Q&A Judicial Reorganization 29 May 2017

Transcription

1 Q&A Judicial Reorganization 29 May 2017 For information purposes only. All creditors should seek their own independent legal, financial, tax and business advice. ATTENTION: The Second List of Creditors presented by the Judicial Administrator was published on 29 May What is a judicial reorganization? Judicial reorganization On 20 June 2016, Oi S.A. ( Oi ) and some of its subsidiaries, namely Oi Móvel S.A., Telemar Norte Leste S.A., Copart 4 Participações S.A., Copart 5 Participações S.A., Portugal Telecom International Finance B.V. ( PTIF ) and Oi Brasil Holdings Coöperatief U.A. ( Coop ) (collectively the RJ Debtors ) filed for judicial reorganization ( RJ or judicial reorganization ) proceedings with the 7th Corporate Court of the Judicial District of the State Capital of Rio de Janeiro, Brazil (the Brazilian Court ). The processing of the RJ was granted by the Brazilian Court on 29 June A judicial reorganization proceeding aims to preserve the value of a company and the role it plays in the economy, for the benefit of all its stakeholders. The objective is to promote the reorganization of a company experiencing short-term difficulties and enable it to continue performing its usual activities, maintaining services for customers and preserving jobs while providing creditors with the recovery that they agree with through the voting and approval of a judicial reorganization plan (the RJ Plan ). The RJ therefore aims to preserve the ability of Oi and its subsidiaries (the Oi Group ) to offer all of its services to its customers while allowing the Oi Group to renegotiate its debts. On 22 July 2016, the Brazilian Court appointed PricewaterhouseCoopers Assessoria Empresarial Ltda. as the financial judicial administrator and Escritório de Advocacia Arnold Wald as the legal judicial administrator in the RJ (together, the Judicial Administrator ). On 31 March 2017, the Brazilian Court replaced PricewaterhouseCoopers Assessoria Empresarial Ltda. from the position of financial judicial administrator with ConsórcioBDOPro. However, given that ConsórcioBDOPro declined the position, on 10 April 2017 the Brazilian Court held a special hearing, in which Escritório de Advocacia Arnold Wald was appointed to fulfill (in addition to its role as legal judicial administrator) the position of financial judicial administrator, such that it now fulfills solely the position of Judicial Administrator.

2 RJ Plan According to the Brazilian Judicial Reorganization Law, the current debts (except for tax debts) and outstanding bills to pay, including the ones not due yet, are frozen at the moment a company files a request for the judicial reorganization. These debts will be paid following implementation of the RJ Plan that must be presented to the Brazilian Court and approved by a vote of creditors. Services contracted after the date of the RJ filing will follow the regular payment flow. On 5 September 2016, the RJ Debtors filed a joint and consolidated RJ Plan with the Brazilian Court. The RJ Plan contains the principal measures that have been proposed to creditors to overcome the RJ Debtors current financial and economic difficulties. On 22 March 2017, Oi s board of directors approved certain basic amendments to be made to the financial terms of the RJ Plan. Objections to the RJ Plan On 8 September 2016, the Brazilian Court issued a notice regarding the filing of the RJ Plan, explaining that, in case of any oppositions, all creditors will have the opportunity to formally object to the RJ Plan ( Objection to the RJ Plan ) during a 30-business day term starting only after the list of creditors reviewed by the Judicial Administrator (the Second List of Creditors ) is published. The Second List of Creditors was published on 29 May What is the deadline to make a creditor claim under the judicial reorganization proceeding? On 20 September 2016, the RJ Debtors prepared and published in the official gazette in Brazil a list of creditors (the First List of Creditors ). The First List of Creditors can be accessed via the following link: Creditors in general had until 11 October 2016 (15 business days following publication of the First List of Creditors, the time period set forth in the Brazilian Bankruptcy Law) to present to the Judicial Administrator either (i) proof of any credit or claim ( Habilitação de Crédito ) ( Creditor Claim )that was not included in the First List of Creditors, or (ii) an objection ( Divergência ) ( Objection to the First List of Creditors ), if, according to the creditor, the amount of a particular credit or claim listed in the First List of Creditors was inaccurate or incorrectly classified. If the creditor agreed with the amount indicated in the First List of Creditors, then such creditor did not have to file a Creditor Claim or an Objection to the First List of Creditors. In case of holders of bonds issued by Oi, PTIF or Coop, the indenture trustees of the bonds, namely, (i) The Bank of New York Mellon for Oi and Coop and (ii) Citicorp Trustee Company Limited for PTIF, were named as the creditors for all of the international bonds issued by the RJ Debtors in the First List of Creditors. Therefore, individual bondholders did not need to present a Creditor Claim or an Objection to the

