Portugal Telecom (PT) Lower as Brazil State Development Bank Questions Rioforte Deal

July 9, 2014 9:17 AM EDT
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Portugal Telecom (NYSE: PT) shares are lower in early trading as Brazil's state development bank, BNDES, lashed out at the company following a recent debt acquisition from one of it's shareholder's holding companies.

Bloomberg reported that Portugal Telecom acquired about $1.22 billion of Commercial Paper from Rioforte last April. Rioforte is controlled by Grupo Espirito Santo, which also has a 10 percent stake in the telecom.

In an emailed statement earlier Wednesday, BNDES said the transaction isn't consistent with minimum standards of good corporate governance.

Analysts speculate that Rioforte won't be able to make payments on the commercial paper, which are due July 15th and 17th, saddling Portugal Telecom with losses while also increasing the company's leverage.

Shares of Portugal Telecom are down 7 percent Wednesday.

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