Criteria CaixaCorp, S.A. Special Report on the Issue of Subordinated Bonds Mandatorily Convertible in the case of articles 414, 417 and 511 of the

Transcription

1 Special Report on the Issue of Subordinated Bonds Mandatorily Convertible in the case of articles 414, 417 and 511 of the Capital Companies Act KPMG Auditores, 17 May 2011

2 KPMG Auditores Tel Edificio Torre Europa Fax Paseo de is Casteliana, 95 Internet es Madrid Special report on the issue of mandatory convertible bonds in the case of articles 414, 417 and 511 of the Capital Companies Act A) To the General Shareholders Meeting of Criteria CaixaCorp, S.A. Dear Sirs, We issue this special report on the proposal for the issue of bonds mandatorily convertible into new-issue shares of Criteria CaixaCorp, S.A. ("Criteria") in accordance with the provisions of articles 414, 417 and 511 of the Capital Companies Act, whose Rewritten Text was adopted by Legislative Royal Decree 1/2010 of July (the "LSC"), as appointed by the Companies Registrar of Barcelona, Mr Guillermo Herrero Moro corresponding to record number A 4275/11 and in accordance with our proposal of professional services dated 25 February Background and purpose of our work 1.1 Background On 27 January 2011, Caixa d Estalvis i Pensions de Barcelona ( la Caixa ), Criteria and Microbank de "la Caixa", S.A. ( Microbank ), signed a framework agreement (the Framework Agreement ), published as a relevant fact on the website of the National Securities Market Commission ( CNMV ), to regulate the operations for reorganising the la Caixa group that were to take place as a result of "la Caixa" exercising its financial activities indirectly by means of Criteria as a listed bank, which will adopt the name of CaixaBank. Said reorganisation process is based on Royal Decree Law 11/2010 of 9 July, which amends Law 31/1985 of 2 August on the regulation of the basic rules and regulations for the governing bodies of savings banks, and Decree Law 5/2010 of 3 August, which amends Legislative Decree 1/2008 of 11 March, which adopts the rewritten text of the Savings Bank Act of Catalonia. Said rules and regulations introduced the possibility of a savings bank exercising its financial activities by means of a bank, of it being the assignor of the former with the essential purpose of designing a structure which, by maintaining fulfilment of the corporate purposes of "la Caixa", makes it possible to adapt to new national and international regulations and, in particular, the new requirements of the Basel Committee on Banking Supervision ( Basel III ). On 24 February 2011, "la Caixa", Criteria and Microbank amended part of the terms and conditions of the Framework Agreement, took the final decision on the economic terms and conditions thereof and confirmed the other terms and conditions of the Framework Agreement. The amendment and subsequent ratification of the Framework Agreement and the final agreement on its economic terms and conditions were also notified to the CNMV (National Securities Market Commission) as a relevant fact. The Ordinary General Assembly of "la Caixa" and the General Shareholders Meetings of Criteria and Microbank then adopted the execution of the aforementioned operations for the reorganisation of the "la Caixa" group on 28 April and 12 May 2011, respectively. In the context of the aforementioned reorganisation operations and in order to strengthen the equity of the future CaixaBank and favour its solvency, the Framework Agreement considered the possibility of an issue of subordinated bonds. KPMG Auditores, a limited liability company, is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliat ed t o KPMG Inter nati onal Cooperative ( KPMG I n t e r n a ti o n al ), a Swiss company. Reg. Mer Madrid. T F 90. Sec. B. H. M , entry 9. Tax No. B

