The market is spooked by the pending report into Portugal Telecom loans to Grupo Espírito Santo subsidiary Rioforte.
PT shares slid closer to the cliff edge today with a 20% drop to their lowest value ever and are trading at around 5% of their value just a year ago.
The President of BPI Fernando Ulrich commented that the PT/Oi merger is a disastrous marriage and everything should be done to stop it happening, such is the ‘monstrous’ destruction of shareholder value already witnessed.
"It amazes me that noone is doing anything to stop this merger which is a tragedy for the shareholders of PT SGPS," said Ulrich in an interview with Reuters, adding,
"Urgent action is required because it is the fall of the shares in Oi that is dragging down the share price of PT SGPS. This is a monstrosity, is a tragic marriage and shocks me to see this tragedy for the shareholders of PT SGPS."
In Brazil, Oi shares have dropped 16% to record lows and by the end of today’s trading PT shares slid more than 20% to the lowest level ever.
The market is deeply concerned that the PwC report into PT management, particularly its loan arrangements with Grupo Espírito Santo companies, will turn out to be explosive and embarrassing.
After delays and the issuing of a preliminary report to the stock market regulator and PT, the full document now has been delivered to these two parties and revelations are expected soon.
The Chairman of PT SGPS, João de Mello Franco, met the Securities Market Commission (CMVM) to ‘provide additional information’ yesterday and the city is tensing itself for some heavy trading in PT shares tomorrow, unless they are suspended to atke the heat out of the situation.
There is a shareholders general meeting looming for PT next week and the main vote will be on the sale of PT to the French company Altice.
The PwC audit of financial relations between PT and Grupo Espírito Santo from the eyar 2000 was requested by PT's board of directors, then still headed by Henrique Grenadeiro in August 2014, following news of the ‘investment’ of €897 million in Rioforte.
This was the investment that was never repaid to PT, leaving its shareholders vulnerable at the very time it was merging with Oi in Brazil.
PT’s offices were turned over yesterday by the police, an action reflected in today’s share price for PT of just 0.642 on worries that the shareholders’ meeting may not go ahead if fraud or corruption allegations are fomalised.
"Raids in the company and the risk of postponement of the general meeting to approve the sale of PT Portugal to Altice are creating a climate of mistrust and is exerting selling pressure on PT SGPS" said SérgioVieira of Orey Financial this afternoon, in perhaps the understatement of the day.
