Material Fact – Public Offering
ALGAR TELECOM S.A. (“Company”), pursuant to the provisions of Article 157, Paragraph 4, of Law 6.404, of December 15, 1976, as amended (“Brazilian Corporations Law”), and to (CVM) Instruction No. 358, of January 3, 2002, as amended, hereby announces to its shareholders, investors and the market in general that, given the approval by the Company’s Board of Directors on this matter, in a meeting held on October 16, 2017, was filed an application on this date to register a public offering of: (i) primary distribution of a certain number of registered, book-entry, common shares with no par value, all free and clear of any liens or encumbrances, to be issued by the Company (“Shares” and “Primary Offering”, respectively); and (ii) secondary distribution of a certain number of Shares issued by the Company and owned by Algar S.A. Empreendimentos e Participações (“Algar Participações”) and Árvore S.A. Empreendimentos e Participações (“Árvore Empreendimentos”) and other shareholders to be established in a timely manner (as established below) (“Secondary Offering”), to be carried out in Brazil, in the non-organized over-the-counter market, pursuant to CVM Instruction No. 400, of December 29, 2003, as amended (“CVM Instruction 400”) and coordinated by Bradesco BBI S.A. (“Bradesco BBI” or “Leading Coordinator”), by Banco BTG Pactual S.A. (“BTG Pactual” or “Stabilizing Agent”), by Banco J.P. Morgan S.A. (“J.P. Morgan”), by Banco Santander (Brasil) S.A. (“Santander”), by UBS Brasil Corretora de Câmbio, Títulos e Valores Mobiliários S.A. (“UBS”), by Banco Itaú BBA S.A. (“Itaú BBA”) and by BB-Banco de Investimento S.A. (“BB Investimentos”, which together with the Leading Coordinator, BTG Pactual, J.P Morgan, Santander, BB Investimentos, UBS and Itaú BBA, are the “Offering Coordinators”), including placement efforts abroad based on Rule 144A of the U.S. Securities Act of 1933, as amended by the U.S. Securities and Exchange Commission (“SEC”), as amended (“Securities Act”) (“Offering”).
Pursuant to Article 14, Paragraph 2, of CVM Instruction 400, the number of Shares initially offered, without considering the Supplementary Shares (as established below), may, at the discretion of the Company and/or Algar Participações, Árvore Empreendimentos and other shareholders that may take part in the Offering, in common agreement with the Offering Coordinators, be increased by up to twenty percent (20%) of the total number of Company’s Shares initially offered (excluding the Supplementary Shares) issued by the Company and owned by Algar Participações, Árvore Empreendimentos and other shareholders that may take part in the Offering, under the same conditions and for the same price of the Shares initially offered (“Additional Shares”).
Pursuant to Article 24 of CVM Instruction 400, the number of Shares initially offered, without considering the Additional Shares, may be increased by up to fifteen percent (15%) of the total Shares initially offered, to be sold by the Company, by Algar Participações, by Árvore Empreendimentos and by other shareholders that may take part in the Offering (“Supplementary Shares”), pursuant to the option to be granted by Algar Participações, by Árvore Empreendimentos and by other shareholders that may take part in the Offering, and by the Company to the Stabilizing Agent, which will be assigned to meet any excess demand that may be verified during the Offering.
The price per share (“Price per Share”) will be established after the conclusion of the procedure of collection of investment intentions, to be carried out in Brazil, by the Offering Coordinators and, abroad, by international placement agents, in line with the provisions of Article 23, Paragraph 1, and Article 44 of CVM Instruction 400 (“Bookbuilding Procedure”) and will have as parameter the indications of interest according to the demand’s quality and quantity (by volume and price) collected from institutional investors during the Bookbuilding Procedure. After the Offering is concluded, Algar Participações will continue to hold the Company’s shareholding control.
In due time, a notice to the market will be released, pursuant to Article 53 of CVM Instruction 400, including information on: (i) the other terms and conditions of the Offering; (ii) the locations to obtain the “Preliminary Prospectus of the Public Offering of Primary and Secondary Distribution of Common Shares Issued by Algar Telecom S.A.” (“Preliminary Prospectus”); (iii) the estimated dates and locations of disclosure of the Offering; and (iv) the conditions and procedure to subscribe and purchase the Shares, the booking period and the period of the Bookbuilding Procedure.
This Material Fact is for informational purposes only, pursuant to the provisions of the law in force, and must not be considered as an advertising material of the offering of Shares. The application to register this Offering is under analysis and, therefore, the Offering will only commence after CVM grants the necessary registrations. No registration of the Offering or the Shares will be made at SEC or at any agency or regulatory body of the capital markets of any other country, except in Brazil, with CVM. The Shares may not be offered or subscribed in the United States of America or to persons considered U.S. persons, as established in Regulation S, unless they are registered at SEC or pursuant to an exemption of registration under the Securities Act.
Together with the application to register the Offering, on this date, was also filed an application to convert CVM’s registration as issuer of securities of the Company from category “B” to category “A”, pursuant to CVM Instruction No. 480, of December 7, 2009, as amended (“Conversion of Category”), as well as submitted an admission application to trade the shares issued by the Company on Novo Mercado, a special trading segment of B3 S.A. Brasil, Bolsa, Balcão (“Novo Mercado”).
The Company will keep its shareholders, investors and the market in general up to date on the development of the Offering, including on the meeting of the Company’s Board of Directors, to be convened to resolve on the Price per Share and the increase in the Company’s share capital resulting from the Offering, as well as on the Conversion of Category and the listing of its shares in Novo Mercado.
Uberlândia – MG, October 16, 2017.
Jean Carlos Borges
Chief Executive Officer and Investor Relations Officer