SAO PAULO â€" Shareholders of the Brazilian telecommunications company Oi have overwhelmingly approved a capital increase and other measures, moving it closer to merging with Portugal Telecom.
In a filing on Thursday, Oi, Brazil’s largest fixed-line provider and fourth-largest mobile phone operator, said that just over 88 percent of the votes cast were in favor of four measures, including trying to raise as much as 14.1 billion reais, or about $6 billion, in new capital, in part by using shares based on a valuation of Portugal Telecom’s assets, which was also ratified.
The meeting took place at Oi’s headquarters in Rio de Janeiro, which will  be home to the new company.
With the vote, as well as with approval on Thursday from the Brazilian telecommunications  regulator,  the two companies  are closer to forming the largest telecommunications company in Portuguese-speaking countries. The merged company will seek to take on competitors Telefonica and America Movil, which is owned by Carlos Slim Helu.
The merger, announced on Oct. 2, has been contentious and faced scrutiny for unusual complexity. Significant cross-ownership already exists between the two companies. Since 2010, Portugal Telecom has had a 22.3 percent stake in Oi. And Oi already owns a stake in Portugal Telecom. They share the same chief executive, Zeinal Bava, who is also set to head the new company.
Minority investors in Oi, which has long been heavily indebted, have contested that its controlling shareholders are trying to shift their debt burden.
“In essence, what is going on is the transfer of the debt that is held by the controlling shareholders to the minority owners of Oi via the overvaluation of Portugal Telecom’s assets.†Mauro Cunha, head of Brazil’s Association of Investors in Capital Markets, or AMEC, said in an interview with DealBook earlier this week.
He said that “compensates Portugal Telecom shareholders for that assumption of debt but not the shareholders of Oi.â€
AMEC as well as Rio de Janeiro-based independent asset manager Tempo Capital, have argued that the controlling shareholders have conflicting interests and should not be allowed to vote on the valuation of Portugal Telecom’s assets and asked the securities regulator to intervene.
But on Tuesday, it ruled in favor of Oi’s controlling shareholders, clearing the way for the vote on Thursday.
The companies were expected to embark on a roadshow on Friday, according to Brazilian newspaper O Estado do S. Paulo and visit the United States, Chile, Canada, France, and Germany.
But the securities regulator has suspended Oi’s new capital offering for 30 days, citing possible violations to  quiet period rules.
Oi expects to price its new shares on April 16 and close the offer on April 23. Brazilian investment bank BTG Pactual is leading a consortium, according to securities filings and has already committed 2 billion reais.
