The Italian Securities Commission Allows Use Of PD-Compliant Prospectuses in an Effort to Ease Italian Bondholders' Participation in Cross-Border Debt Exchange Offers
April 20, 2009
On April 16, 2009, the Italian Securities Commission (“Consob”) issued a release (DEM/9034174, the “Release”) allowing for the use – subject to certain conditions – of prospectuses approved by the competent authority of a Home Member State pursuant to EU Directive 2003/71/EC (the “Prospectus Directive” or “PD”) in the context of cross-border exchange offers of debt securities for newly issued securities.
Prior to the Release, the launch of an exchange offer of debt securities in Italy, including as part of a European multi-jurisdictional offer, was subject to the publication of an offering document compliant with the form of tender offer prospectus specified in Consob Regulation 11971/1999 (the “Issuer Regulation”).
As Consob acknowledged, this requirement led several issuers to exclude Italian holders of debt securities from cross-border exchange offers extended simultaneously in several EU jurisdictions on the basis of PD-compliant prospectuses.
Consob has represented to the Italian Ministry of Economy and Finance the urgent need to amend the Italian Consolidated Financial Act (D. Lgs. 58/1998, the “TUF”) to allow that exchange offers, under certain circumstances, be subject to rules applicable to offers of securities (rather than to tender offer rules), in order to avoid that Italian holders find themselves in a detrimental position vis-á-vis holders resident in other EU jurisdictions.
Pending the adoption of these amendments by the legislator, Consob – through the Release – has adopted a new interpretation of the existing rules to allow for the use of PD-compliant prospectuses in the context of exchange offers made in Italy. In particular, cross-border offers for the exchange of debt securities against newly issued securities may be conducted on the basis of a PD-compliant prospectus in the English language or an Italian translation of the summary note duly approved by the competent authority of the relevant Home Member State (note however that – as explained below – the prospectus or the summary note must also be approved by Consob, though on an expedited basis, and that Italian tender offer rules would generally apply to the offer in Italy).
Any offeror that intends to use a PD-compliant prospectus or a summary note to extend an exchange offer to Italian holders of debt securities is invited to timely contact Consob to illustrate the offer and indicate which provisions of the Issuer Regulation that would otherwise apply to the offer would not be consistent either with the simultaneous execution of the offer in several jurisdictions, or with the provisions applicable to the offer in the relevant Home Member State. The offeror must also provide Consob with a draft of the summary note or the prospectus to be used in the exchange offer, subject to the approval of the competent authority of the relevant Home Member State.
Upon review of the proposed offer, Consob shall communicate to the offeror if the prospectus used to launch the exchange offer in other EU jurisdictions would enable Italian holders to make an informed assessment of the offer. To this end, the summary note or the prospectus must include information about:
a) The mechanics and terms and conditions for participating in the offer in Italy;
b) The mechanics and terms and conditions for payment of the consideration and related tax treatment (note that information about tax treatment is not included in the minimum content of a summary note according to the Prospectus Directive);
c) Risk factors;
d) Potential conflicts of interest of parties involved in the offer; and
e) Corporate approval of the issue of the new securities offered in exchange of the debt securities subject to the offer.
Should Consob confirm that the prospectus would enable Italian holders to make an informed assessment of the offer, the offeror may formally file with Consob the prospectus – rather than a tender offer document compliant with the Issuer Regulation – together with a notice in accordance with Article 102 of the TUF, thus initiating the procedure to launch the exchange offer in Italy. Consob shall then approve the prospectus – if possible – by a date in line with the expected date of the beginning of the offer period in other European jurisdictions.
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