Tender Offers and Schedules

Last Update: November 18, 2016

QUESTIONS AND ANSWERS OF GENERAL APPLICABILITY

Sections 101 to 102. [Reserved]


Section 13(e) and Rule 13e-4

Sections 103 to 129. [Reserved]


Section 14(d) and Regulation 14D

Sections 130 to 159.

Section 159. Rule 14d-101 – Schedule 14D-9

Question 159.01

Question: Item 5 of Schedule 14D-9 and Item 1009(a) of Regulation M-A together require a summary of all material terms of employment, retainer or other arrangement for compensation regarding "all persons [ ] that are directly or indirectly employed, retained, or to be compensated to make solicitations or recommendations in connection with" a transaction subject to the provision. Is a financial advisor engaged by an issuer's board or independent committee for the exclusive purpose of providing financial advice considered a person "directly or indirectly employed, retained, or to be compensated to make solicitations or recommendations" within the meaning of Item 1009(a), even if its opinion expressly states that it is not making a solicitation or recommendation to any of the target company shareholders?

Answer: Yes. Notwithstanding the disclaimer that it is not making a solicitation or recommendation, a financial advisor engaged by the issuer's board or independent committee to provide advice with respect to the tender or exchange offer and whose analyses or conclusions are discussed in the issuer's Schedule 14D-9 is "indirectly employed, retained, or to be compensated" to assist the issuer to make its Schedule 14D-9 solicitation or recommendation. [November 18, 2016]

Question 159.02

Question: Item 5 of Schedule 14D-9 and Item 1009(a) of Regulation M-A together require a "summary of all material terms" of employment, retainer or other arrangement for compensation paid or to be paid to all persons directly or indirectly employed, retained, or to be compensated to make solicitations or recommendations in connection with the transaction. Would disclosing that "customary compensation" will be paid to financial advisors engaged to assist the issuer in making its required response to a tender or exchange offer, without any further details, satisfy this requirement?

Answer: While such a determination ultimately depends on the relevant facts and circumstances, generic disclosure such as “customary compensation” will ordinarily be insufficient as it lacks the specificity needed to assist security holders in evaluating the merits of the solicitation or recommendation and the objectivity of the financial advisors’ analyses or conclusions used to support such solicitation or recommendation. See generally Exchange Act Release No. 16384 (Nov. 29, 1979)(stating that the disclosure in Schedule 14D-9 is intended to “assist security holders in making their investment decision and in evaluating the merits of a solicitation/recommendation”). While quantifying the amount of compensation payable to the financial advisors may not necessarily be required in all instances, disclosure of the summary of the material terms of the financial advisors’ compensatory arrangements would generally include:

  • the types of fees payable to the financial advisors (e.g., independence fees, sale transaction or “success” fees, periodic advisory fees, or discretionary fees);
  • if multiple types of fees are payable to the financial advisors and there is no quantification of these fees, then sufficiently-detailed narrative disclosure to allow security holders to identify the fees that will provide the primary financial incentives for the financial advisors;
  • any contingencies, milestones, or triggers relating to the payment of the financial advisors’ compensation (e.g., the payment of a fee upon the consummation of a transaction, including with a bidder in an unsolicited tender or exchange offer); and
  • any other information about the compensatory arrangement that would be material to security holders’ assessment of the financial advisors’ analyses or conclusions, including any material incentives or conflicts that should be considered as part of this assessment. [November 18, 2016]

Section 14(e) and Regulation 14E

Section 160. [Reserved]

Section 161. Section 14(e)

Section 162. Rule 14e-1

Question 162.01

Question: The Abbreviated Tender or Exchange Offers for Non-Convertible Debt Securities no-action letter (Jan. 23, 2015) states that if the issuer is an Exchange Act reporting company, the issuer must furnish a press release announcing the abbreviated offer on a Form 8-K filed prior to 12:00 noon, Eastern time, on the first business day of the abbreviated offer. Can a foreign private issuer satisfy this condition by filing a Form 6-K?

Answer: Yes. [November 18, 2016]

Question 162.02

Question: The Abbreviated Tender or Exchange Offers for Non-Convertible Debt Securities no-action letter (Jan. 23, 2015) states that abbreviated offers must be made “for any and all” subject debt securities. Does this mean that abbreviated offers cannot have minimum tender conditions?

Answer: No. Abbreviated offers can have minimum tender conditions. [November 18, 2016]

Question 162.03

Question: Under the Abbreviated Tender or Exchange Offers for Non-Convertible Debt Securities no-action letter (Jan. 23, 2015), abbreviated offers for cash consideration to all holders may be made for a fixed amount of cash or for an amount of cash calculated with reference to a fixed spread to a benchmark as of the last business day of the offer. The letter also provides that abbreviated offers for consideration consisting of Qualified Debt Securities, as defined in the letter, may be made to all persons who are QIBs and non-U.S. persons for a fixed amount of Qualified Debt Securities or for an amount of Qualified Debt Securities calculated with reference to a fixed spread to a benchmark, so long as a fixed amount of cash consideration is concurrently offered to persons other than QIBs and non-U.S. persons to approximate the value of the offered Qualified Debt Securities. In the latter case, can the amount of cash consideration offered to persons other than QIBs and non-U.S. persons instead be calculated with reference to a fixed spread to a benchmark?

Answer: Yes, the amount of cash consideration offered concurrently to persons other than QIBs and non-U.S. persons can be calculated with reference to a fixed spread to a benchmark, provided that the calculation is the same as the calculation used in determining the amount of Qualified Debt Securities. [November 18, 2016]

Question 162.04

Question: Can offerors issue Qualified Debt Securities under Securities Act Section 3(a)(9), rather than Securities Act Section 4(a)(2) or Securities Act Rule 144A, to Eligible Exchange Offer Participants, as defined in the letter, and still conduct an abbreviated offer in reliance on the Abbreviated Tender or Exchange Offers for Non-Convertible Debt Securities no-action letter (Jan. 23, 2015)?

Answer: Yes. [November 18, 2016]

Question 162.05

Question: One of the conditions specified in the Abbreviated Tender or Exchange Offers for Non-Convertible Debt Securities no-action letter (Jan. 23, 2015) is that the abbreviated offer not be “commenced within ten business days after the first public announcement or the consummation of the purchase, sale or transfer by the issuer or any of its subsidiaries of a material business or amount of assets that would require the furnishing of pro forma financial information with respect to such transaction pursuant to Article 11 of Regulation S-X (whether or not the issuer is a registrant under the Exchange Act).” If the offeror announces one of these transactions, when can it announce the abbreviated offer?

Answer: Offerors may announce the abbreviated offer at any time, but should not commence the abbreviated offer prior to 5:01 p.m. on the tenth business day after the first public announcement of a purchase, sale or transfer of a material business or amount of assets described in the letter. Note that, if the abbreviated offer is commenced after 5:01 p.m. on a particular business day, the first day of the five business day period would be the next business day. [November 18, 2016]