3 First List of Creditors to have their claims recognized and consequently paid in accordance with the RJ Plan. A creditor has not lost its right to object to the final creditor list if it did not present an Objection to the First List of Creditors by 11 October 2016, as the First List of Creditors is subject to review by the Judicial Administrator, who has published on 29 May 2017 a Second List of Creditors, to which creditors also have a right to object. A creditor who did not present a Creditor Claim to the Judicial Administrator by 11 October 2016 can, as of now, judicially file a late creditor claim ( Late Creditor Claim ). Given the publication of the Second List of Creditors on 29 May 2017, creditors now have 10 business days to judicially file their objections to said list ( Objection to the Second List of Creditors ). 3. Is the 10 day term to file an Objection to the Second List of Creditors counted in business days or calendar days? And what about the term to present a Late Creditor Claim? As explained above, the term to file an Objection to the Second List of Creditors is counted in business days in Brazil, as stated by a judicial decision rendered by the Brazilian Court dated 29 June 2016, in light to the Brazilian Code of Civil Procedure. There is no specific term to file a Late Creditor Claim, but it must be filed before the judge confirms the general list of creditors, which arises from the ruling of all Objections to the Second List of Creditors. 4. To which entity and to which address should a creditor address its Objection to the Second List of Creditors or Late Creditor Claim? What documentation would be necessary to formalize an Objection to the Second List of Creditorsor a Late Creditor Claim and through what procedure can a creditor file an Objection to the Second List of Creditors or a Late Creditor Claim? The creditor must file before the Brazilian Court, which must be done electronically through the Court s website its Objection to the Second List of Creditors or Late Creditor Claim, and such filing should be accompanied by documentation that proves (i) in case of an Objection to the Second List of Creditors, the correct amount or classification of the claim, according to the creditor; or (ii) in case of a Late Creditor Claim, the existence, amount and classification of the credit or claim against the RJ Debtor, according to the creditor. 5. How should I proceed if I cannot find my name in the First List of Creditors or the Second List of Creditors? With respect to bondholders, the First List of Creditors and the Second List of Creditors only included the names of the indenture trustee of each of the bonds issued

4 by Oi and its subsidiaries, PTIF and Coop, given the number of bondholders and the way in which the bonds are held by such holders. Therefore, we suggest that the bondholders review all notices published by the relevant indenture trustee and, in case of any doubt, contact their indenture trustee using the following contact details: The Bank of New York Mellon for Oi and Coop bondholders: Address: 101 Barclay Street, Floor 7E, New York, NY 10286, United States Attn: Global Finance Americas Facsimile: +1 (724) Citicorp Trustee Company Limited for PTIF bondholders: Address: Citicorp Trustee Company Limited, Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB United Kingdom Attn: Andrew McIntosh / Rachel Clear Facsimile: +44 (0) / +44 (0) andrew.mcintosh@citi.com rachel.clear@citi.com restructuringgroup@citi.com With respect to any other creditor, the term to present a Creditor Claim in relation to the First List of Creditors has already ended. If such creditor has not presented its Creditor Claim and cannot find its name in the Second List of Creditors, it should file a Late Creditor Claim. 6. Should creditors file claims against Oi or are the claims included as a debt of PTIF / Coop (as applicable)? As explained in more detail above, the First List of Creditors and the Second List of Creditors were presented in a unified manner for all RJ Debtors and includes all creditors (including bondholders) of the RJ Debtors, which include Oi, PTIF and Coop. 7. What are the next steps in the judicial reorganization proceedings? What is the expected timeline? Due to the end of the 15 business day term for creditors to present their Creditor Claim or Objections to the First List of Creditors to the Judicial Administrator (which, as described above, ended on 11 October 2016), the Judicial Administrator has reviewed the First List of Creditors and, taking into account such Creditor Claims or Objections to the First List of Creditors, presented the Second List of Creditors on 15 May 2017, which was published in the official gazette on 29 May 2017.

