REPUBLIC ARGENTINA FAST TRACK SETTLEMENT IN RESPECT OF CERTAIN DEFAULTED ARGENTINE BONDS GOVERNED UNDER GERMAN LAW MINISTRY OF FINANCE AND

Transcription

1 2016 FAST TRACK SETTLEMENT IN RESPECT OF CERTAIN DEFAULTED ARGENTINE BONDS GOVERNED UNDER GERMAN LAW REPUBLIC OF ARGENTINA MINISTRY OF FINANCE AND PUBLIC CREDIT

2 Table of Contents 1 GENERAL QUESTIONS AND ANSWERS What is the purpose of this invitation? Where can I find more information about the invitation? How do I obtain the necessary documents? What are the terms of this invitation? How do I find out whether I hold eligible bonds? I do not know the ISIN, only the German securities code (WKN) What is the fast track settlement? What is the individual settlement? Why are there two different settlement tracks? What is the timing for the fast track settlement? What is the timing for the individual settlement? What happens if I participate in the settlement? What happens if I do not participate in this settlement? I have a judgment against the Republic. Do I get a better deal? Does the Republic reimburse me for my court fees / attorney fees? What is the Judgment Value? Do I have to calculate the Judgment Value? Why is the settlement amount capped at the Judgment Value? Can I negotiate a better deal? Can you advise me regarding taxation? Is there a gross-up for taxes that I have to pay on the Settlement Amount? Are there any legal restrictions when participating in this settlement? I have a signed Agreement in Principle (AiP) from the Republic. Do I have to fill out the letter of transmittal? I am not resident in Germany. Can I participate? FAST TRACK SETTLEMENT Am I eligible for the fast track settlement? Which bonds are eligible for the fast track settlement? Why are bonds listed in Annex II not eligible for the fast track settlement? I hold bonds of a bond series listed in Annex I. Am I eligible for the fast track settlement? I hold bonds of a bond series listed in Annex I, but they are not in central custody. Am I eligible for the fast track settlement? Can I re-enter my bonds into central custody at Clearstream Banking AG? How does that work? I hold both Eligible Bonds for the fast track settlement and Other Bonds for the individual settlement. What do I have to do? Do I have to fill out separate letters of transmittal for Eligible Securities and Other Bonds (as defined in the Republic s Press Release dated July 20, 2016)? I hold Eligible Bonds in different accounts / at different banks. What do I have to do? The bonds are held by more than two co-owners collectively and we cannot enter more than two co-owners in the web form. What do we have to do?

3 2.11 I have a judgment. Do I have to hand in the judgment? Where do I send the judgment? My court proceedings are still pending. What do I have to do? How long will it take to receive my money? Will I have to pay any fees or commission to participate in the fast track settlement? Can I withdraw my offer/tender if I elected to participate in the Fast Track Settlement? SETTLEMENT MECHANICS Fast Track Settlement How does the Fast Track Settlement work? Procedures for bondholders to participate in the Fast Track Settlement Procedures for Custodians/ Banks/ Brokers ( Custodians ) to validate bondholder s submissions to participate in the Fast Track Settlement I sent the letter of transmittal to my bank. My bank does not know what to do with it. Can you help? I do not know my bank s participant number in Clearstream Luxembourg or Euroclear. Can you help? If the direct participant in the clearing system holds the bondholder s position in Clearstream Banking AG directly (as a direct participant in Clearstream Banking AG), why should the Direct Participant transfer its position to Clearstream Luxembourg or Euroclear? I do not know if my bonds are held in central custody or definite form outside of central custody I completed, printed and signed the LoT. I now realize that I inserted inaccurate information. Can I amend my LoT? I do not have internet access. How do I submit my LoT? SECTION FOR CUSTODIANS I am the custodian of the bondholder and he is eligible to participate in the Fast Track Settlement. How do I assist my client? My customer does not have internet access, so he has asked me as his custodian to complete the LoT on his behalf. Is this possible? I am the custodian of the bondholder, but not a direct participant in Clearstream Luxembourg or Euroclear. What information about which custodian in the custody chain is required? Who should countersign the letter of transmittal? INDIVIDUAL SETTLEMENT

