November 21, 2016
7 New Tender Offer CDIs: Financial Advisor Disclosure & Abbreviated Debt Tenders
On Friday, as noted in this Bryan Pitko blog & Cydney Posner blog, Corp Fin published seven new Tender Offers & Schedules CDIs. The first two (new CDIs 159.01 & 159.02) address disclosures about the retention & compensation of a target board’s financial advisors. The remaining CDIs address interpretive issues relating to abbreviated debt tenders (new CDIs 162.01 – 162.05), which Broc blogged about last year when the Staff issued a no-action letter permitting them.
This Gibson Dunn blog summarizes the new CDIs – & also discusses remarks made by Ted Yu, head of Corp Fin’s Office of Mergers & Acquisitions, during Friday’s ABA meeting in Washington. Here’s an excerpt:
Later in the day on November 18, the Chief of OM&A, Ted Yu, speaking at an ABA meeting in Washington, D.C., noted that Senior Special Counsel Nicholas Panos in OM&A recently completed an extensive review of all Schedule 14D-9s filed over the past 15 years. The results of the survey revealed that although more than two-thirds of the 14D-9 filings had very detailed disclosures, there was still a significant number of filings containing the objectionable “customary compensation” language, prompting issuance of the interpretations.
Separately, the Staff addressed certain timing and structural issues that have come up since the 2015 no-action letter was granted. The C&DIs clarify that foreign issuers may commence their abbreviated debt tender offers by furnishing a press release on Form 6-K before noon (Eastern) – similar to the Form 8-K requirement for domestic issuers commencing such tender offers. In addition, the Staff clarified that issuers making abbreviated debt tender offers may:
– include a “minimum tender” condition in such offers;
– calculate the amount of cash offered to non-QIBs (in an exchange offer limited to QIBs and non-U.S. persons) by reference to a fixed spread to a benchmark, provided the calculation is the same as the calculation for QIBs and non-U.S. persons;
– rely on Section 3(a)(9) for an exemption from Section 5 when offering “qualified debt securities” in an exchange offer; and
– announce their offer at any time, provided that they delay commencement until ten business days following the first public announcement or consummation of any purchase, sale, or transfer of a material business or amount of assets that would otherwise require disclosure of pro forma financials under Article 11 of Regulation S-X.
– John Jenkins