Agreements have terminated in accordance with their terms, except as otherwise provided in the Confidentiality Agreements.

Discussions among the Company, the Noteholders and Brookfield

During the weeks beginning October 19, 2015, October 26, 2015 and November 2, 2015, representatives of the Company and the Company's financial and legal advisors (the "Company Representatives") met in New York with representatives of the Noteholders and the Noteholders' financial and legal advisors (the "Noteholder Representatives") and representatives from Brookfield and its legal advisors (the "Brookfield Representatives") to discuss the Restructuring and the Potential Transaction.  On October 22, 2015 the Company Representatives provided to the Noteholder Representatives a fourth written restructuring term sheet representing possible terms of a Restructuring (the "Fourth Company Term Sheet").  On October 23, 2015, the Noteholder Representatives provided to the Company Representatives a fourth written restructuring term sheet representing possible terms of a Restructuring (the "Fourth Noteholder Term Sheet").

At the meetings that occurred during the week beginning October 19, 2015, the Brookfield Representatives notified the Noteholder Representatives and the Company Representatives that, at the Invepar Auction, Brookfield would be willing to bid R$1.35 billion for the Invepar Shares (the "Proposed Price"), subject to a plan being approved by creditors and ratified by the Court and a sale process in compliance with articles 60 and 142 of the Brazilian Bankruptcy Law and subject to acceptable terms and conditions to be set forth in an offer for share purchase and related documentation the forms of which were to be negotiated.  During such meetings the parties also discussed proposed amended terms for the DIP financing that Brookfield would provide (the "DIP Financing"), the original terms of which had been agreed between the OAS entities and Brookfield, with financing documents executed on May 14, 2015.  The terms of the amended DIP Financing discussed included a principal amount of R$225,000,000, an interest rate equal to the CDI rate plus 13.06%, a maturity of 18 months, a commitment fee of no greater than 2% and a disbursement fee of no greater than 1% of the face amount of the DIP Financing.  Other provisions of the original DIP Financing would remain in place, including bid protections and topping rights, although the Noteholders proposed that the right to top should terminate if the agreement for the purchase of the Invepar Shares terminated, and Brookfield did not approve such modification to the original DIP Financing terms. A draft commitment letter, along with draft annexes, containing such proposed amended terms for the DIP Financing were shared by Brookfield Representatives with the Noteholder Representatives (the "Modifying DIP Commitment Documents"). The Company proposed revisions to these documents and also shared such revisions with Noteholder Representatives.

At these meetings, the Noteholder Representatives notified the Company Representatives and the Brookfield Representatives that the Noteholders would be prepared to support a plan of reorganization for the Company (the "Plan") that contemplated Brookfield attending and participating in the Invepar Auction, offering to purchase the Invepar Shares at the Proposed Price on an "as is, where is" basis with no purchase price adjustment, subject to (1) final documentation being acceptable to the Noteholders, (2) resolution of the remaining open terms and conditions of the Plan acceptable to the Noteholders, (3) the Plan containing the other terms provided in the Fourth Noteholder Term Sheet, and (4) the draft of the Plan being in form and substance acceptable to the Noteholders.

On and during the week of October 24, 2015, the Brookfield Representatives delivered to the Company Representatives and the Noteholder Representatives a draft of a binding offer (the "Brookfield Offer", as such has been amended as described herein) memorializing Proposed Price and other terms and conditions pursuant to which Brookfield would submit an offer for the Invepar Shares in the Invepar Auction.  Meetings were held among the Company Representatives, the Noteholder Representatives and the Brookfield Representatives during which the terms and conditions set forth in the Brookfield Offer were discussed.  In addition, the Company Representatives and the Noteholder Representatives discussed the potential terms of the Plan.

