The company announced a global offering of 2,142,279,524 common shares, including 396,589,982 common shares in the form of American Depositary Shares. The offer also includes 4,284,559,049 preferred shares, including 828,881,795 preferred shares in the form of ADSs.
Oi SA offered the common shares at a price of R$2.17 a share and the preferred shares at R$2 a share. The company offered the common shares outside Brazil at a price of 97 cents per common ADS and preferred shares at 89.4 cents per preferred ADS.
The aggregate cash proceeds of the offering will total approximately $5.868 billion after underwriting discounts and commissions, before expenses.
The stock was down 15.38% to 88 cents at 10:15 a.m. on Tuesday.
Separately, TheStreet Ratings team rates OI SA as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate OI SA (OIBR) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Although OIBR's debt-to-equity ratio of 3.11 is very high, it is currently less than that of the industry average. Along with the unfavorable debt-to-equity ratio, OIBR maintains a poor quick ratio of 0.79, which illustrates the inability to avoid short-term cash problems.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Diversified Telecommunication Services industry and the overall market, OI SA's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- OIBR's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 55.18%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- OI SA reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, OI SA reported lower earnings of $0.39 versus $0.79 in the prior year. For the next year, the market is expecting a contraction of 108.7% in earnings (-$0.03 versus $0.39).
- OIBR, with its decline in revenue, underperformed when compared the industry average of 2.7%. Since the same quarter one year prior, revenues fell by 32.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full analysis from the report here: OIBR Ratings Report
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.