Portugal Telecom’s merger with Brazil’s Oi group has been hit by the problems of the Espirito Santo family.
One of the family’s financially troubled companies owes 897 million euros to Portugal Telecom (PT) and cannot pay it back.
The Brazilians said as a result they would revise the terms of the merger so PT will have a smaller holding in the merged firm.
Financial analyst Camilo Lourenço explained: “When PT negotiated the merger with Oi, the terms were that PT would get 38 percent of the new merged company, PT’s situation is now different. Now there is 900 million euros less in PT accounts, that has to be taken into account as the company is now worth less.”
PT, which is Portugal’s largest telecoms services group, will now have a 25.6 percent stake in the merger with Oi. But investors were reassured that the deal is to go ahead.
PT now plans to take legal action to try and recover the debt from the Espirito Santo family company.
Meanwhile shares in Banco Espirito Santo rebounded from Tuesday’s all-time lows.
Portugal’s largest listed bank has confirmed it has more than enough reserves to deal with its exposure to the Espirito Santo empire, but the final financial fate of the family remains uncertain.