Portugal's stock market regulator on Friday suspended trading in
shares of Portugal Telecom SGPS SA until the firm discloses
"relevant information" about the sale of an operating unit to
France's Altice SA.
The regulator, CMVM, said it had asked Portugal Telecom several
times since Dec. 22 to provide more details about a Jan. 12
shareholder meeting to approve the sale but hadn't received a
response.
PT is in the process of merging with Brazilian phone company Oi.
The combined group is planning to sell its operations in Portugal
to Luxembourg-based Altice for EUR7.4 billion ($9.13 billion).
The suspension followed PricewaterhouseCoopers' publication of
findings from an investigation into failed investments made by
Portugal Telecom in units of collapsed Portuguese financial
conglomerate Esprito Santo.
PWC said in a 31-page report that PT had failed to perform any
risk analysis before purchasing hundreds of millions of euros worth
of bonds issued by the Espirito Santo units.
The report said PT had made consecutive purchases of bonds
issued by units including Rio Forte Investments SA "immediately
upon the termination of another investment." This successive
rollover of investments may have delayed the defaults of Rio Forte
and another unit of the conglomerate, Espirito Santo International.
The two units defaulted in July 2014.
The auditor said it based its conclusions on documentary
evidence and interviews with former and current executives of PT
and Espirito Santo. It said it couldn't establish who at the phone
company had authorized the investments. Between 2010 and 2014, the
report said, purchases of securities issued by the Espirito Santo
group were never subject to approval or consideration by PT's board
of directors, executive committee or audit committee.
"Many decisions and approvals were made informally and without
evidence regarding who made those decisions or approved certain
transactions," the report said.
Write to Matthew Cowley at matthew.cowley@wsj.com and
Christopher Bjork at christopher.bjork@wsj.com
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