New requirements to qualify new indebtedness transactions as advance or pre-export financing

On May 21, 2007 the Central Bank of the Republic of Argentina issued Communication “A” 4672, which is in force since May 22, 2007. Such Communication adds two additional requirements to those provided in Communication “A” 4443 of the mentioned entity (as amended) which must be complied with so that new indebtedness transactions may be entered through the exchange local market qualifying as advance and pre-export of financings.

The new requirements added by Communication “A” 4672 are the following:

1.    The exporter must not have outstanding indebtedness for advances and pre-export financings in force as of September 8, 2005 to be paid out of proceeds of the export of goods whose shipment period is inferior to 365 days according to point 2 of Communication 4443 and complementary regulations,[i] which will be paid with proceeds of the exports of goods not already shipped as of the date of the entering of the new indebtedness transaction.

Therefore, for new indebtedness transactions to qualify as advance and pre-export financings, in addition to complying with the other requirements provided in applicable regulations, the shipment of goods with a shipment period inferior to 365 days the proceeds of which shall be allocated to pay advances and pre-export financings in force as of September 8, 2005, must not be outstanding.

The provision set forth in Communication “A” 4415 and maintained by Communication “A” 4443 pursuant to which the shipments allocated to the repayment of indebtedness for pre-export financings outstanding as of September 8, 2005 must be made prior to the shipments allocated to the repayment of indebtedness for new pre-export[ii]  is still in force. However, Communication “A” 4672 adds a new requisite in order to qualify new advances and pre-export financings under the regime set forth by Communication “A” 4443: shipments allocated to the repayment of indebtedness for advances and pre-export financings in force as of September 8, 2005 must not be outstanding.

2.    The pre-export financing must be granted by international organizations or their related agencies, official agencies of credits to exports, Argentine or foreign banking institutions, or financial entities whose activities are subject to specific regulation of the authority in charge of the banking surveillance of the country in which resides the financial entity granting the financing. The purpose of this additional requirement is to avoid the advances and pre-export financings granted by related companies, head offices and trusts.