Debt tender offers and/or debt exchanges

1. Public offering transparency regime

Decree No 677/01 (the “Transparency Regime”) introduced a new legal regime for capital markets in Argentina.

This decree provides a mandatory regime for public tender offers and/or exchange of shares or other securities convertible into shares (“Public Tender Offer Regime”) with regard to companies whose shares are admitted to the public offer regime. The Public Tender Offer Regime is intended to guarantee minority shareholders a fair and equal treatment and their participation in the benefits of change of control transactions. However, the Public Tender Offer Regime is optional for those companies that have resolved not to adhere to it pursuant to an express resolution adopted in the first shareholders’ meeting held after April 6, 2003. For more information on the Transparency Regime, see articles “Decree No 677/01 - New corporate regime and capital market practice” and “Public offer – Transparency regime”, published in Marval News #1 and #15 of July 31, 2001 and March 28, 2003, respectively.

2. Regulations

The Transparency Regime has granted the CNV the power to regulate the Public Tender Offer Regime according to the principles set forth in such law. General Resolutions No 400/02 and 401/02 have regulated certain aspects of the Transparency Regime.

3. Scope of Resolution CNV No 401/02 in connection with debt tender offers and/or debt exchange

Resolution CNV No 401/02 (the “Resolution”) is not clear enough as to whether it applies to debt tender offers and/or debt exchanges. Determining the precise scope of application of the Resolution is important to determine the requirements that need to be met to carry out a public tender offer and/or an exchange of “negotiable securities”.

The Resolution requires, inter alia:

· previous authorization of the CNV;

· publication of certain ads with mandatory information;

· an information prospectus that shall comply with certain formal and material requirements as provided in the CNV rules;

· a guarantee securing the fulfillment of obligations arisen from the tender offer or exchange;

· copy of the two latest audited annual financial statements of the offeror and, if applicable, of the offeror group;

· an irrevocable acquisition commitment, except as to the offered price which may only be increased by at least 5%;

· the offer period may last at least 20 days and not more than 30 days counted as from the tender offer or exchange authorization. The offer period may be extended by at least 5 days and not more than 10 days;

· an opinion of the board of directors of the issuer as to the fairness of the offered price and a technical recommendation about its acceptance or rejection; and

· the offeror is obliged to inform material events related to the offer.

In the U.S., the Securities Exchange Commission has regulated debt tender offers, pursuant to Rule 14e-1 of the Securities Exchange Act of 1934; however, we understand that they are subject to less stringent regulation than the tender offers for equity securities. Although no filing with the SEC would be required, this rule requires tender offers to be held open for at least 20 business days from the date the tender offer is first published or sent to security holders and for at least 10 business days from the date that notice is given of an increase or decrease in the percentage of the class of securities being sought or the consideration offered.

4. CNV interpretation

In certain individual filings made by offerors to obtain the prior CNV approval for certain public debt tender offers and debt exchanges, the CNV has interpreted that Resolution CNV No 401/02 does not apply to public tender offers of debt (in re “Industrias Metalúrgicas Pescarmona”, “Telefónica de Argentina”), and debt exchanges (in re “Telecom Argentina”, “Multicanal”). The CNV understands that the Resolution only refers to the acquisition of voting shares or other securities that, directly or indirectly, grant the right to subscribe, acquire, or be converted into, voting shares.

However, the CNV has indicated that although public debt tender offers and/or debt exchanges do not require prior approval of such entity, offerors are required to keep the CNV informed about the offer process negotiations and outcome so as to comply with the “obligation to inform”, as set forth in Section 5, Chapter II, of the Transparency Regime.