4 Terms used but not defined in this document have the meanings given to those terms in the Republic s Press Release of July 20, 2016, available at 1 GENERAL QUESTIONS AND ANSWERS 1.1 What is the purpose of this invitation? The Republic of Argentina (the Republic ) wishes to settle with holders of outstanding defaulted German law governed bonds of the Republic that are not time barred, as authorized by the Argentine Congress in Where can I find more information about the invitation? How do I obtain the necessary documents? You can access the website where you will find all the necessary information: Alternatively, you may contact the Republic s Information Agent, Morrow Sodali, via (argentina.deutschebondset@morrowsodali.com) or phone (from Germany: ; from outside Germany: / ). 1.3 What are the terms of this invitation? In short, a holder of an eligible German Bond will receive a total cash payment equal to 150% of the principal amount of the eligible bonds subject to the settlement (the Settlement Amount ) against transfer of the tendered bonds to an account designated by the Republic. There is an exception if the bondholder obtained a judgment or arbitral award against the Republic. If the value of the judgment or arbitral award (including interest) as of January 31, 2016 (the Judgment Value ) is lower than 150% of the principal amount, the bondholder is only entitled to the lower judgment or award amount. If, instead the Judgment Value exceeds the Settlement Amount, the bondholder will receive only the Settlement Amount, but not the higher Judgment Value. The cash payment of 150% of the principal amount covers all claims related to the bonds, including: the principal amount, all accrued and unpaid interest, legal fees, any claims under any judgment or cost order. 1.4 How do I find out whether I hold eligible bonds? I do not know the ISIN, only the German securities code (WKN). Please refer to the website for a list of eligible bonds. Bondholders may find the ISIN and/or the German securities code (WKN) in their securities account statements. You may also contact your custodian for assistance. 4

5 1.5 What is the fast track settlement? What is the individual settlement? The fast track process has been put forward to expedite the settlement process and is available for holders of eligible bonds of the following series provided they are held in central custody: DE DE DE DE DE DE DE DE DE DE DE DE DE DE DE DE DE DE DE DE DE XS In this case, no individual settlement process is required and the settlement will be processed on an expedited basis. There is an exception if the holder of any of the eligible bonds obtained a judgment or arbitral award against the Republic and the value of the judgment or arbitral award (including interest) as of January 31, 2016 (the Judgment Value ) is lower than 150% of the principal amount. In that case, the settlement of those otherwise eligible bonds will be subject to the individual verification procedure ( Individual Settlement ). Bondholders holding bonds not eligible for the fast track (German bonds listed in Annex II; German Bonds not in central custody; German bonds with a Judgment value below 150 % of the principal amount) will need to complete an individual verification procedure to settle their claims. Depending on the circumstances, this may require some time. Please refer to the Eligibility Chart below (the chart can also be found as a PowerPoint file on the website). 5

6 My bonds are in central custody I have bonds in definitive form (not in central custody) I hold one of the following bond series: DE ; DE ; DE ; DE ; DE ; DE ; DE ; DE ; DE ; DE ; DE ; DE ; DE ; DE ; DE ; DE ; DE ; DE ; DE ; DE ; DE ; XS I hold one of the following bond series: DE ; DE ; DE ; DE ; DE ; DE ; DE and have a judgment or timely initiated court proceedings in respect of the principal I hold one of the following bond series: DE ; DE ; DE ; DE ; DE ; DE ; DE ; DE I have a certificate of presentment (Vorlegungsbescheinigung) or timely initiated court proceedings in respect of the principal I hold one of the following bond series: DE ; DE ; DE ; DE I do not have a certificate of presentment (Vorlegungsbescheinigung) or a judgment in respect of the principal nor have I timely initiated court proceedings I have a judgment or timely initiated court proceedings in respect of the principal I hold one of the following bond series: DE ; DE ; DE ; DE ; DE I do not have a judgment or timely initiated court proceedings in respect of the principal Fast Track Settlement Individual Settlement (central custody) Individual Settlement (definitive form) Not Eligible 1.6 Why are there two different settlement tracks? The Republic wants to give as many holders of German law governed bonds as possible the opportunity to settle on an expedited basis. Individual verification procedures will be used only when necessary. Generally, those holders of German law governed bonds in central custody will be able to settle on an expedited basis if those bonds have not yet become extinct or time-barred. 1.7 What is the timing for the fast track settlement? What is the timing for the individual settlement? For the fast track settlement, signed letters of transmittal should be received by the Information Agent as soon as possible and no later than November 12, The procedures for the individual settlement were announced on September 20, What happens if I participate in the settlement? Generally, a bondholder eligible to participate in the settlement will receive the Settlement Amount, a total cash payment of 150% of the principal amount of bonds tendered. The bondholder will be 6

