04 dez uk scheme of arrangement
A scheme of arrangement is a very flexible and long-established Companies Act procedure which can be used to vary the rights of some or all of a company’s creditors and/or shareholders. Although securities offered and sold in private offering pursuant to Section 4(a)(2) do not pre-empt blue sky laws, as long as the US sales are made only to accredited investors in accordance with Section 4(a)(2) this is not expected to raise "blue sky laws" concerns. The content of an explanatory statement in respect of a scheme whereby the scheme creditors will be entitled to securities in the scheme proposals will be deemed to have been made by the issuer, so the issuer, and potentially any officer of the issuer, will be subject to potential liability under Rule 10b-5. As such, adequate time should be allotted for the offer to be held open. Although securities offered and sold in private offering pursuant to Section 4(a)(2) do not pre-empt blue sky laws, as long as the US sales are made only to accredited investors in accordance with Section 4(a)(2) this is not expected to raise "blue sky laws" concerns. There is no need for a company to be insolvent under English law for a scheme of arrangement to be available … These include: 1. The operation of the UK takeover regime may be affected by Brexit. Introduction. 21 December 2015 The English scheme of arrangement is a very popular European restructuring tool. That said, schemes of arrangement are regularly usedby insolvent companies in order to restructure debts or to agree a way forwardwith creditors in an effort to avoid insolvent liquidation. As such, in schemes where equity is being offered or transferred, attention should be given to the number of holders. Proposals of the Scheme Administrator, 2 April 2013 Letter to Scheme Creditors dated 13 November 2012 regarding the triggering of the Scheme of Arrangement Proposal in relation to a Scheme of Arrangement sanctioned by the court on 19 January 1994 Letter to members, 9 December 1993 Schemes of arrangement are an important and flexible mechanism, which can be used to reorganise a company's capital. The term "tender offer" is not defined under US securities laws, but a scheme of arrangement which results in the transfer or purchase of securities may potentially contain several of the features of transactions that the SEC has considered to qualify as a tender offer. In addition, the securities offered will be "restricted securities" and may not be freely resold in the US without registration thereof or an exemption from registration. Preparing a US registered offering is a significant undertaking and, following a registered offering, a SEC registrant is subject to, among other obligations, SEC disclosure requirements and increased levels of potential securities law liability. Issuers often voluntarily enhance this requirement to require investors to be institutional accredited investors or qualified institutional buyers (as defined under Rule 144A), to limit the number of security holders without professional investment experience. Acquiring a strategic stake before a bid 32 6. Click here to read more about how we use cookies. As detailed above, each exemption has different requirements, advantages and disadvantages, depending on the specific circumstances of the proposed securities offering and the companies have the ability to choose the most suitable combination. The exemption is available if (i) the issuer is a foreign private issuer and is not an investment company; (ii) US holders hold no more than 10% of the securities to be exchanged; and (iii) the issuer permits US holders to participate in the offering on terms at least as favourable as those offered to other security holders. In the context of a scheme of arrangement, the following exemptions from registration may apply: Section 4(a)(2) exempts from registration offers and sales by an issuer that do not involve a public offering or distribution. We predict that this will continue in 2016, despite European alternatives, because of the scheme’s flexibility, predictability, the speed of access … If no eligible recipient is designated within the set timeframe, the trustee will sell the securities and give cash proceeds to ineligible holders. It is a formal arrangement between the target company and its shareholders, which is governed by the Companies Act 2006. Offers outside the US are typically made in an "offshore transaction" without "directed selling efforts" in order to comply with the safe harbour of Regulation S under the Securities Act. The principal disadvantage of this exemption is that the securities may not be offered for cash and debt securities issued under this exemption are not exempt from the Trust Indenture Act. The defence 65 ... resident in the UK, the Channel Islands and the Isle of Man and takeovers of certain private companies having public c ompany characteristics. Prior results do not guarantee a similar outcome. gan uk scheme of arrangement update. lenders or debenture holders). Competition 23 5. Section 3(a)(10) provides an exemption from registration based on a court or a government agency's approval of the fairness of the offering. The exemption is available if (i) the issuer is a foreign private issuer and is not an investment company; (ii) US holders hold