Dow Jones sources confirm other reports that Rioforte is preparing to file for creditor protection but say it could come “over the next days,” citing a person familiar with the situation.
The good news is that the company may have worked out a somewhat pre-packaged restructuring plan that would avoid all its assets falling into the mess that is the bankruptcy court system.
Rioforte will present a restructuring plan to a judge that, if approved, will allow the company to sell assets and take other steps to raise funds without interference from creditors, the person added.
The key will be cooperation from Portugal Telecom but that’s likely because it’s largely owned by the same family that owns Banco Espirito Santo. The risk now is that larger problems begin to leak out of Portugal Telecom and Banco Espirito Santo, especially as clients start asking questions. Secondly, it’s hard to believe the Portugal Telecom and Oi merger won’t hit some major snags.
