SAO PAULO (Reuters) - An influential shareholder in Brazil's Oi SA OIBR4.SA is working with U.S. and UK distressed debt hedge funds to maintain his central role at the telecoms provider as it struggles to emerge from bankruptcy protection, four sources said.

The logo of Brazilian telecoms company Oi SA is pictured on a payphone in Rio de Janeiro, Brazil November 1, 2017. REUTERS/Ricardo Moraes

The funds, the smallest group of Oi bondholders known as the G6, could help Nelson Tanure, who has a 6.5 percent stake in Oi and significant board clout, fend off rival restructuring plans by the company’s two largest bondholder groups.

The G6 includes Solus Alternative Asset Management LP, Attestor Capital LLP, Centerbridge Partners LP, Silver Point Capital LP, and Davidson Kempner Capital Management LP.

Tanure’s alliance with distressed debt funds illustrates the tangled ties that have formed in Latin America’s largest-ever bankruptcy, which has seen a procession of hedge and private equity funds dip into the process before withdrawing amid creditor and shareholder infighting.

It also shows the lengths to which shareholders such as Tanure - who has criticized opposing creditor groups as vulture funds - are willing to go to strengthen their hand before a Nov. 10 meeting in which creditors will vote on a plan to take the carrier out of bankruptcy protection.

As negotiations about Oi’s future intensify ahead of the November meeting that could determine whether it survives as a going concern, a big question is whether the G6 funds will stick by Tanure, the sources said, as two of them have at least temporarily withdrawn support.

A spokesman for Tanure, who has invested in distressed companies from the oil to media industries, defended the motivations of the allied funds, and denied any had withdrawn support.

“They have very different strategies from vulture funds, who manipulate information, motivated by spurious motivations and are dedicated to ultra short-term gains,” the spokesman said.

Solus, Silver Point, and Davidson Kempner, a big player in sovereign and territorial debt disputes in Argentina and Puerto Rico, declined to comment. Attestor and Centerbridge did not respond to requests for comment.

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Oi, Brazil’s fourth-largest carrier, filed for in-court restructuring 16 months ago, sagging under 65.4 billion reais ($20 billion) of debt. At stake is the future of the sole fixed-line telecoms carrier in about one-third of Brazil’s 5,500 municipalities.

SEPARATE TRACKS

Negotiations to bring Oi out of bankruptcy protection have essentially split into three separate tracks, said the sources, who requested anonymity due to the sensitivity of the issue.

The so-called Ad Hoc Group of Oi Bondholders and International Bondholders Committee, which – together with allied creditors – hold about 23 billion reais in debt, have met repeatedly with Oi’s management over the last two weeks. Those bondholders have put forth a proposal that would leave them with 88 percent of Oi’s equity.

The government, which is exposed to billions of dollars of Oi debt through state banks and unpaid regulatory fines, has formed a working group of its own to protect its interests.

On Monday, Brazil's solicitor-general is meeting with U.S. private equity fund TPG Capital Management LP and state-owned China Telecom Corp 0728.HK about a possible bid for Oi after it emerges from bankruptcy protection, local media reported.

Tanure – who has already formed an alliance with majority shareholder Pharol SGPS PHRA.LS – is working with the G6, who have only a fraction of the debt held by the main bondholder groups. His proposal would imply a significantly more severe haircut for the bondholders, the sources said.

Under the Tenure deal, Oi would need to pay the G6 funds substantial fees up front in return for a commitment from the group to inject capital into the carrier, the sources said.

People close to the other bondholder groups say the fees could reach 500 million reais, but people related to the Tanure group say this would only happen if the capital injection took two years to materialize. A short-term fee would be much lower, around 20 million reais, one of the sources said.

“This is about ... remunerating for the mobilization of capital, something that’s common in these types of negotiations,” Tanure’s spokesman said.

It is unclear how solid the G6 block remains: Davidson Kempner and Silver Point Capital fund have at least temporarily dropped out, four sources said.

But reasons the funds exited were unclear. One source said their withdrawal was only temporary, to avoid restricting the funds’ ability to trade on Oi´s debt while negotiating with the company.

Both bondholder groups will need as much creditor support as possible going into the Nov. 10 meeting in Rio de Janeiro.

A plan approved by Oi’s board last month was rejected by creditors for giving too much control to Tanure’s Societe Mondiale FIA, two people with knowledge of the matter told Reuters.

G6 support for Tanure’s alternative plan could change this. That’s because provisions in Brazilian bankruptcy law can lower the threshold needed for approval of a restructuring plan in some situations, lawyers involved in the deal say.

The judge overseeing the bankruptcy proceeding could decree a “cram down”, in which disagreeing creditors are forced to accept what a majority agreed to, the lawyers added.

Should creditors vote down the restructuring proposal outright, the company could be liquidated. The main bondholders want to avoid that at all costs, the sources said, as they would stand to lose more if the company were liquidated than if they accepted the Tanure-backed terms.

($1 = 3.28 reais)