CNV Proposes New Regulation on Debt Exchange for Refinancing Purposes

On July 22, 2020, the Argentine Securities and Exchange Commission (the “CNV”, after its acronym in Spanish) issued Resolution No. 849, which invites citizens to provide their opinion and proposals with respect to a General Resolution Draft that would amend the regulation on securities exchange for refinancing purposes  (the “Proposal”).

The CNV has set a 15-busines-day term to provide opinions and/or proposals through its website.

The Proposal provides that, in cases of refinancing of previously issued private notes and/or credits, the requirement of public offering for the new notes  will be considered fulfilled when (i) the new notes are subscribed by creditors of the company in a percentage that does not exceed thirty percent of the total amount, and (ii) the remaining seventy percent is subscribed in Argentine pesos by individuals or legal entities other than the creditors awarded in the 30% referred to above.

In the same way, it will also be required on a mandatory basis that:

i. The credits being refinanced should be reflected in the last financial statement  published by the company in the website of the CNV (the “AIF”, after its acronym in Spanish).

ii. The offer is directed at all holders of pre-existing credits against the company, or at all those in the same category.

iii. Once the placement has been completed, the private notes and /or the credits received by virtue of the exchange are cancelled.

iv. The offer documents include a complete description of the procedure to evidence the ownership of the private notes and/or credits being refinanced.

v. If there is over-subscription, the allocation must be made on a pro-rata basis and based on the amounts of the private notes/credits being refinanced. In all cases, the documentation that evidences the placement efforts and the allocation process, must be kept at the disposal of the CNV, in case it is required.

Although we understand that the intention of the CNV is to expand the possibilities of refinancing through the capital market and to maintain the current regime for debt refinancing of public notes, we consider it important that the final rule expressly clarifies this circumstance.