Quantcast
Last updated on April 18, 2014 at 21:21 EDT

Oi announces material fact of step-up in basis of assets arising from Brasil Telecom S.A.’s acquisition of control of Telemar Norte Leste S.A.

April 26, 2013

RIO DE JANEIRO, April 26, 2013 /PRNewswire/ — Oi S.A. (“Oi“) and Telemar Participacoes S.A. (“Telemar Participacoes“), in compliance with article 157, paragraph 4, of Law No. 6,404/76 and pursuant to CVM Instruction No. 358/02, inform their shareholders and the market in general that, in response to the formal consultation that Oi submitted to the Brazilian Securities and Exchange Commission (Comissao de Valores Mobiliarios – CVM) (“CVM“) to confirm the most appropriate accounting treatment for the step-up in basis of assets arising from Brasil Telecom S.A.’s acquisition of control of Telemar Norte Leste S.A. as part of the corporate reorganization that was approved on February 27, 2012 (“Corporate Reorganization“), as reflected in Oi’s individual and consolidated financial statements as of and for the year ended December 31, 2012 previously filed with the CVM, Oi was informed by CVM, in a letter received on this date, that on April 24, 2013, the Board of Directors of CVM unanimously decided to accept Oi’s position that the reversal of the step-up in basis recorded by Oi (in the total amount of R$12,849 million as of December 31, 2012), and the recognition of such amount in Telemar Participacoes’ financial statements, is the most appropriate accounting treatment for such event.

Subject to the conclusion of the necessary accounting and auditing work, Oi anticipates that the reversal of the step-up in basis will reduce Oi’s the depreciation, amortization and write-off of property, plant and equipment expenses by R$1,436 million for the fiscal year ended December 31, 2012, causing an increase in adjusted net income for such year of R$948 million.

The table below shows the principal impacts on Oi’s accounting records as a result of these adjustments.

                         As of and for the year ended December 31, 2012
                         ----------------------------------------------

                                        Reported Balance                Reversal of Step-Up in Basis and  Reclassification of Other Deferred Taxes
                                                                            Deferred Taxes and Social              and Social Contribution
                                                                                  Contribution                                                       Adjusted Balance
                                                       ----------------  --------------------------------   ---------------------------------------- ----------------

                                     (in millions of reais)
                                      ---------------------

    Assets
    ------

    Current                                                      21,145                                 -                                         -                  21,145
    -------                                                      ------                               ---                                       ---                  ------

    Noncurrent                                                   56,647                           -12,849                                     4,135                  47,933
    ----------                                                   ------                           -------                                     -----                  ------

    Total                                                        77,792                           -12,849                                     4,135                  69,078
    -----                                                        ------                           -------                                     -----                  ------

    Liabilities
    -----------

    Current                                                      17,067                                 -                                         -                  17,067
    -------                                                      ------                               ---                                       ---                  ------

    Noncurrent                                                   40,898                            -4,369                                     4,135                  40,664
    ----------                                                   ------                            ------                                     -----                  ------

    Shareholders' Equity                                         19,827                             -8,48                                         -                  11,347
    --------------------                                         ------                             -----                                       ---                  ------

    Total                                                        77,792                           -12,849                                     4,135                  69,078
    -----                                                        ------                           -------                                     -----                  ------

    Net Income                                                      837                               948                                         -                   1,785
    ----------                                                      ---                               ---                                       ---                   -----

Oi will file with the CVM a restatement of its financial statements as of and for the year ended December 31, 2012, as well as its quarterly financial statements.

Rio de Janeiro, April 25, 2013.

Alex Waldemar Zornig
Investor Relations Officer
Oi S.A.

Pedro Jereissati
Investor Relations Officer
Telemar Participacoes S.A.

Oi S.A.
Corporate Taxpayers’ Registry (CNPJ/MF) No. 76.535.764/0001-43
Board of Trade (NIRE) No. 3330029520-8
Publicly-Held Company

Telemar Participacoes S.A.
Corporate Taxpayers’ Registry (CNPJ/MF) No. 02.107.946/0001-87
Board of Trade (NIRE) No. 3330016601-7
Publicly-Held Company

Tickers: OIBR3, OIBR4

SOURCE Oi S.A.


Source: PR Newswire