7 required to acknowledge the full and final settlement and discharge of all claims under the bonds. This includes: the principal amount, all accrued and unpaid interest, legal fees, any claims under any judgment or cost order In case litigation proceedings are pending, the bondholders must withdraw the court action. Each party bears its own attorney s fees. The Republic will not pay or reimburse court fees or the holder s attorney s fees. If a bondholder has already obtained a judgment in a legal proceeding, it must surrender and deliver all enforceable copies of any such judgment and related cost orders. In any event, the bondholder waives the right to enforce any judgment and cost order. 1.9 What happens if I do not participate in this settlement? The bondholder is not obligated to participate in the settlement. However, this is the only settlement proposal that Argentine laws currently contemplate for German bonds I have a judgment against the Republic. Do I get a better deal? No. The cash payment of 150% of the principal amount covers all claims related to the bonds, including any claims under judgments or cost orders. The Republic will not assume, indemnify or reimburse any legal costs separately Does the Republic reimburse me for my court fees / attorney fees? No, the Republic will not assume, indemnify or reimburse any legal costs separately What is the Judgment Value? Do I have to calculate the Judgment Value? Why is the settlement amount capped at the Judgment Value? Law of the Argentine Congress prohibits the government to pay more than the Judgment Value. We expect most judgments obtained against the Republic under German law governed bonds to exceed 150% of the principal and therefore to be capped at the Settlement Amount. The bondholders do not need to calculate the Judgment Value. If the Judgment Value is below 150% of the principal, we will contact him directly Can I negotiate a better deal? Law of the Argentine Congress does not contemplate a more favorable deal than the Settlement Amount for holders of German law governed bonds. This also applies to Individual Settlements Can you advise me regarding taxation? We are not in a position to advise on taxation. The bondholders are encouraged to contact their own tax advisor Is there a gross-up for taxes that I have to pay on the Settlement Amount? No gross-up will be paid on any taxes. 7

8 1.16 Are there any legal restrictions when participating in this settlement? Holders are responsible to verify whether they can legally participate in the settlement. We are not aware of any legal restrictions I have a signed Agreement in Principle (AiP) from the Republic. Do I have to fill out the letter of transmittal? Yes, if you are eligible to participate in the Fast Track Settlement and choose to participate, you will have to fill out the letter of transmittal even if you already have a signed AiP with respect to eligible bonds. The Republic typically requires more information and specific representations for a settlement of the German law governed bonds I am not resident in Germany. Can I participate? The proposal is available to all holders of eligible German bonds, regardless of their residence. Each holder must establish under laws applicable to it whether it can participate. We are not aware of any legal restrictions. 2 FAST TRACK SETTLEMENT 2.1 Am I eligible for the fast track settlement? Only certain ISINs are eligible for the fast track settlement. Please refer to the eligibility chart on the website illustrated also in the answer to question 1.5. In addition, only bondholders who hold their bonds in central custody are eligible for the fast track settlement. Bondholders holding bonds in definitive form outside of central custody are not eligible to participate in the fast track settlement regardless of the ISIN. 2.2 Which bonds are eligible for the fast track settlement? Please refer to the eligibility chart on the website and also to the answer to question Why are bonds listed in Annex II not eligible for the fast track settlement? Those bonds have become time-barred unless court or similar proceedings were timely initiated. Thus, tendering bonds listed in Annex 2 requires an individual procedure to verify that the bondholder submitting a request has tolled the statute of limitations by timely initiating legal proceedings. 2.4 I hold bonds of a bond series listed in Annex I. Am I eligible for the fast track settlement? Yes, provided those bonds are held in central custody and you have not obtained a judgment with a value lower than 150% of the principal amount. 2.5 I hold bonds of a bond series listed in Annex I, but they are not in central custody. Am I eligible for the fast track settlement? No, unless the bondholder re-enters them into central custody, which we encourage him to do in order to participate in the fast track settlement. If re-entering the bonds into central custody is not possible, an individual settlement is required. 8

9 2.6 Can I re-enter my bonds into central custody at Clearstream Banking AG? How does that work? Reference is made to Clearstream s announcement at: The holders should contact the relevant paying agent or other Custodians for further information and assistance. 2.7 I hold both Eligible Bonds for the fast track settlement and Other Bonds for the individual settlement. What do I have to do? The Fast Track Settlement is only open for Eligible Bonds. Procedures for potential settlement for other Bonds will be announced in due course. Holders of non German law (not listed in Annex I or II) must complete the AiP available at and contact the Republic through agreementinprinciple@mecon.gov.ar. 2.8 Do I have to fill out separate letters of transmittal for Eligible Securities and Other Bonds (as defined in the Republic s Press Release dated July 20, 2016)? Yes. 2.9 I hold Eligible Bonds in different accounts / at different banks. What do I have to do? If the bondholder holds its bonds in central custody, but at different banks / at different accounts, the Republic requires separate letters of transmittal for each account The bonds are held by more than two co-owners collectively and we cannot enter more than two co-owners in the web form. What do we have to do? Such bondholders may obtain a special print-out of the letter of transmittal from the information agent I have a judgment. Do I have to hand in the judgment? Where do I send the judgment? Yes. The fast track settlement requires holders to deliver all enforceable copies of the judgment and any cost order to the Information Agent. Bondholders should send the enforceable copies of their judgments and all related orders such as cost orders to the Information Agent (Morrow Sodali) My court proceedings are still pending. What do I have to do? Pending litigation does not prevent from participating in the settlement. However, the court action must be withdrawn (through counsel). Each party bears its own costs, any court fees already paid or advanced by the bondholder will not be reimbursed by the Republic How long will it take to receive my money? Eligible Bonds that are validly tendered and accepted by Argentina will be settled on a delivery versus payment basis as on such date as Argentina may determine (the Settlement Date ) but no later than fifteen (15) business days after the Expiration Date (the Final Settlement Date ). 9