5 Given the publication of the Second List of Creditors, creditors now have 10 business days to present any Objections to the Second List of Creditors. At the same time, a 30 business day term for creditors (who are duly represented by an attorney admitted to practice in Brazil) to present to the Brazilian Court Objections to the RJ Plan has commenced. All relevant deadlines will continue to be published on the following website: If an Objection to the RJ Plan is presented, a general meeting of creditors (the General Creditors Meeting ) must be held in order to deliberate upon the approval, modification or rejection of the RJ Plan. In the event that no Objections to the RJ Plan are raised by any creditor, the Brazilian Court is required to confirm the RJ Plan unless it determines that the RJ Plan contains provisions that are illegal under applicable Brazilian law. 8. When will the bondholders need to vote on the RJ Plan? How should the bondholders submit their vote? The General Creditors Meeting is when a creditor can vote on the RJ Plan (this only occurs in circumstances where Objections to the RJ Plan have been filed). On 4 October 2016, the Brazilian Court rendered a decision recognizing the bondholders right to vote individually. To do so, they will have to present to the Judicial Administrator certain documents which will be determined in a notice (not yet published) specifying the procedure that must be followed (the notice will be published on the judicial reorganization website in due course). The respective trustees will vote on behalf of the bondholders who do not wish to vote individually, or those who do not correctly follow the voting procedure. We note that this judicial decision is currently subject to appeals. As a general rule, only creditors who are present at the General Creditors Meeting or who have delivered, in a timely fashion, a valid proxy to an attendee may vote (except for labour creditors who can eventually be represented by a union). 9. Who approves the RJ Plan? The RJ Plan is presented by the RJ Debtors but is exclusively approved by creditors in observation of Law No , dated 9 February However, the Brazilian Court must also confirm the RJ Plan to ensure that it complies with Brazilian law. If the RJ Plan is not approved by the majority of creditors in each of the classes of creditors, it can be crammed down by the judge if certain legal requirements are met. In general terms, the legal requirements for cram down according to the Brazilian bankruptcy law are (i) approval by creditors representing more than half of the amounts of the creditor claims attending the General Creditors Meeting; (ii) approval by two of

6 the classes of creditors; and (iii) approval by at least one third of the creditors of the class that did not vote in favor of the RJ Plan. 10. If the RJ Plan is approved, what are the next steps? After the RJ Plan is approved, the provisions contained therein will apply for the payment of all debts subject to judicial reorganization in accordance with the dates, terms and implementation steps set out in the RJ Plan. Following the Brazilian Court confirmation of the RJ Plan, the RJ Debtors will be considered, for a period of two years, to remain under judicial reorganization. 11. If the RJ Plan is rejected by the creditors at the General Creditors Meeting, would a new RJ Plan be filed? If the RJ Plan is rejected by the creditors at the General Creditors Meeting, it can be crammed down by the Brazilian Court, as explained above. However, if the legal requirements for the cram down are not met, the RJ Debtors may be declared bankrupt by the Brazilian Court and, in this instance, the judicial reorganization would be converted into a Brazilian liquidation proceeding. 12. If the RJ Plan is rejected and there is no agreement between the shareholders and the bondholders, can the judge impose an alternative RJ Plan? No, the judge cannot provide for an alternative RJ Plan. The RJ Debtors are the only entities who can submit an RJ Plan, and they ultimately control any revisions and amendments in relation to it. The RJ Plan can, however, be crammed down by the Brazilian Court, as explained above. 13. What is the current status of Coop and PTIF? As explained above, a RJ filing was made in respect of Coop and PTIF as foreign entities for RJ subject to the judicial reorganization proceeding together with the other RJ Debtors in Brazil on 20 June The processing of the RJ was granted by the Brazilian Court for all RJ Debtors, including Coop and PTIF, on 29 June On 5 September 2016, the RJ Debtors (including Coop and PTIF) filed a joint and consolidated RJ Plan with the Brazilian Court. Dutch Suspension of Payments ( Suspension of Payments ) On 9 August 2016, Coop filed a petition within the District Court of Amsterdam, the Netherlands (the Dutch Court ) for Suspension of Payments. On 30 September 2016, PTIF filed a petition in the Dutch Court for Suspension of Payments. The Suspension of Payments petitions were filed in order to ensure compatibility in the Netherlands with the RJ Debtors judicial reorganization proceeding in Brazil while protecting Coop and PTIF from creditor enforcement actions in the Netherlands that would be potentially

