France's Vivendi said on Tuesday it has until February to exercise a right to buy about 12 percent of Brazilian telecoms company GVT, seeking to dispel regulatory scrutiny in the South American nation about the transaction.
Vivendi has until Feb. 17 to exercise the right to buy up to 16.41 million shares of GVT from British-based investment fund Tyrus Capital, according to a securities filing by GVT in Brazil. Such a stake would give Vivendi about 63 of GVT's voting stock, up from almost 51 percent it now fully owns.
Brazil's securities regulator CVM said late on Monday that Vivendi has failed to explain why it has not settled the so-called irrevocable options for an additional stake of 19.6 percent in GVT.
Vivendi named Tyrus Capital as its counterpart in the transaction.
Research conducted by the CVM questions the capacity of Vivendi's counterparties to honor the options contracts described in the (previous) filing, the Rio de Janeiro-based regulator said.
Vivendi said in Tuesday's filing it has no legitimacy to assess whether Tyrus was capable of honoring the accords. A spokesman for Vivendi in Paris declined to offer more details on the response.
As part of its takeover of GVT, Vivendi signed an agreement with Tyrus to buy its 19.6 percent stake, or 24.93 million shares, in the Brazilian phone company.
Vivendi bought 8.52 million shares of GVT from Tyrus on Nov. 17, but has yet to purchase the remainder. As part of the agreement between Tyrus and Vivendi, the British investment firm ceded rights to call options on GVT shares to Vivendi.
Payment of the call options will be made in cash and the settlement and delivery of the GVT stock will be made according to appropriate rules, the filing said.
In a separate statement distributed on Tuesday from France, Vivendi said it boosted its stake in GVT, including options, another 5 percent to 62.85 percent.
Vivendi's bid values GVT at 7.2 billion reais, or about $4.2 billion.
A Vivendi spokesman in Paris declined to comment.
In a surprising move on Nov. 13, the French company acquired 37.9 percent of GVT's voting shares for 56 reais each and disclosed that it had the right to exercise the options from third parties it did not name, winning an additional 19.6 percent stake in the company.
The French company outmaneuvered Spanish telecom giant Telefonica, which had been aggressively seeking GVT.
Vivendi surpassed Telefonica's 50.5 reais-a-share offer made on Nov. 4 by 10.9 percent. Telefonica's $4 billion bid had been seen by most analysts as a sure winner.
Sources with direct knowledge of the situation said Telefonica was monitoring the developments and could resume a plan to buy GVT through a tender offer. Telefonica's media office in Sao Paulo declined to comment.
Vivendi rose 3 percent to 19.76 euros on Tuesday in Paris. GVT was unchanged at 55 reais from Monday's close. Telefonica gained 1.5 percent to 19.41 euros.
($1=1.74 reais) (Additional reporting by Elzio Barreto in Sao Paulo, editing by Maureen Bavdek)