Material Fact – Conclusion of the DHM

MATERIAL FACT

São Paulo, December 22, 2015. Contax Participações S.A. (“Contax” or “Company”; CTAX11; CTAX3 and CTAX4), pursuant to Article 157, paragraph 4, of Law No. 6404, of 12.15.1976 (“Law of Corporations”) and to CVM Instruction 358/02, hereby informs its shareholders, investors and the market in general, complementing the Material Fact published on December 21, 2015, that the general meetings of the debenture holders of the Company‘s 1st and 3rd debenture issues were concluded, in which the conditions for the extension of its financial debt profile represented by debentures was approved.

The 1st and 3rd debentures issue will have final maturities dates unified at December 30, 2021 and will be amortized in 16 (sixteen) quarterly installments beginning at March 31, 2018. The Company was also exempted from compliance with the financial “covenants” related to the financial statements of the 4th (fourth) quarter of 2015 and the 2016 fiscal year.

As part of the process of readjustment of the Company‘s capital structure, the sale of the Allus Division, involving the operations conducted by the Company in Argentina, Peru, Colombia and Spain, has also been approved, under the condition that the Company will allocate the proceeds from the sale that exceed R$ 200,000,000.00 (two hundred million reais), after deducting any costs and taxes, to the reduction of its debt.

In contrast to the postponement of the maturity of the debentures, the Company shall, until May 31, 2016, conduct a stock offering, pursuant to CVM Instruction 476/09, to increase its capital in the amount of R$ 200,000,000.00 (two hundred million reais), and, prior to the capital increase, (i) the Company shall convene an extraordinary general meeting to elect new members of its Board of Directors with a term of 2 (two) years, and (ii) immediately after the election of new members of the Board of Directors, the Company will use its best efforts in order to perform the migration to the special segment of BM&F Bovespa New Market listing. Amounts received in cash in the offering (excluding any amount of the referred debt, subject to the paragraph below, which may be converted into shares) exceeding R$ 54,540,000.00 (fifty-four million, five hundred and forty thousand reais) must be aimed at reducing the Company‘s debt.

Concurrently with the completion of the debt extension, the Company‘s controlling shareholder, CTX Participações S.A., will undertake a subordinated loan in the amount of R$ 45,460,000.00 (forty-five million, four hundred and sixty thousand reais), which, under the shares offer, will be converted into a number of shares proportional to the participation of CTX Participações S.A. in the Company‘s capital regarding the shares that may be subscribed by other shareholders, new investors and/or creditors of the Company. The proceeds of the subordinated loan, including any installment that may be converted into shares, will be used to the exclusive discretion of the Company.

If the capital increase does not reach the total amount of R$ 200,000,000.00 (two hundred million reais), the Company shall make a private issuance of subordinated convertible debentures, assuring the Company‘s shareholders preemptive rights to subscribe for such subordinated convertible debentures under the law. Andrade Gutierrez S.A. and Fundação Atlântico de Seguridade Social have committed to subscribe, under this issuance, an aggregate amount of the correspondent difference between (a) R$ 200,000,000.00 (two hundred million reais) and (b) the sum of (b.1), the effective value of the restrict supply (including the converted values of subordinated debt and other amounts that may be converted into shares) plus (b.2) the subordinated debt not converted into capital’s balance, this added value limited to the max, in any event, of R$ 54,540,000.00 (fifty-four million, five hundred and forty thousand reais).

In addition, taking into account the company‘s financial situation, which led to the convening of general meetings of debenture holders, until the Company presents a net debt/EBITDA below 2.00 (two points), the Company agrees not to hold any distribution of funds to shareholders, either as dividends (including the mandatory minimum dividend) or interest over equity, and, therefore, the Company‘s management will annually: (i) propose to the General Meeting of shareholders the full retention of profits in such fiscal year, in accordance with Article 196 of the Law of Corporations; and (ii) propose not to distribute the minimum mandatory dividend, pursuant to paragraph 4 of Article 202 of the Law of Corporations. The Company obtained a commitment from its controlling shareholder, CTX Participações S.A., to vote for the full retention of profits until the Company‘s net debt/Ebitda is below 2.00 (two points). Such limitations do not apply to the payment of the dividends declared at the Annual General Meeting held on April 30, 2015.

The debenture holders have also authorized a possible change in control of the Company resulting from (i) the conversion of its preferred shares into common shares, (ii) the termination of CTX shareholders‘ agreement and/or dissolution of CTX; or (iii) the completion of the capital increase.

The effectiveness of the approval of the debenture holders on the topics covered during the general meetings of debenture holders is subject to the following conditions, among others: (i) the approval of the same topics, under the same terms and conditions, or other more beneficial to the company than the aforementioned, in the debenture holders‘ meeting for the 2nd (second) Company’s debentures issue, to be held on January 15, 2016; and (ii) the approval by other Company‘s financial creditors of the extension of a significant portion of its financial debt profile, under terms and conditions satisfactory to the Company and its financial creditors, consistent with the terms and conditions approved at the general meetings of the debenture holders.

The other terms and conditions of the aforementioned materials are detailed in the minutes of the general meetings of debenture holders of the 1st and 3rd debentures issue, which are available at the Company‘s website (www.contax.com.br/ri).

São Paulo, December 22, 2015.

José Roberto Beraldo
CFO and Investor Relations Officer