7 detrimental to that process. On 9 August 2016 and 3 October 2016, respectively, the Dutch Court granted Coop s and PTIF s requests and provisionally granted Suspension of Payments. The Dutch Court appointed Mr. J.R. Berkenbosch of Jones Day, Amsterdam,the Netherlands, as Coop s judicial administrator in the Netherlands and Mr. J.L.M. Groenewegen of CMS Derks Star Busmann N.V., Amsterdam,the Netherlands, as PTIF s judicial administrator in the Netherlands (each a Dutch Administrator and together the Dutch Administrators ). The Dutch Administrators were judicially appointed to oversee the provisionally granted Suspension of Payments processes and act in the interest of the creditors of Coop and PTIF (as applicable) together with Coop and PTIF s managing board (as applicable).mr. W.F. Korthals Altes and Ms. M.J. Geradts of the Dutch Court were appointed as the supervisory judge of Coop and PTIF, respectively. On the 1 st of December 2016, the Dutch Administrators and certain creditors (in the case of Coop) and the notes trustee issued by PTIF, purportedly acting at the determination of the majority of certain creditors (in the case of PTIF) filed requests for the conversion of PTIF s and Coop s Suspension of Payments into Dutch bankruptcy processes( Bankruptcy ) (together, the Conversion Requests ). After the hearings, on 12 January 2017, to resolve the Conversion Requests, the Dutch Court denied the Conversion Requests, therefore maintaining Coop s and PTIF s Suspension of Payments, by decision rendered in February 2, Conversion into Dutch Bankruptcy On 10 February 2017, certain creditors (in the case of Coop) and the notes trustee issued by PTIF purportedly acting at the determination of the majority of certain creditors (in the case of PTIF) appealed against the decisions that denied the Conversion Requests of each of PTIF and Coop. On 29 march 2017 the hearings took place to decide about such appeals and, on 19 April, 2017 the Dutch Court of Appeal ruled in favor of the appeals, therefore converting Coop and PTIF s Suspension of Payments into Bankruptcy. On 1 May 2017, Coop and PTIF filed cassation appeals before the Dutch Supreme Court against the decisions that converted the Suspension of Payments into Bankruptcy. 14. What is the effect of the Bankruptcy according to Dutch law? As mentioned above, the Dutch Court of Appeal declared Coop and PTIF bankrupt by decision of 19 April In addition, the Dutch Court appointed the former administrators as bankruptcy trustees (each a Dutch Trustee and together the Dutch Trustees ) and the former supervisory judges as supervisory judges in the Bankruptcy of PTIF and Coop. The most important effect of the Bankruptcy from a Dutch law perspective is the fact that PTIF and Coop lose the power to dispose of their assets with retroactive effect from 19 April :00 hours as a matter of Dutch law. So far as the law of the Netherlands is concerned, only the Dutch Trustee can dispose of the assets from then on. Also according to Dutch law, the bankruptcy estate is only liable for obligations incurred by the debtor after the adjudication of the Bankruptcy if such obligations are for the benefit of the bankruptcy estate.

