New Provisions for Determining Equitable Price in Acquisition Public Biddings

The Argentine Securities Commission (CNV) issued General Resolution 1012 on August 8, 2024—submitted to public consultation through General Resolution 1007—formalizing the changes regarding the determination of the equitable price in tender offers.

 

The CNV stated that the Resolution seeks to safeguard the interests of shareholders against the time passing and the value of money. For this, the equitable price must be expressed, settled, and paid in the same currency agreed upon or used in the takeover, unless there is a duly accredited impossibility to do so.

 

In this sense, the Resolution establishes that, if it is impossible to pay or settle the equitable price in the same currency agreed upon in the takeover, and only in this case—duly proved—the payment and settlement will be admitted in its equivalent in ARS, using the BYMA Dollar Index published by Bolsas y Mercados Argentinos Sociedad Anonima on its website, or using the Banco de la Nacion Argentina’s (BNA) selling exchange rate of the agreed currency, the highest at the close of business on the business day immediately before the settlement date.

 

The payment may also be made in the ARS equivalent calculated at the selling exchange rate of the BNA's bill currency when the shareholder expressly accepts so. If the currency of payment is a foreign currency other than USD, payment must be made in USD or, at the shareholder's choice, in ARS at the selling exchange rate of the BNA's agreed currency. If the BNA does not have a quotation of such currency, a market quotation will be used as described in the corresponding prospectus.

 

If the price paid for the takeover was in ARS, the equitable price must be made in ARS, and for purposes of settlement and payment, such price must be increased using the Badlar Rate in ARS of Private Banks—or the rate that replaces it in the future—calculated considering the simple arithmetic average of the daily rates published by the Argentine Central Bank from the date considered for the determination of the initial equitable price and up to the day prior to the payment or settlement date.

 

Article 88 of the Capital Markets Law states that to calculate the value of comparable companies or businesses, when there are prices in a currency other than ARS, they must be converted into ARS using the BYMA Dollar Index or the selling exchange rate, bills rate, of the BNA or choosing the higher value. These updates and conversion guidelines also apply to any tender offer and/or unilateral declaration of acquisition in takeover bids or residual shareholdings regime, as established in the Capital Markets Law.

 

Finally, the Resolution incorporates new exceptions to the obligation to make a public tender offer:

 

1. when the acquisition of the controlling stake is a direct consequence of the sale, in whole or in part, by the Federal Government or its autarchic entities in a company under the public offer regime of shares within the framework of a privatization process of state-owned companies, and provided that the admission of the company to the public offering regime took place as from the date of entry into force of this Resolution.

 

2.         When the controlling stake has been acquired as a direct consequence of judicial approval of an agreement or restructuring plan that provides for the exchange, conversion, or capitalization of debt securities or other credits within the framework of the reorganization proceeding or out-of-court preventive agreement of the company, if such agreements or restructuring plans have not been subject to judicial approval, provided that:

 

a.         It includes an independent expert's opinion stating (i) the situation of economic or financial difficulties of a general nature of the affected company or its default (current or imminent) and (ii) that the proposed conversion or capitalization may reasonably allow its financial recovery.

 

b.         The proposed conversion or capitalization is approved by the shareholders' meeting with the majorities required by the applicable law.