Consob, through the Communication n. 13028158 of 4 April 2013 (the "Communication"), has provided new information duties for offers of less than 5 million euros which are, therefore, exempted from publishing the prospectus (under article 34-ter(1), letter c) and article 57(1), letter l) of the Issuers Regulation no. 11971/99).
The Supervisory Authority has ascertained that the difficulties incurred by the issuers in retrieving capitals lead them to carry out extraordinary transactions, which not only aim at consolidating the value of corporate assets or finance new investments, but are also intended to support the day-to-day financial needs of the company or are therefore performed within wider debt restructuring procedures.
Consob has therefore established that if these transactions are part of a broader restructuring plan, the issuers must provide the market with adequate information on the actual economic and financial situation of the issuer itself (or of the group), in order to allow investors to make informed investment decisions.
In addition, the Authority has also determined that in both the meeting of approval of the relevant transactions and in every price sensitive communication released as a result of shareholders and board meeting resolutions, the market must be properly informed about the main aspects of the transactions and its possible connection with other scheduled restructuring plans (such as debt restructuring agreements).
Among the issues in relation to which Consob requires issuers to inform the market, the Communication mentions also those relating to: (i) the adequacy of the proceeds deriving from the offer in relation to the current financial need of the issuer, (ii) the procedures for the implementation of any commitment subscription and (iii) limited to cases where there is uncertainty regarding the business continuity, the risks related to the possible failure of the transaction.
The Communication indicates in detail the information that the disclosure shall contain:
- the updated estimate of the net working capital of the issuer (or of the group),
- the estimated net funding need of the issuer (or of the group) in the twelve months following the offer period, without taking into account the proceeds or the effects deriving from the transaction,
- a description of the financing methods of the total funding need of the issuer (or of the group), and should the resources deriving from the offer be lower than the current total funding need of the group itself, it is also deemed useful to add a description of further actions planned to face the short-term commitments,
- the allocation, to be indicated possibly in order of priority, of the proceeds resulting from the transaction which are additional to the current financial needs, and
- a description of the main terms and conditions of the underwriting commitments that may have existed, as well as the methods of execution of the same.
When the transaction (i) aims at increasing the asset value to an extent which is slightly less than the prospectus exemption threshold, and (ii) is carried out by listed issuers whose indices of financial and income deterioration present a risk related to the continuation of the business, in addition to the aforementioned information, Consob requires that the following additional information is provided to the market:
- Should the issuer be subject to debt restructuring procedures, they must provide details relating to the purpose of the transaction with respect to the implementation of these procedures and the expected timing for implementation
- the effects of the offer on the issuer's (or the group's) net debt, with evidence of the impact on the short-term exposure, as well as an indication of the debt / equity ratio ,
- communication of the risks connected with the failure of the relevant transaction.
Finally, Consob requires that beside the debt restructuring operations, all transactions (of a value below the threshold for exemption from the obligation to publish a prospectus) that concur with other activities and actions to pursuing aims behind the strengthening of the value of corporate assets, must be clearly represented to the market, together with the above mentioned initiatives / actions (eg. a plan to integrate business intended to obtain a fundamental change of business and / or changes in the ownership of the company).
In order to provide the market with the information necessary for a proper assessment of the transaction, issuers shall also ensure that the information required is provided on time, regularly and in detail, avoiding general statements or clauses of style.