On Nov. 18, 2016, the SEC Division of Corporation Finance for the first time issued Compliance and Disclosure Interpretations, or CDIs, relating to the tender offer rules under Regulation 14D and 14E.
- Schedule 14D-9:
- If an issuer engages a financial advisor to provide advice that will be discussed in the Schedule 14D-9, it must disclose a summary of all “material terms” of the compensation arrangement even if the advisor expressly states that it is not soliciting or making recommendations to the shareholders.
- An issuer, when attempting to meet the “material term” disclosure obligation stated above, may not do so through generic references to “customary compensation,” as such ambiguity does not help shareholders properly assess the objectivity of the advisor’s analysis.
- Interpretations on the Abbreviated Tender Offer No Action Letter
- When a foreign private issuer announces an abbreviated offering, it may do so by furnishing a press release on a Form 6-K rather than a Form 8-K.
- Abbreviated tender offers can have minimum tender conditions.
- In the event of an abbreviated tender offer, the amount of cash consideration offered concurrently to persons other than Qualified Institutional Buyers (QIBs) and non-U.S persons can be calculated with reference to a fixed spread to a benchmark, provided the calculation is the same as that used in determining the amount of Qualified Debt Securities.
- Offerors can issue Qualified Debt Securities under Section 3(a) (9) of the 1933 Act to QIBs and/or non-U.S. persons and can still conduct an abbreviated offer. They need not rely on Section 4(a)(2) or Rule 144A.
- Regarding the no-action letter’s conditions for an abbreviated offer, offerors may announce the abbreviated offer at any time, however 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 described in the no-action letter. If commenced after 5:01 p.m. on a particular business day, the first day of the business day period would be the next business day.