3 Special Report on the Issue of Bonds mandatorily convertible in the cases of article 414, 417 and 577 of the Capital Companies Act mandatorily convertible for the amount of up to one billion five hundred million euros ( 1,500,000,000). In accordance with the information and documentation received, the Board of Directors of Criteria, in accordance with the authorisation awarded by the Ordinary General Shareholders Meeting held on 12 May 2011, in its meeting of 12 May 2011 adopts, at the same time as the approval of the directors' report attached as an annex to this report (the "Directors' Report ), the agreement for an issue of subordinated bonds mandatorily convertible (the "Bonds") into new-issue shares of Criteria for the amount of one billion five hundred million euros ( 1,500,000,000), where provisions have been made for a possible incomplete subscription, with exclusion of the pre-emptive right and with a maturity of thirty (30) months from the payment date. In accordance with the information that has been received, the issue will take place in accordance with the terms and conditions provided in the Directors' Report and in the draft version of the "Securities Note on the issue of mandatory convertible subordinated bonds of Criteria Corp, S.A. series 1/2011". In accordance with the provisions of articles 414, 417 and 511 of the Capital Companies Act, and 14 February 2011, we were appointed by Mr Guillermo Herrero Moro, Companies Registrar of Barcelona, in accordance with record number A 4275/11, for the issue of the official special report. The purpose of our work has not been to certify the issue or conversion price of the Bonds. The purpose of our work has been as follows: To apply the procedures established in the technical regulations for the preparation of special reports on the issue of convertible bonds in the case of article 292 of the Rewritten Text of the Public Limited Companies Act (replaced by article 414 of the Capital Companies Act) and declare whether or not the Directors' Report, together with the provisions of the resolution adopted by the Board of Directors of Criteria 12 May 2011, contains the required information as provided in the aforementioned law, which includes the explanation of the terms and conditions and modalities of the conversion corresponding to the Bonds. To issue a technical report on the reasonable nature of the data related to the issue of the Bonds with exclusion of the pre-emptive right as provided in the Directors' Report and the resolution of the Board of Directors of Criteria of 12 May 2011, and on the suitability of the conversion ratio of the Bonds and their adjustment formulas for compensating any possible dilution of the economic participation of shareholders, all in accordance with the provisions of article 417 of the Capital Companies Act. 2. Procedures used in our work We have used the following procedures in our work: 2.1Obtaining and analysing the following information: Document requesting the appointment of an accounts auditor for the preparation of the Special Report on the issue of mandatory convertible subordinated bonds as submitted by Criteria to the Companies Registry of Barcelona on 11 February Appointment of KPMG Auditores, S.L. by the Companies Registrar of Barcelona on 14 February 2011 for the preparation of said Special Report. 2

4 1,1. 1 4ṛ Criteria CaixaCorp, S.A. Special Report on the Issue of Bonds mandatorily convertible In the case of articles 414, 417 and 511 of the Capital Companies Act Audited consolidated annual accounts of Criteria corresponding to the years ended at 31 December 2008, 2009 and "Relevant facts" about the transaction as notified to the CNMV (National Securities Market Commission). Announcement of the Ordinary General Shareholders Meeting of Criteria held on 12 May Resolution of the Ordinary General Shareholders Meeting of Criteria of 12 May 2011 in relation to the award of the power to the Board of Directors of Criteria to issue convertible bonds and exclude the pre-emptive right. Report drawn up by the directors of Criteria to explain the terms and conditions and modalities of the conversion, dated 12 May 2011, included, as already mentioned, as an Annex to this report. Agreement for the issue of the Bonds adopted by the Board of Directors of Criteria on 12 May Information and explanations given by the Directors of Criteria in respect of the subsequent facts, mainly in the following areas: Evolution of contingent liabilities or important commitments on the date of the last audited annual accounts and the existence of contingent liabilities or significant commitments on the date of our report, where applicable. The amendments to the share capital or significant changes in long-term debts or working capital that may arise between the date of the last audited annual accounts and that of our report, where applicable. The existence of changes to any accounting principle to date. The existence of facts that may have a significant effect on the financial statements. Explanations given by the directors of Criteria for the justifications given in their report in relation to Criteria to justify the proposal for the issue of the Bonds and the full exclusion of the preemptive right. Other information considered of interest for our work. 2.2 Confirmation that the Directors' Report contains the information considered necessary and sufficient for the Bonds in accordance with the aforementioned Technical Rule, for their appropriate interpretation and understanding by the investors. 2.3 Verification of the calculations applied in the valuation methods used by Criteria's Directors to specify the terms and conditions and modalities of conversion and other rights, where applicable, guaranteed for the subscribers of the Bonds. 2.4 Confirmation that, in accordance with the Directors' Report, the issue price of the Bonds is not below their face value. 2.5 Confirmation that the conversion price of the Bonds into new-issue shares (the "Conversion Price") is not below the face value of the shares into which they are to be converted. 3

