Stock exchange trading of companies with negative net worth

Buenos Aires Stock Exchange (“BASE”) enacted, on December 9, 2003, Resolution No 13/03 (“Resolution No 13”), which allows companies with negative net worth to continue trading at BASE until June 30, 2004 under the reduced trading system.

Resolution No 13 extends the application of Resolution No 4/02 (“Resolution No 4”) which had suspended up to December 10, 2003 the application of Section 42, paragraph “d” of BASE Trading Rules.

Section 42, paragraph “d” requires the Stock Exchange to suspend the trading of values when its balance sheets or any other information provided by the Company shows that it has a negative net worth.

Resolution No 4 was issued as a result of Argentine emergency provided by Law No 25,561 and is based on the legal grounds of Decree No 1269/02, which stated the suspension of the application of Section 206 and 94 par 5 of the Argentine Companies Law No 19,550 until December 10, 2003. These sections provide the mandatory capital reduction and liquidation of companies in the event of capital loss, respectively. For further information on Decree No 1269/02 please refer to “Suspension of mandatory capital reduction and liquidation in the event of capital loss”, published in Marval News # 8, of July 31, 2002.

Since the “emergency” provided by Law No 25,561 was extended by Law No 25,820 until December 31, 2004, and since up to the issuance date of Resolution No 13 the Government did not pronounce with regard to the extension of the suspension provided by Decree No 1269/02, the BASE decided to extend the term established by Resolution No 4 up to June 30, 2004.

The Argentine Securities Commission (Comisión Nacional de Valores- “CNV”) approved Resolution No 13 by means of Resolution No 14,697 dated December 10, 2003.

Consequently, companies with negative net worth may trade their values by the reduced trading system until June 30, 2004.