Refinancing short-term debt is a serious challenge for Net Serviços and a solution is being worked out, although it hasn?t proved possible to reach a framework agreement with all creditors, as originally planned, CFO Leonardo Pereira told PAY-TV News. In its third-quarter earnings report, Net said it would have to repay or refinance around 314 million Brazilian Reals in bonds, commercial paper and working-capital loans in the fourth quarter. The amount outstanding is now around 200m BRL. The most urgent negotiations are going on separately with each creditor, Mr Pereira said, and the terms differ case by case. He wouldn?t disclose details of those terms or how much Net has had to pay to refinance debts, but it?s presumably not cheap given Brazil?s rising sovereign risk premiums and the fact that Net?s largest shareholder is in default. At the same time the company is seeking a framework agreement with all creditors along lines similar to those discussed in mid-year in an arrangement that wasn?t put into effect. Exchange-rate fluctuation has had a perverse effect on Net?s capital structure, Mr Pereira noted, explaining that total debt corresponded to 1.4bn BRL at the end of September, when the exchange rate was 3.83 BRL per US Dollar, and is now down to about 1.1bn BRL with the exchange rate close to 3.50. Other measures include cost cutting and an attempt to increase average revenue per subscriber to offset net subscriber losses. This has been successful so far: third-quarter revenue was virtually flat year over year in local currency. Mr Pereira declined to give details in answer to analysts? questions about rumors of a deal with prospective buyers or lessees of its network, but confirmed that negotiations are proceeding.
Crisis