no more than 10% of the securities to be exchanged; and (iii) the issuer permits US holders to participate in the offering on terms at least as favourable as those offered to other security holders. In addition, while neither of the exemptions mentioned herein pre-empt "blue sky laws", and the company will need to conduct a "blue sky laws" survey to determine the residency of offerees to identify applicable US state exemptions, so long as the US sales are made only to accredited investors in compliance with Section 4(a)(2) this is expected not to raise any "blue sky laws" concerns. Neither Sections 4(a)(2), 3(a)(10) nor Rule 802 act as an exclusive exemption; an issuer making an offer or sale of securities in reliance on one of these exemptions or safe harbours may also rely on any other applicable exemption from the registration requirements of the Securities Act. If a company is offering securities, it must comply with both federal regulations and state securities laws and regulations in the states where securities are offered and sold (typically, the states where offerees and investors are based). As detailed above, each exemption has different requirements, advantages and disadvantages, depending on the specific circumstances of the proposed securities offering and the companies have the ability to choose the most suitable combination. Schemes of arrangement are becoming increasingly more popular in recent years as the preferred way in which 'takeovers' of Australian listed companies are effected.A scheme of arrangement is If no eligible recipient is designated within the set timeframe, the trustee will sell the securities and give cash proceeds to ineligible holders. The principal disadvantage of relying on Section 4(a)(2) and the relevant safe harbours is that the utility of this exemption depends on the composition of the creditors subject to the scheme of arrangement, i.e. As such, adequate time should be allotted for the offer to be held open. However, Section 304 of the Trust Indenture Act does not provide an exemption for debt securities issued pursuant to the exemption available under Section 3(a)(10) of the Securities Act (and therefore an application for qualification under the Trust Indenture Act must be filed and approved by the Securities Exchange Commission if relying on the exemption available under Section 3(a)(10) of the Securities Act). A scheme of arrangement was sanctioned by the High Court of Justice of England and Wales. November 26, 2020: Oslo, Norway, PGS ASA (the “Company or “PGS”) announces today that it has launched a scheme of arrangement in England (the “Scheme”) via the issuance of a practice statement letter to the lenders under its ~$350 million revolving credit facility and ~$522 million term loan B facility (the “RCF/TLB Facility”). A scheme of arrangement is an agreement between the companyand its creditors and/or members (or a certain class or classes of them) abouta specified issue. Once voting on the scheme has taken place and the required number of creditors has agreed to its use, the arrangement is binding … In addition, the securities will be subject to blue sky laws. Preparing a US registered offering is a significant undertaking and, following a registered offering, a SEC registrant is subject to, among other obligations, SEC disclosure requirements and increased levels of potential securities law liability. In addition, the securities offered will be "restricted securities" and may not be freely resold in the US without registration thereof or an exemption from registration. Scheme of Arrangement: An English Law Cram Down Procedure. In a number of recent schemes of arrangement that involved securities, a combination of Sections 4(a)(2) and 3(a)(10) were used, indicating that issuers continue to value the pre-emption of state securities laws, the exemption from the Trust Indenture Act (in case of debt securities) and the exemption from the SEC filing requirements. the average daily trading volume of the securities in the US for a recent twelve-month period ending on a date no more than 60 days before the public announcement of the tender offer exceeds 10 percent of the average daily trading volume of that class of securities on a worldwide basis for the same period; or, the most recent annual report or annual information filed or submitted by the issuer with securities regulators (in any jurisdiction) indicates that US holders hold more than 10 percent of the outstanding subject class of securities; or. The principal disadvantage of this exemption is that the securities may not be offered for cash and debt securities issued under this exemption are not exempt from the Trust Indenture Act. Usually a target company will use a scheme of arrangeme nt because they support an offer. Investegate announcements from Ei Group plc, Scheme of arrangement . While the SEC regulates and enforces the federal securities laws, each state has its own securities regulator who enforces what are known as "blue sky" laws. It should be kept in mind that an indenture for debt securities must be qualified under Section 305 of the Trust Indenture Act or must meet the requirements for an exemption from qualification under Section 304 of the Trust Indenture Act. The principal disadvantage of this exemption is that the information sent to