During the week beginning November 2, 2015, the discussions regarding the Brookfield Offer, the Plan, the Potential Transaction and the Restructuring continued.  In connection with such discussions, the Company Representatives shared with the Noteholder Representatives and the Brookfield Representatives a draft Plan, and the Noteholder Representatives and Brookfield Representatives provided comments on the same.  In accordance with the terms and conditions of the Fourth Noteholder Term Sheet, the Plan was to be premised and conditioned on the sale of the Invepar Shares for not less than the Proposed Price in cash and having an executed Brookfield Offer from Brookfield at the Proposed Price.  In addition, certain exhibits to the Plan were shared with the Noteholder Representatives, including, term sheets and draft agreements related to the financial instruments to be issued pursuant to the Plan (the "Plan Implementation Documents") and a draft forbearance and settlement agreement (the "Settlement Agreement") regarding certain litigation claims.  In one or more telephonic conferences during the week of November 9, 2015, the Company Representatives also shared orally with the Noteholder Representatives certain information regarding potential sales of assets held by the Company in its investment divisions other than the Invepar Shares, including that the only assets advancing with reasonable certainty toward a sale are the Company's stakes in SAMAR – Solucoes Ambientais de Aracatuba S.A., for which the Company has an executed binding offer, Arena Gremio and OAS Oleo e Gas S.A., and that the aggregate value expected to be derived from the sale of certain of these assets would likely equal approximately R$125-140 million, which amount would likely be sufficient to allow the Company to perform certain of the obligations set forth in the Plan.  Moreover, the Company Representatives discussed with the Noteholder Representatives and the Brookfield Representatives the possibility of Invepar selling all or a portion of the assets of LAMSAC or all or a portion of the equity interests in LAMSAC held indirectly by Invepar (any such sale of such assets or such equity interests, a "LAMSAC Sale") in connection with the Restructuring and that the Company may exercise its voting rights (or may cause the members of the board of directors of Invepar designated by the Company to exercise their voting rights) in favor of a LAMSAC sale.  Such parties also discussed the terms and conditions pursuant to which a LAMSAC Sale could occur.  Specifically, such parties discussed that a LAMSAC Sale could occur so long as:

1. the LAMSAC Sale is made through the best offer within the scope of an all‑cash sale bid process, the net amount of which to be received by the Invepar must at least be the greater of (a) two billion Reais (R$ 2,000,000,000.00) and (b) an amount that is sufficient to repay in full certain debentures (the "Invepar Debentures") in respect of which Invepar is the obligor,
2. Brookfield is provided with the possibility of tendering in the bidding process run in connection with the LAMSAC Sale and shall have received access to the same documents and been treated equally to other bidders,
3. Invepar launches a mandatory early redemption process (a "Mandatory Early Redemption") or a tender offer (a "Tender Offer") as provided for in the indenture governing the Invepar Debentures, and
4. the proceeds arising from the LAMSAC Sale are actually used within 30 days of receipt to perform in full the payment of the holders of the Invepar Debentures in connection with such Mandatory Early Redemption or Tender Offer.

The Company Representatives discussed with the Brookfield Representatives and the Noteholder Representatives that the best offer selected by Invepar in the bidding process run in connection with a LAMSAC Sale may contemplate an up‑front payment of less than the total purchase price together with deferred cash payments for the balance of the total purchase price so long as:

1. the offeror has, on the date the offer is made (a) an international corporate credit rating that is equal to or better than BB/Ba2 (two notches below investment grade) or (b) if such offeror has a corporate credit rating that is less than BB/Ba2 (two notches below investment grade), the offeror has obtained and presents evidence of a letter of credit from a first‑tier bank in Brazil guaranteeing the payment of the amount to be paid through deferred cash payments,
2. the offer calls for (a) at least fifty percent (50%) of the total purchase price to be paid on the date the offer is accepted as the best offer, (b) a total purchase price the present value of which is equal to at least two billion Reais (R$ 2,000,000,000.00) using a discount rate equal to the greater of (x) the interest rate applicable to the Invepar Debentures and (y) seventeen percent (17%) per year, (c) a schedule for deferred cash payments that will result in the payment in full of the total purchase price in no more than one (1) year from the date the offer is accepted as the best offer, (d) up front and deferred cash payments denominated in Brazilian Reais and payable in cash and (e) until the total purchase price has been paid in full, a pledge or fiduciary lien to Invepar of the equity interests in LAMSAC that are the subject of the offer to secure the offeror's obligation to make the deferred cash payments.