10 2.14 Will I have to pay any fees or commission to participate in the fast track settlement? The Republic and the Information Agent do not charge any fee or commission. However, it cannot be excluded that the bondholders Custodians charge fees for the settlement process. Bondholders should inquire about any fees at their respective custodian. The Republic does not reimburse any such fees Can I withdraw my offer/tender if I elected to participate in the Fast Track Settlement? Yes, this will be possible until the Settlement Date, i.e., the date the bondholder receives the cash payment upon delivery of the bonds. Please contact your custodian as soon as you decide to withdraw the offer / tender. In addition, please contact the Information Agent by sending an to AmendmentArgentina@morrowsodali.com to advise on your withdrawal. The subject line of the should state Withdrawal and include your LoT reference number (reference number is detailed in the LoT) (e.g., Withdrawal + LoT reference number by way of example, if your LoT number were XYZ123, the subject line would be Withdrawal LoT XYZ123 ). The cancellation will be processed by the Information Agent once the latter confirms in writing (responding to the original received) that such instruction has been withdrawn. 3 SETTLEMENT MECHANICS Fast Track Settlement 3.1 How does the Fast Track Settlement work? Fast track settlement is available to bondholders if (1) their bonds are listed in Annex I, and (2) are held in central custody, and (3) do not have a judgment with a Judgment Value below 150 % of the principal amount of such bonds Procedures for bondholders to participate in the Fast Track Settlement Step 1: Bondholders must ensure that their bonds are held at either Clearstream Luxembourg or Euroclear. If the bondholder s position of Eligible Bonds is currently held at Clearstream Banking AG (Frankfurt), the position must be transferred to either Clearstream Luxembourg or Euroclear prior to the submission of the letter of transmittal to the Information Agent. Please refer to your custodian for assistance. Step 2: Bondholders wishing to participate in the Fast Track Settlement must submit certain information to the Information Agent online ( Bondholders are asked to contact their custodian to obtain the following account information: Custodian contact details for follow up questions (name of contact, address, phone number) Name of the clearing system to be used for the settlement (either Clearstream Luxembourg or Euroclear) Name of direct participant at clearing system 10

11 Direct participant account number at clearing system (5 digits only) If the bondholder s custodian is not a direct participant in the relevant clearing system, the following additional information is required: Name of custodian Custodian s account number at the direct participant Step 3: The bondholder should navigate to the website and click on the link: Create Letter of Transmittal. The bondholder will be guided through a filter to confirm its eligibility for the Fast Track Settlement. If eligible, the bondholder will be able to generate his letter of transmittal with a unique reference number provided that the required information is entered. Once the bondholder has completed the LoT electronically, the bondholder will be able to review the information entered. If the information is accurate, the bondholder should click Submit to submit the information electronically and to obtain a printable PDF version of the LoT. Every LoT will have a unique 6-digit reference number generated by the system). If the information is not accurate, the bondholder can modify the information by clicking on Modify before submitting/printing the LoT to amend the inaccurate information. Step 4: The bondholder should sign the LoT and post or hand deliver the signed LoT to his custodian. The LoT includes the instructions the Custodians require to settle the trade on a DvP basis Procedures for Custodians/ Banks/ Brokers ( Custodians ) to validate bondholder s submissions to participate in the Fast Track Settlement Once the custodian (that can either be a Direct Participant or a Non-Direct Participant in the clearing system) receives the original LoT from his client, he should validate the account information and the fact that the bondholder holds at least the position in the nominal amount to be tendered with a separate signature on the last page of the LoT. The custodian should then deliver the original LoT to the Information Agent, as soon as possible and no later than November 12, 2016 to: MORROW SODALI (c/o TMF Group) Eschenheimer Anlage 1, Frankfurt am Main Germany or MORROW SODALI Via 24 Maggio, Roma Italy 11