8 For certain actions the Dutch Trustees require the prior consent of the supervisory judge, including where they intend to initiate legal proceedings against a third party. On 1 May 2017, both PTIF and Coop filed appeals of the Dutch Court of Appeal decisions to convert PTIF and Coop into Bankruptcy with the Dutch Supreme Court. While pending these appeals, the Dutch Trustees are expected to act prudently when performing their duties and to refrain from taking any action that would be irreversible, until such time as the decisions to convert the Suspension of Payments proceedings are final and binding. The Dutch Supreme Court also recently affirmed that when an appeal against a Dutch Suspension of Payments proceeding is pending, a Dutch Trustee is only authorized to perform irreversible acts when those acts (i) are in the best interests of the estate and (ii) cannot be delayed considering all relevant facts and circumstances. In the previous Q&A to bondholders (dated 29 March 2017), it was noted that, as part of the Suspension of Payments, Coop and PTIF had each offered their creditors composition plans which contemplated that Coop and PTIF would restructure their debts pursuant to the RJ Plan with the ultimate aim of satisfying their creditors. Normally, in the Suspension of Payments, the creditors would be allowed to vote on such plans. However, as a result of the conversion into Bankruptcy, no voting on the Dutch composition plans has taken place and the Dutch composition plans that were offered in the Suspension of Payments are currently suspended. Therefore, the management boards of Coop and PTIF may offer new Dutch composition plans to their creditors. If the management boards of Coop and PTIF offer new composition plans, such plans will need to be approved by a majority of the creditors of Coop and PTIF (as applicable), representing a majority of the claims, who are present and (allowed to) vote at the creditors meeting relating to such plan. 15. I am a creditor of Coop and/or PTIF. What happens to my claim in the Bankruptcy? In the Netherlands, usually, the creditors of Coop and PTIF must submit their claims to the applicable Dutch Trustee. Normally, a verification meeting will be held in which the Dutch Trustee, the debtor and the various creditors may challenge the provisionally admitted claims. If a verification meeting is held, all claims must be filed before the date of such meeting. There is no prescribed manner to file claims in Bankruptcy (i.e. there is no standard claim submission form). Claims are generally submitted by sending a letter to the Dutch Trustee that sets out the claim, including any documents substantiating such claim. In the Netherlands, creditors of Coop and PTIF must submit their claims to the applicable Dutch Trustee. Please note that at this time, creditors of Coop and PTIF are requested not yet to file claims with the Dutch Trustees. Creditors of Coop and PTIF should in any case take appropriate action to file claims in the RJ process, noting that, in case of holders of bonds issued by PTIF and Coop, the indenture trustees of the bonds were named in the First List of Creditors and the Second