On November 15, 2015, the Brookfield Representatives informed the Company Representatives that Brookfield did not intend to execute a Brookfield Offer or to amend the original DIP Financing at such time. 

On November 17, 2015, at the Company's request, Brookfield provided its views on the revised terms that would need to be agreed in order for Brookfield to re-commence its consideration of a transaction, as follows: (1)  execution of an amendment to the Shareholder's Agreement satisfactory to Brookfield, in Brookfield's sole discretion, as a condition precedent to closing the Brookfield Offer; (2) Brookfield's right to terminate the Brookfield Offer if the results of the ABC Due Diligence are not considered satisfactory to Brookfield, in Brookfield's sole discretion; and (3) Brookfield's existing right to top in the DIP Financing being modified to terminate in conjunction with a termination of the stalking horse bid, if (a) the DIP matures (i) on the date of the closing of the acquisition of the Invepar shares, or (ii) 6 months after termination of the stalking horse bid, and (b) in case the Invepar shares are sold to any third party during the six-month period during which there is no right to top, in which event Brookfield would be owed a break-up fee equivalent to R$67.5 mn (5% of the amount of the stalking horse bid).  Since that date, the Company Representatives, the Noteholder Representatives and the Brookfield Representatives continued discussions regarding the Brookfield Offer and topping rights.  In the course of such discussions, all parties agreed that the Company and Brookfield would not enter into any such modifications to existing terms and conditions of the DIP Financing.

The Noteholder Representatives also informed the Company Representatives that they were not prepared to support the Plan as outlined above.  The Fourth Noteholder Term Sheet provided that the Plan was to be conditioned on (i) the sale of the Invepar Shares for not less than the Proposed Price in cash, (ii) the execution of the Brookfield Offer by Brookfield (or other offer in form and substance identical to the Brookfield Offer by any other winning bidder at the Invepar Auction (an "Alternative Offer")), and (ii) the existence of a termination event upon the earlier of (a) the Brookfield Offer's (or an Alternative Offer's) termination or (b) failure to close pursuant to the terms of the Brookfield Offer (or an Alternative Offer) by March 31, 2016 (unless extended according to the terms of the Draft Offer (or an Alternative Offer)).

In light of the status of the discussions with Brookfield, the Company proposed that Noteholders consider alternate reorganization plans. Such alternatives were set forth and described in a presentation provided by the Company Representatives ("Company Presentation") to the Noteholders and Noteholder Representatives on November 16, 2015. In one such possible alternative, the Company suggested that Noteholders succeed to the Company's position as a shareholder of Invepar, and Noteholders become indirect shareholders of Invepar, possibly with a view to selling the Invepar Shares at a later date. The Company confirmed that under such a plan, Noteholders would become subject to the existing shareholders agreement among the current Invepar shareholders. As part of enabling Noteholders to understand and assess such proposed possible plan, the Company explained several pertinent aspects of that shareholders agreement to Noteholders and/or their advisors. These are specifically as follows, and each as also discussed in connection with the Potential Transaction:

1. Invepar shareholders may not transfer their shares unless they shall have complied with a right of first refusal provided to each Invepar shareholder.  Such right entitles each shareholder to a 30-day notice period within which it may indicate interest in acquiring the Invepar Shares on the terms of a notified proposed transfer.  Any transferee of Invepar Shares becomes subject to the shareholders agreement.
2. Invepar shareholders have agreed to certain non-competition provisions, including requirements that shareholders direct concession opportunities to Invepar.  It is further agreed that the Company shall be provided the opportunity to execute the works related to any such concession awarded to Invepar.
3. Invepar shareholders have agreed to a list of material steps and transactions that Invepar may undertake only upon the unanimous agreement of all of the Invepar shareholders, including without limitation (a) approval of the annual business plan, (b) issuance of new shares or indebtedness convertible into shares, (c) distribution of dividends, (d) the incurrence of material indebtedness or the provision of guarantees, (e) the disposal or encumbrance of material assets, and (f) the transfer of Invepar Shares to third parties who are not party to the shareholders agreement, as may be permitted.

