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The CNV established new regulations applicable to public offerings of securities and debts refinancing

By virtue of General Resolution N° 861/2020 (the “Resolution“), the Argentine Securities and Exchange Commission (Comisión Nacional de Valores, the “CNV“, for its Spanish acronym) established new regulations applicable to (i) primary placement of securities; and (ii) debts refinancing through exchange offers and/or issuance of notes, whose price may be subscribed as payment in kind with securities issued by way of a private offer or with preexisting credits.

In this sense, the Resolution introduced the following changes:

A- Public offering of notes under global programs and/or individual series and/or classes of notes to be issued under the general public offering regime. Reduction of the diffusion period.

The Resolution provides the reduction of the diffusion period for the primary placement of securities to one business day in case of public offering of notes under global programs and/or individual series and/or tranches  of notes to be issued within the framework of the the general public offering regime, addressed exclusively to qualified investors as defined in tittle II, chapter VI, section I of General Resolution No. 622/2013, as amended (the “CNV Rules”). The reduction of the diffusion period will not be applicable in the case of debt refinancing by means of exchange offers and/or through issuance of notes with subscription kind with securities issued by way of a private offer or with pre-existing credits

It should be noted that the diffusion period for the primary placement of securities through a public offering addressed to the general public is set at 3 business days prior to the date of the auction or public tender or the subscription or allocation in the case of the placement of securities through book building

Regarding the reduction of the diffusion period for the primary placement of securities, the Resolution clarified  that the commencement of the diffusion period will start at zero hours on the day following the date on which the subscription notice (aviso de suscripción) and the corresponding pricing supplement are published on the Financial Information Highway (Autopista de la Información Financiera, the “AIF” after its acronym in Spanish, which is on the CNV’s website) and on the markets where said securities are to be listed and/or traded, and the diffusion must be made during 1 business day before the date of the auction or public tender or the subscription or allocation in the case of book building.

Finally, the Resolution establishes that the reduction of the diffusion period will not be applicable in the case of debt refinancing by means of exchange offers and/or through the issuance of notes with subscription and integration in kind with securities issued by way of a private offer or with pre-existing credits.

 

B- Placement of securities by public offering within the framework of debt refinancing through exchange offers and/or with integration in kind.

Pursuant the Resolution, the CNV modifies its position regarding the placement of securities by public offering by allowing issuers facing debt refinancing by means of exchange offers and/or through the issuance of new notes with subscription and integration in kind, the possibility to offer the subscription and integration of such new notes with previously issued debt securities  by way of a private offer and/or pre-existing credits. In that cases, the requirement of public offering for the new debt securities  issuances will be considered fulfilled when (i) the new issuance of debt securities  shall be subscribed by creditors of such issuer with private notes previously issued by way of a private offer and/or existing credits in a proportion that does not exceed 30% of the total amount of the new debt securities placed through public offering, and (ii) the remaining 70% shall be subscribed and paid in cash or in kind, by delivering debt securities originally placed under a public offering, or other notes listed on markets authorized by the CNV, issued by the same company, by individuals or legal persons other than the creditors allocated in the 30% referred above, who are domiciled in the country or in countries that are not included in the list of non-cooperative jurisdictions for the purposes of tax transparency according to section 24 of the Annex of the Decree No. 862/2019.

In order to calculate the percentages indicated above, the nominal value of credits denominated in foreign currency will be converted at the following exchange rates, in each case corresponding to the business day before the date of the commencement of the exchange offer and/or auction or public tender or the subscription or allocation in the case of book building: (i) the Reference Exchange Rate  published by the Central Bank of the Argentina Republic (the “Central Bank”) through the Communiqué “A” 3500; and (ii) the exchange rate published on the Central Bank´s website, in the case of those credits that are denominated in foreign currencies other than the U.S. Dollar.

It is worth mentioning that through the Resolution the CNV eased the requirements to considered fulfilled the requirement of placement of securities by public offering, with a direct impact on the tax benefits of new notes issuances subscribed and integrated by creditors who are holders of previously issued private notes and/or existing credits, since the CNV and the Argentine Tax Authority (Adminsitración Federal de Ingresos Públicos, the “AFIP” after its acronym in Spanish), by means of Joint Resolution No.1738/2004 – 470/2004 (the “Joint Resolution 1738/470“) – which was later repealed by Joint Resolution No. 3872/2016 – 664/2016 – established that in case of corporate debt refinancing process the tax benefits of notes originally placed by public offering, were only extended to the new notes offered through exchange offers to the extent that the subscribers were noteholders of the notes tendered in the exchange offer.

Pursuant to Joint Resolution 1738/470, the CNV and AFIP determined that in case of issuances of notes within the framework of debt refinancing process, the tax benefits of notes originally placed by public offering will only be extended to the new notes if the exchange offer only involves the noteholders of the notes that are tendered.

Consequently, by means of the Resolution, the CNV modifies the criteria established in the Joint Resolution 1738/470, allowing creditors who are holders of debt securities previously issued by way of a private offer and/or pre-existing credits to subscribe to new debt securities  with public offering up to a percentage not exceeding 30% of the total amount to be placed.

Additionally, the Resolution establishes that the following requirements must also be met:

(i)    the debts to be  refinanced should be reported in the issuers’s latest financial statement published on the AIF;

(ii)   the offer must be addressed to all the holders of the pre-existing credits against the issuer, or to all those holders who are in the same category;

(iii)  once the placement and payment process is  concluded, the private debt securities and/or the debt exchanged will be cancelled;

(iv) the offering memorandum and/or pricing supplements shall describe the procedure whereby creditors must prove their ownership over the credits before the placement agent, prior to allocation;

(v)   when there is oversubscription, the allocation of the new notes must be made on a pro rata basis of the respective credits to be exchanged; and

(vi)  15 days after the placement, issuers must submit to the CNV certain information regarding the debt securities issued by way of a private offer  and pre-existing credits exchanged, and creditors information; as well as a report issued by an independent chartered  accountant, on the existence of the exchanged credits and the authenticity of the information related to such creditors; and an affidavit from the issuer and the respective placement agents regarding the requirements described herein above.

Access the full text of the Resolution here.


This publication does not constitute a legal opinion on specific matters. If necessary, specialized legal advice should be sought.

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