On November 18, the Division of Corporate Finance of the Securities and Exchange Commission (the "Division") issued new guidance (the "Guidance") in the form of Questions and Answers of General Applicability clarifying its January 2015 no-action letter, Abbreviated Tender or Exchange Offers for Non-Convertible Debt Securities, permitting five-business-day debt tender offers and exchange offers.
On January 23, 2015, the Division issued a no-action letter permitting debt tender offers and exchange offers for high-yield debt securities to remain open for five business days instead of 20 business days (the "2015 No-action Letter"). The Guidance clarifies questions that have arisen in interpreting the 2015 No-action Letter.
Foreign Private Issues Form 6-K Filing
The 2015 No-action Letter states that if the issuer is a reporting company under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the issuer must furnish a press release announcing the abbreviated offer on a Form 8-K filed prior to noon, Eastern time, on the first business day of the abbreviated offer. The Guidance clarifies that a foreign private issuer may satisfy this condition by filing a Form 6-K.
Minimum Tender Conditions
The 2015 No-action Letter states that abbreviated offers must be made "for any and all" subject debt securities. The Guidance clarifies that abbreviated offers can have minimum tender conditions.
Cash Paid to Non-QIB U.S. Persons in Fixed-spread Exchange Offers
The 2015 No-action Letter provides that abbreviated offers for consideration consisting of Qualified Debt Securities, as defined in the letter, may be made to all persons who are QIBs and non-U.S. persons for a fixed amount of Qualified Debt Securities or for an amount of Qualified Debt Securities calculated with reference to a fixed spread to a benchmark, so long as a fixed amount of cash consideration is concurrently offered to persons other than QIBs and non-U.S. persons to approximate the value of the offered Qualified Debt Securities. The Guidance clarifies that the amount of cash consideration offered concurrently to persons other than QIBs and non-U.S. persons can be calculated with reference to a fixed spread to a benchmark, provided that the calculation is the same as the calculation used in determining the amount of Qualified Debt Securities.
Securities Act 3(a)(9) Exchange Offers
The Guidance clarifies that offerors may issue Qualified Debt Securities under Section 3(a)(9) of the Securities Act of 1933, rather than Securities Act Section 4(a)(2) or Securities Act Rule 144A, to Eligible Exchange Offer Participants, as defined in the 2015 No-action Letter, and still conduct an abbreviated offer.
Material Acquisitions and Dispositions
The 2015 No-Action Letter provides that abbreviated offers may not be "commenced within ten business days after the first public announcement (or the consummation) of the purchase, sale or transfer by the issuer or any of its subsidiaries of a material business or amount of assets that would require the furnishing of pro forma financial information with respect to such transaction pursuant to Article 11 of Regulation S-X (whether or not the issuer is a registrant under the Exchange Act)." The Guidance clarifies that offerors may announce the abbreviated offer at any time, but should not commence the abbreviated offer prior to 5:01 p.m. on the 10th business day after the first public announcement of a purchase, sale or transfer of a material business or amount of assets. If the abbreviated offer is commenced after 5:01 p.m. on a particular business day, the first day of the five-business-day period would be the next business day.
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