In connection with the discussions related to the alternative reorganization plans, on November 22, 2015, the Company Representatives provided to the Noteholder Representatives a term sheet (the "Alternative Structure Term Sheet") setting forth a possible alternative structure for the Plan (the "Alternative Structure"), which would be implemented in the event that the Invepar Shares were not sold at the Invepar Auction or otherwise by a date set forth in the Alternative Structure Term Sheet.  During the week of November 23, 2015, the Noteholder Representatives informed the Company Representatives that, while the terms and conditions set forth in the Alternative Structure Term Sheet were unacceptable to the Noteholders, the Noteholders were amenable to including provisions in the Plan incorporating the Alternative Structure in modified form.  Since then, the Company Representatives and the Noteholder Representatives continued discussions regarding the Alternative Structure, which has yielded a revised and agreed-upon Plan incorporating the Alternative Structure pursuant to which, in the event that the Brookfield Offer or an Alternative Offer is not selected as the winning offer at the Invepar Auction, the Invepar Shares will be transferred to a special purpose vehicle owned by certain creditors.  In that scenario, such vehicle will hold the Invepar Shares and may seek to sell them at a later date.

In addition to the disclaimers and qualifiers set forth in the materials themselves, all statements made in the Fourth Noteholder Term Sheet, the Modifying DIP Commitment Documents, the Brookfield Offer, the Plan, the Plan Implementation Documents, the Settlement Agreement, the Company Presentation and any other document disclosed in connection with this press release are in the nature of settlement discussions and compromise, are not intended to be and do not constitute representations of any fact or admissions of any liability, and are for the purpose of attempting to reach a consensual compromise and settlement.  Nothing contained in the Fourth Noteholder Term Sheet, the Modifying DIP Commitment Documents, the Brookfield Offer, the Plan, the Plan Implementation Documents, the Settlement Agreement, the Company Presentation and any other document disclosed in connection with this press release is intended to or shall be construed to be an admission or a waiver of any rights, remedies, claims, or causes of action or defenses. The information contained in the Fourth Noteholder Term Sheet, the Modifying DIP Commitment Documents, the Brookfield Offer, the Plan, the Plan Implementation Documents, the Settlement Agreement, the Company Presentation and any other document disclosed in connection with this press release is for discussion purposes only and shall not constitute a commitment to vote for or consummate any transaction described therein.  The Noteholders have informed the Company that none of the Noteholders is a temporary insider or fiduciary of the Company or any of its subsidiaries or affiliates or any creditor or equity owner of the Company or any of its subsidiaries or affiliates, and each of the Noteholders expressly disclaims any purported fiduciary duty to any such parties.

The Company has published the following documents on its website, available at http://www.oas.com.br:

• the Fourth Noteholder Term Sheet,
• the Plan (together with all exhibits, annexes and schedules thereto, including the Brookfield Offer in substantially final form and the Plan Implementation Documents which were ultimately included in the Plan),
• the Settlement Agreement (together with all exhibits, annexes and schedules thereto),
• the Plan Implementation Documents which were shared among the Noteholder Representatives and the Company Representatives but which were not ultimately included in the Plan and not finalized,
• the last draft of the Modifying DIP Commitment Documents shared by the Company Representatives with the Noteholder Representatives,
• a chart provided by the Company Representatives to the Noteholder Representatives containing certain information regarding the existing Invepar Shareholder Agreement, and
• the Company Presentation.

Comunicacao OAS
+ 55 11 2124-1437
+ 55 11 9-9110-3163

Related Links

http://www.oas.com.br