investors must be submitted to (but not registered with) the SEC and the securities issued in reliance on Rule 802 will be "restricted securities" and may not be freely resold in the US without registration or exemption from registration. In a number of recent schemes of arrangement that involved securities, a combination of Sections 4(a)(2) and 3(a)(10) were used, indicating that issuers continue to value the pre-emption of state securities laws, the exemption from the Trust Indenture Act (in case of debt securities) and the exemption from the SEC filing requirements. The Flawed Headcount Requirement on Schemes of Arrangement, Cortefiel – The Use of Schemes of Arrangement for ‘Amend & Extends’, Second Infrastructure Investment Plan for Mexico, Foreign direct investment reviews 2020: A global perspective - Spain, UK Supreme Court clarifies arbitrator’s duty of disclosure when accepting multiple appointments in related arbitrations. Section 5 of the Securities Act requires offers and sales of securities in the US to be registered with the US Securities and Exchange Commission (SEC), unless an exemption is available. If the registration exemptions above cannot be used for particular investors who are not eligible under one of the above exemptions, mechanisms to avoid unfairness to holders have been created, such as placing the scheme securities with a trustee for a holding period during which the ineligible holder may designate an eligible recipient to receive the restructured securities, and to whom the holder will have in effect sold their entitlement. The following US securities laws may be applicable in the scheme of arrangement context, and it is important to ensure that the relevant offering components are built into a transaction timeline. A scheme of arrangement can be used to effect a solvent reorganisation of a company or group structure, including by merger or demerger , as well as to effect insolvent restructurings such as by a debt for equity swap or by a wide variety of other debt-reduction strategies. the court or authorised governmental entity must hold a hearing before approving the fairness of the terms and condition of the transaction, which must be open to everyone to whom securities would be issued in the proposed exchange; adequate notice of the hearing must be given to all those persons, and there cannot be any improper impediments to the appearance by those persons at the hearing. The principal advantage of relying on Section 4(a)(2) and the relevant safe harbours is that debt securities issued under this exemption are exempt from the Trust Indenture Act (See "Other Considerations—Trust Indenture Act" below). An offer to all, or a substantial majority of, security holders which results in an offer for, or exchange of, existing securities, may potentially constitute a tender offer under US securities laws. Section 5 of the Securities Act requires offers and sales of securities in the US to be registered with the US Securities and Exchange Commission (SEC), unless an exemption is available. It may affect mergers and amalgamations and may alter shareholder or creditor rights. Offers outside the US are typically made in an "offshore transaction" without "directed selling efforts" in order to comply with the safe harbour of Regulation S under the Securities Act. © 2020 White & Case LLP, UK Schemes of Arrangement and US Securities Considerations. It should be kept in mind that an indenture for debt securities must be qualified under Section 305 of the Trust Indenture Act or must meet the requirements for an exemption from qualification under Section 304 of the Trust Indenture Act. Build a Morning News Brief: Easy, No Clutter, Free! Hold-Outs Beware: UK Schemes of Arrangement and Chapter 11 Lie in Wait August 2013 Alerts The recent Thomas Cook refinancing and Cortefiel scheme of arrangement offer contrasting examples to investors of the risks and rewards of adopting a hold-out position in … Among other provisions, Rule 10b-5 provides that it is unlawful in connection with the sale of any security "to make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading". accredited investors or offers made in offshore transactions. As such, care should be taken that the explanatory statement contains sufficient detail, in an accurate manner, to allow scheme creditors to make an informed decision on the securities offered in the scheme proposals. Securities issued in reliance on Section 3(a)(10) are generally not considered "restricted securities" and are not subject to US. This note is a guide to the main issues that the court will take into account when deciding whether to convene meetings of creditors and/or members for the purpose of voting on a scheme of arrangement, and subsequently, when deciding whether to sanction a scheme … In order to comply with Section 4(a)(2), an issuer may only offer and sell securities into the US to persons the issuer reasonably believes are accredited investors as defined in Rule 501 under the Securities Act ("accredited investors"). Finding that the requirements of sections 1507(b) and 1521(a) were satisfied and furthered the goals of a chapter 15, the Bankruptcy Court entered an order enforcing the Scheme. Acquiring control 40 7. The applicant in this case is an insurance company with long-tail exposure (mostly in the