Opportunity to transfer assets to Delaware-based firm

Opportunity has obtained permission from CVM, the securities regulator, to transfer several Brazilian assets from CVC/Opportunity Equity Partners L.P. to a new company, CVC Delaware. It applied for permission on July 3, 2002, and CVM gave the transfer its blessing on February 25, 2003. CVC Delaware is a subsidiary of CVC Opportunity L.P. and is registered in Delaware (USA). CVC Opportunity L.P. is registered in Cayman and governed by U.K. and local court decisions.
According to the minutes of CVM?s February 25 meeting, which approved the transfer, CVC Opportunity L.P. justified its request saying that ?the transaction will not incur any expense or affect the Brazilian investments of CVC LP, and is designed solely to adapt the entity to the regulatory environment to which it is subject so as to provide the best possible return to investors?. As one of the funds managed by Opportunity, CVC/Opportunity L.P. is the vehicle through which Citibank invests venture capital in Brazil. Among the companies in which CVC Opportunity Equity Partners L.P. holds equity are Brasil Telecom, Telemig Celular and Amazônia Celular.
CVM says Opportunity can now decide whether and when to complete the transfer. We asked Opportunity for comment more than a week ago but so far we haven?t received an answer. Opportunity declines to say whether it has formally advised other major shareholders in the companies it controls about the transfer. Nor has it explained the effects of the change of domicile. And it hasn?t said which regulatory environment it?s adapting to by transferring CVC Opportunity L.P.?s assets to CVC Delaware.

It?s worth asking whether the transfer of CVC L.P.?s assets from Cayman to the United States might have something to do with Cayman high court decisions or British law. Alternatively it might be deemed a transfer of ownership or possibly even a move to create yet another vehicle in the already complex tangle of companies controlled by Opportunity, perhaps with the aim of hindering judicial action.
Queen Elizabeth
CVC Opportunity Equity Partners L.P. is a fund managed out of Cayman by CVC Opportunity Equity Partners Ltd. The fund manager is the object of litigation between Daniel Dantas, Opportunity?s controlling shareholder, and Luís Roberto Demarco. On March 27, 2002, i.e. before Opportunity filed for CVM approval to transfer CVC L.P.?s assets to CVC Delaware, HM Queen Elizabeth II signed a Privy Council ruling giving Mr Demarco the right to demand the liquidation of CVC Opportunity Equity Partners Ltd. Opportunity commissioned expert legal opinions to inquire into the possible effects of this ruling by the final court of appeal for a number of Commonwealth countries including Cayman. The experts see serious risks of deleterious effects for CVC Opportunity Equity Partners L.P., including the possible loss of telco licenses in Brazil. The opinions were written by two highly regarded Brazilian law firms.