9 List of Creditors, and therefore bondholders did not need to present a Creditor Claim or an Objection to the First List of Creditors, nor will they have to present a Late Creditor Claim or an Objection to the Second List of Creditors to have their claims recognized and consequently paid in accordance with the RJ Plan. The Dutch Trustees will send notices to all known creditors of Coop and PTIF, as applicable, setting out the relevant information and deadlines, amongst others, the abovementioned deadline for the creditors to submit their claim as well as to the extent that PTIF and/or Coop decide to offer Dutch composition plans the relevant information in respect of the content of and voting mechanics for such composition plan. These notices will be published on the following websites: (for Coop) and (for PTIF) and will contain further instructions on the filing of claims and (in case a composition plan will be offered) the voting procedure. During the Bankruptcy, Trustee will prepare a list of claims submitted, listing the creditors, amounts owed and whether the claim is admitted or disputed by the Dutch Trustee. If a claim is disputed by the Dutch Administrator, the supervisory judge or the Dutch Court will decide the amount of the claim that is permitted to vote on the composition plan. Please note that the amount so determined is solely relevant for voting purposes. All notices, public reports, court documents and other relevant (general) information relating to the Bankruptcy will be made available via the following websites for Coop and for PTIF. Through the PTIF Dutch Trustee s website, interested parties can also, free of cost, subscribe to the PTIF Dutch Trustee s CMS Electronic Alert Service and, after subscription, such parties will receive an alert whenever new documents or information has been published on the website. Further correspondence between the Dutch Trustees and creditors may be conducted by general mail, or otherwise, depending on the preference of each Dutch Administrator. Relevant information for all creditors will be published on the following website: Each of the Dutch Trustees will also publish any relevant information for Coop and PTIF s creditors on the following websites: for Coop and for PTIF. Important developments and key dates will generally also be published in the Dutch online insolvency register, accessible via NOTE: creditors of PTIF and Coop should be aware that, although the Dutch Bankruptcy proceedings are taking place in parallel with the RJ, it is important that all claims against any of the RJ Debtors (including PTIF and Coop) are properly claimed in the RJ. Therefore, all such creditors should give attention to the publication of the Second List of Creditors and follow the recommended procedure above. Bringing claims in the Dutch process alone may well not be sufficient to fully protect the interests of such creditors.

10 16. I am a Class III (unsecured) creditor and I have reviewed the RJ Plan and the options of payment in relation to the reorganization of the RJ Debtors, but couldn t clearly understand what my options were. Please clarify in a simple manner the options I am entitled to under the RJ Plan. All creditors should seek their own independent legal, financial, tax and business advice. However, the following, which is outlined in the EY Economic Financial Report dated 5 September 2016 and appended to the RJ Plan, is a summary of the payment options currently available for bondholders. All defined terms below which are not defined in this Q&A shall have the same meaning as set out in the RJ Plan. Linear Payment - Creditors with credits worth up to BRL will be paid in a single installment 20 days after the RJ Plan is confirmed by the Brazilian Court. Creditors with credits that exceed BRL may choose to be paid in one single installment, provided that they agree to receive only the amount of BRL 1, as full payment of their respective credit and related costs, which will be paid in 20 business days from the date the creditor opts to be paid in this manner. For Class III creditors (i) who are not paid according to the linear payment described above, (ii) who do not want to be paid in accordance with one of the options for partner creditors which differ from Option 3 (below), and (iii) whose credit relates to Administrative Fines, such creditors will be offered a menu of options limited to a maximum amount per option. The creditor may choose only one of them, except in the case of Option 3, where it can choose more than one option: o Option 1: Restructuring without Conversion - Limited payment of BRL 9, , for debts in BRL, whose interest rate will be the highest between 8% per annum and TR + 1% per annum; and limited payment of USD 1,872,540, for debts in dollars or euros, whose interest rate is 1.25% per annum. The debt will be repaid in 14 semiannual installments from the 11 th year counted from when the RJ Plan is confirmed by the Brazilian Court. Interest/monetary correction will be capitalized into the debt in the first 7 years and thereafter shall be paid semi-annually. o Option 2: Restructuring with Conversion - Issuance of a securities package issued by any of the RJ Debtors to be delivered to creditors holding credits totaling up to BRL 32,330,000,000.00, whereas at least one of the securities will be convertible or entitle the creditor to the subscription of common shares of Oi (or the company that will replace it after the completion of any corporate reorganization). The securities will have face value (in dollars, euros or reais) equivalent to up to BRL 10 billion. During the three years after the RJ Plan is confirmed by the Brazilian Court, at the end of each semester, the company will be able to redeem, in part or in full, the convertible securities for their corresponding face value plus interest of 4% per year. If the securities in question are not redeemed within three years, the securities will be

