The Turkish Capital Markets Board (“CMB”) amended the Tender Offer Communiqué II-26.1 on June 5, 2018 to introduce a major change to the tender offer regime in Turkey. The amendment provides banks with certain exceptions to tender offer requirements, enabling them to dispose more easily of public company shares (“pledged shares”) provided to them as collateral pursuant to Article 47 of the Capital Markets Law No. 6362 ("CML"), for facilities the banks extended.
In principle, persons acquiring the management control of a public company are required to launch a tender offer to those holding the company's remaining shares.
Pursuant to the recent amendment, subject to the CMB’s approval, no mandatory tender offer is necessary if
- a bank seizes the ownership of the pledged shares upon default and in accordance with Article 47 of the CML;
- the pledged shares are acquired by a special purpose vehicle (“SPV”) founded by a bank upon default;
- a bank or SPV, following their seizure, sells the pledged shares to a third party upon default; and
- the shares are transferred to satisfy the requirements of laws or regulations that define the criteria to become shareholders.
Points to consider
The amendment is important from two angles. Firstly, only Turkish banks (banks established in Turkey and the Turkish branches of foreign banks) can benefit from this new exemption. Therefore, in syndicates consisting of Turkish and foreign banks, the Turkish banks may acquire the foreign banks' claims, benefit from the exemption and sell the shares, and finally distribute the proceeds to all concerned banks on a pro rata basis.
Secondly, the exemption does not apply in cases where the bank directly enforces the share pledge without seizing ownership of the shares.
The CMB introduced long awaited exceptions that will facilitate Turkish banks to dispose of pledged shares without being subject to tender offer requirements.