12 Optional online registration for the custodian: A Custodian may use the website to keep track of the letters of transmittal submitted to the Information Agent on behalf of its customers. After registering on the website, every custodian has the opportunity to view submitted letters of transmittal by entering the unique 6-digit reference number of the letters of transmittal, and the 5-digit direct participant account number in Euroclear or Clearstream Luxembourg (as indicated in the letter of transmittal). The Custodian will then be able to view the LoT from its client in electronic form (same LoT as received in original format). 3.2 I sent the letter of transmittal to my bank. My bank does not know what to do with it. Can you help? The bondholder may invite his bank or custodian to review the Information Letter to Custodians. The custodian may always contact the Information Agent. 3.3 I do not know my bank s participant number in Clearstream Luxembourg or Euroclear. Can you help? The bondholder needs to contact his custodian to receive this information. The bondholder may direct his custodian s attention to the Information Letter to Custodians and Brokers for further background. 3.4 If the direct participant in the clearing system holds the bondholder s position in Clearstream Banking AG directly (as a direct participant in Clearstream Banking AG), why should the Direct Participant transfer its position to Clearstream Luxembourg or Euroclear? The settlement will follow Delivery versus Payment procedures ( DvP ) in Clearstream Luxembourg or in Euroclear. Hence, to fulfill the standard DvP procedures, such transfer is required to participate in these Settlements. 3.5 I do not know if my bonds are held in central custody or definite form outside of central custody Bonds held in central custody are held in custody of Clearstream Banking AG (that includes the bonds being held in Euroclear or Clearstream Luxembourg s custody). Contact your custodian if you do not know whether your bonds are held in central custody. The ISIN XS is held in Clearstream Luxembourg or Euroclear. 3.6 I completed, printed and signed the LoT. I now realize that I inserted inaccurate information. Can I amend my LoT? Yes, the bondholder will be able to amend his LoT until the Settlement date (i.e.: the date the bondholder receives the cash payment upon delivery of the bonds). The bondholder should contact the Information Agent for further details. 3.7 I do not have internet access. How do I submit my LoT? In case the bondholder cannot complete the LoT online, nor has anyone to assist him to do so, the bondholder may request his custodian or any other third party to complete the LoT submission online. The bondholder should sign the printed LoT in person. 12

13 If a third person signs the LoT on behalf of the bondholder (i.e.: the custodian), the underlying original power of attorney must be sent to the Information Agent along with the original LoT. Morrow Sodali can assist with the completion of the online LoT submission. 4 SECTION FOR CUSTODIANS 4.1 I am the custodian of the bondholder and he is eligible to participate in the Fast Track Settlement. How do I assist my client? Please refer to the Information Letter to Custodians. In summary, the custodian needs to do the following: Provide the bondholder with the account information in either Clearstream Luxembourg or Euroclear. This information is vital for the bondholder to complete the letter of transmittal. Once the custodian receives the signed original letter of transmittal from its customer, the custodian is required to validate the account information in the letter of transmittal as well as the fact that the bondholder holds at least the position in the nominal amount to be tendered with a separate signature at the end of the letter of transmittal. Please send all completed and countersigned original letters of transmittal to the Information Agent Morrow Sodali as soon as possible and no later than November 12, My customer does not have internet access, so he has asked me as his custodian to complete the LoT on his behalf. Is this possible? Yes, a custodian may complete the letter of transmittal on behalf of its customer provided the bondholder has instructed the custodian to do so. In this case, the custodian should follow the instructions under 3.1 above. It is important, however, that the letter of transmittal is signed by the bondholder before it is submitted to the Information Agent. If a third person (e.g., the custodian) signs the LoT on behalf of the bondholder, the underlying original power of attorney must be sent to the Information Agent along with the original letter of transmittal. 4.3 I am the custodian of the bondholder, but not a direct participant in Clearstream Luxembourg or Euroclear. What information about which custodian in the custody chain is required? Who should countersign the letter of transmittal? The direct custodian of the bondholder should validate the account information of the direct participant in the relevant clearing system and the fact that the bondholder holds the nominal amount of Eligible Bonds tendered by countersigning the relevant section of the letter of transmittal. The letter of transmittal should indicate your contact information. The custodian s account number at the direct participant should be the account number of your upstream correspondent with an account at the direct participant. 5 INDIVIDUAL SETTLEMENT Details for the individual settlements will be announced in due course. Bondholders may refer to the eligibility chart on the website to check whether they are eligible for the individual settlement. 13