11 converted into shares representing 85% of Oi s (or company that will replace it after the completion of any corporate reorganization) share capital. If creditors holding credits totaling BRL 32 billion or more do not choose to receive or be allocated in this securities package, then the percentage of the share capital to be attributed to such creditors will be adjusted proportionately. This option is restricted to creditors with a credit of at least BRL 50 thousand. o Option 3: New Funds Strategic Creditors - Creditors that wish to grant new loans to entities within the Oi group will have the payment terms of the new credit applied equally to the payment of claims subject to the judicial reorganization (in the proportion of 1 to 1), subject to the limit of USD 2 billion or the equivalent in BRL. The conditions of the new loans include, amongst other things: (i) the principal will be repaid in 10 years, in 5 annual installments of 20% starting from the 6 th year counted from the date that the RJ Plan is confirmed by the Brazilian Court, and (ii) interest rate of Libor + 1.5% per annum for loans denominated in dollars, and CDI % per annum for loans denominated in BRL, which will be capitalized to the debt principal in the first five years and thereafter shall be paid annually, along with the main installments. o Option 4: General Option - this option will apply to creditors who are not entitled to the options above; or if Options 1 to 3 reach their limits and the creditor still has an outstanding balance to receive, besides other specific situations of the RJ Plan, such as the payment of administrative fines if there is no satisfactory mediation. Option 4 considers the repayment of the principal in 9 annual and consecutive installments, the first due after a 10 year grace period, and interest/monetary correction of 0.5% per annum for debt denominated in dollars or euros and TR + 0.5% per annum for debt denominated in BRL, applied from the RJ Plan s confirmation by the Brazilian Court. Only the total amount of interest and monetary correction accrued during the relevant period will be paid, together with the last installment of the principal. On 19 December, 2016, the Brazilian Court granted the installment of mediation procedures, in which any and all creditors that wish to receive an advance of 90% of their credits, up to BRL50.000,00, can participate. This decision, along with other details of the mediation procedures are available at the website I would like to understand what a waterfall system within the RJ Plan means: if I choose Option 1, should the limit of such class be calculated in currency or in a global scale? After the amounts within Option 1 are fulfilled, should the limit shift to Option 2, followed by Option 3? The limit (cap) for Option 1 is calculated according to both the currency and the global amount. Considering Option 1 provides for restructuring of the current Class III claims in two currencies, if one of them has reached its respective limit, the creditor s outstanding balance will automatically fall into the other currency still available. However, for debts denominated in dollars or euros, the creditor can chose between

12 allocating the outstanding balance in the other currency (BRL) if still available or directly in Option 2. If the limits of both currencies have been reached within Option 1, the outstanding balance will be allocated into Option 2. However, if Option 2 has reached its limits, the outstanding balance will be paid according to Option 4. If Option 2 has reached its limit and the creditor has an outstanding balance, this amount will be paid in accordance with Option 1, if there is still any portion available within Option 1. However, if Option 1 has reached its limits, the outstanding balance will be paid in accordance with Option What is included in the RJ Plan for creditors within Class III? For instance, are Class III Judicial Deposit Partner Creditors or Class III Credits Administrative Fines included in the options given to Class III Creditors? If they are, does this consider the net amount of collateral to these credits or not? All Class III creditors, except for Class III Credits Administrative Fines, can choose among Options 1, 2, 3 or 4 (as further explained above), taking into consideration the limits set forth in each option and the deadlines established in the RJ Plan in relation to such options. For Strategic Creditors with judicial deposits, any outstanding balance remaining after the deposit is released will paid in accordance with Option 4. NOTICE: The above information is a summary of certain implications of the RJ and the Dutch Bankruptcy, and is intended for general guidance only and does not purport to be complete and does not eliminate the need for bondholders to hire an attorney in Brazil in relation to the RJ and/or in the Netherlands in respect of the Dutch Bankruptcy. The Oi Group (and its affiliates) make no representation regarding the legal, tax, business or financial consequences of the RJ or DutchBankruptcy to any creditor of the Oi Group. Creditors should consult with their own advisors as to legal, tax, business, financial and related aspects of the RJ and the Dutch Bankruptcy and their decisions to buy, sell or hold any securities of the Oi Group s, or to vote any claims in a creditors meeting (including the General Creditors Meeting), in light of their particular circumstances. The information provided above is subject to updates.