Prepayment of financial indebtedness

As a general principle, an Argentine resident has access to the FX Market to obtain foreign currency in order to repay foreign financial indebtedness at maturity, provided that the local debtor evidences to the local financial entity through which the transaction will be channeled that:

a) the foreign debt is registered in accordance with the reporting regime created by Communication “A” 3602; and

b) where applicable, the foreign debt has been transferred into Argentina and converted into Pesos through the FX Market and the minimum waiting period and the mandatory deposit (“encaje”) have been complied with.

Local debtors may also prepay in advance, in whole or in part, such indebtedness within a certain period or in excess of such period if, in addition to the general requirements, the following conditions are met:

Access to the FX Market for prepayment is generally permitted with an advance not exceeding 30 calendar days, as per Communication 4960. Formerly, the applicable period was 365 calendar days.

When prepayment is intended for principal whose maturity exceeds the above mentioned 30-calendar day period (either as part of a restructuring process or otherwise), one of the following conditions has to be met in order for the local debtor to have access to the FX Market:

a) the amount of foreign currency prepaid cannot exceed the present value of the portion of foreign debt that is being prepaid, to be calculated at a discount rate based on the rates applicable to forward exchange transactions in U.S. Dollars traded in regulated markets (“mercados institucionalizados”); or

b) the prepayment has to be funded with new foreign indebtedness or has to be part of a restructuring process which conditions and any cash payment being made shall not exceed the present value of the debt that is being prepaid.

As to interest, there are no restrictions for paying accrued interest to foreign creditors at any time of the on going interest period, or in advance up to 15 days prior to each interest payment date.