US) which is currently unable to meet the minimum capital requirements imposed by Solvency II. A scheme of arrangement under §425 of the Companies Act of 1985 is a procedure under which a company may make a compromise with its creditors or any class of them. Takeovers: scheme of arrangement vs contractual offers. Attorney Advertising. accredited investors or offers made in offshore transactions. Law Firms: Be Strategic In Your COVID-19 Guidance... [GUIDANCE] On COVID-19 and Business Continuity Plans. Rule 802 under the Securities Act provides an exemption from the registration requirements of the Securities Act for certain cross-border exchange offers and business combinations by foreign private issuers involving the issuance of securities. resale limitations, unless the recipient is an "affiliate" of the issuer (or was one within the prior 90 days). Issuers often voluntarily enhance this requirement to require investors to be institutional accredited investors or qualified institutional buyers (as defined under Rule 144A), to limit the number of security holders without professional investment experience. This publication is protected by copyright. UK Schemes of Arrangement and US Securities Considerations. A scheme of arrangement is a procedure that allows a company to reconstruct its capital, assets or liabilities with the approval of its shareholders and the Court. The Trust Indenture Act applies only to debt securities, so the Trust Indenture Act will not be relevant if a scheme entitles the scheme creditors to equity securities only. A scheme of arrangement must be approved both by the shareholders of the target company and the High Court. To ensure that the offer of securities as part of the scheme does not constitute a public offering, it is therefore customary that the offer in the US of scheme securities is made only to institutional accredited investors. The Trust Indenture Act applies only to debt securities, so the Trust Indenture Act will not be relevant if a scheme entitles the scheme creditors to equity securities only. the issuer knows or has reason to know, before the public announcement of the offer, that the level of US ownership exceeds 10 percent of such securities. A Scheme is a statutory procedure which permits a company to make an arrangement or compromise with its members or creditors (or any class of them) which, if approved by the requisite majority of such members or creditors and sanctioned by the court, will be binding on all Rule 802 under the Securities Act provides an exemption from the registration requirements of the Securities Act for certain cross-border exchange offers and business combinations by foreign private issuers involving the issuance of securities. This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. If the registration exemptions above cannot be used for particular investors who are not eligible under one of the above exemptions, mechanisms to avoid unfairness to holders have been created, such as placing the scheme securities with a trustee for a holding period during which the ineligible holder may designate an eligible recipient to receive the restructured securities, and to whom the holder will have in effect sold their entitlement. A scheme of arrangement is a formal statutory procedure under Part 26 of the Companies Act 2006 under which a company may enter into a compromise or arrangement with its members or creditors (or any class of them). The term "tender offer" is not defined under US securities laws, but a scheme of arrangement which results in the transfer or purchase of securities may potentially contain several of the features of transactions that the SEC has considered to qualify as a tender offer. In structuring a UK scheme of arrangement that involves the restructuring of existing securities and/or the offer of new securities, due consideration must be given to the relevant US securities laws and registration exemptions thereunder, since security holders who are US persons or resident in the United States may be involved or new securities offered as part of the scheme of arrangement may be distributed into the US. In addition, Regulation D under the Securities Act provides a non-exclusive "safe harbor" for the Section 4(a)(2) exemption, which permits the offer of securities to an unlimited number of accredited investors, using the Section 4(a)(2) exemption. Significantly, a scheme of arrangement can be used to implement a restructuring where not all creditors agree to the compromise proposed. the securities must be issued in exchange for securities, claims or property interests and cannot be offered for cash; a court or authorised governmental entity must approve the fairness of the terms and conditions of the exchange; the reviewing court must find, before approving the transaction, that the terms and conditions of the exchange are fair and be advised before the hearing that the issuer will rely on the 3(a)(10) exemption; and. None of the exemptions discussed here pre-empt blue sky laws so the issuer will need to conduct a blue sky survey to determine the residency of the investors and to identify applicable state exemptions. Schemes have been used in the United Kingdom (and in many other Commonwealth jurisdictions) for many years. 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