Oncoclinicas Do Brasil Servicos Medicos S.a.BMFBOVESPA: ONCO11

Oncoclinicas ends talks with Porto and Fleury, weighs new deals

· Issued by Oncoclinicas Do Brasil Servicos Medicos S.A.

Brazilian healthcare firm Oncoclinicas BMFBOVESPA:ONCO11 said on Tuesday it would continue to evaluate potential financial and corporate transactions after confirming the end of talks with Porto Seguro BMFBOVESPA:PSSA3 and Fleury (FLRY.SA).

Both Porto Seguro and Fleury had previously announced their intentions to end discussions with Oncoclinicas following the expiration of a 30-day exclusivity period on April 12 under which the companies mulled the creation of a new company.

"Porto and Fleury have decided not to extend the exclusivity period of the term sheet; consequently, negotiations regarding the potential transaction have been officially terminated," Oncoclinicas said in a securities filing.

The three Brazilian companies had entered a non-binding term sheet last month to negotiate a potential 500 million real ($100.5 million) investment from Porto and Fleury to form a new company that would have included Oncoclinicas' oncology clinics.

Oncoclinicas, which had a net debt of 2.94 billion reais by the end of December, is seeking alternatives to solve its financial struggles. It said on Monday that it would file a precautionary relief action to temporarily suspend debt acceleration clauses.

Oncoclinicas' shares were up 4% after dropping more than 10% in early trading on Tuesday. Porto stock fell 2%, while Fleury's shares rose 2%.

Analysts at JP Morgan said Tuesday's announcement was not a surprise given "major uncertainties" within Oncoclinicas.

"Our view remains that a potential capitalization should take place at the Oncoclinicas level, while, following the recent developments, there may be further debt restructuring," they said in a note.

($1 = 4.9775 reais)

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