5 Special Report on the Issue of Bonds in the case of articles 414, 417 and 511 of the Capital Companies Act 2.6 Confirmation that the accounts information contained in the Directors' Report corresponds to the bank s accounts information that was used to draw up the consolidated audited annual accounts for the years closed at 31 December 2008, 2009 and Analysis of other events, where applicable, subsequent to the adoption of the last audited consolidated accounts. 2.8 Reading of the minutes available for the General Shareholders Meetings and meetings of the Board of Directors that were held in the last year and up to the date on which this report is issued. 2.9 Evaluation of the reasonable nature of the information contained in the Directors' Report to justify the proposal for the issue of the Bonds with exclusion of the pre-emptive rights as a result of the application of the conversion ratio. Analysis of the suitability of the conversion ratio and the corresponding adjustment formulas to compensate any possible dilution of the economic participation of shareholders Reading of the announcement of the Ordinary General Shareholders Meeting of Criteria and the agreement for the award to the Directors of the power to issue convertible bonds and the power to exclude the pre-emptive right Meetings with the Directors of "la Caixa" and Criteria to obtain clarifications about the matters that have arisen during our work, as well as to gather other information that is considered to be of interest Obtaining a letter signed by the Directors or Executives with sufficient powers of attorney to represent Criteria, in which they confirm to us, among other issues, that we have been given all the information required for the preparation of our report and that no events have occurred up to the date of our report that have not been notified to us and that may have a significant effect on the results of our work. 3. Relevant matters for consideration when interpreting the results of our work Both the interpretation of the requirements provided in articles 414, 417 and 511 of the Capital Companies Act and the opinions given in this report imply, besides objective factors, other subjective factors that imply an opinion and, therefore, it is not possible to guarantee that third parties will necessarily agree with the interpretation and opinions given in this report. The information required for our work has been provided by the Directors of Criteria and "la Caixa" or has been obtained from public sources. In relation to the information obtained from public sources, our work has not included the verification of said information on the basis of external evidence, without prejudice to the fact that, as far as possible, we have checked that the information given coincides with other information obtained during our work. We are not obliged to update our report as a result of events that may occur after the date on which it is issued. The content of this report must be understood as referring to the information received about the events occurring prior to the date thereof. 4

6 Special Report on the Issue of Bonds mandatorily convertible in the cases of articles 414, 417 and 511 of the Capital Companies Act We have assumed that all the authorisations and registers which, where applicable, are relevant in Spain and in the other jurisdictions in which Criteria operates for the effectiveness of the planned transaction and that have a significant effect on our analysis will be obtained with no adverse effect for either company or for the profits anticipated from said transaction. Finally, it is important to point out that our work is independent and, therefore, does not represent whatsoever recommendation to the Directors of Criteria, the shareholders or third parties in relation to the position they should take up in relation to the issue of the Bonds. 4. Conclusion In accordance with the work carried out, the scope described in the foregoing paragraphs and subject to the relevant matters for consideration when interpreting the results of our work, all with the exclusive purpose of meeting the requirements provided in articles 414, 417 and 511 of the Capital Companies Act, it is our professional opinion that: the attached Report of the Directors of Criteria on the proposed issue of subordinated bonds that are mandatorily convertible into Criteria shares, with exclusion of the pre-emptive rights, contains the information required by the Technical Rules on the preparation of the special report on the issue of Convertible Bonds in the case of article 292 of the Rewritten Text of the Public Limited Companies Act (replaced by article 414 of the Capital Companies Act) and that the information contained in the aforementioned Directors' Report is reasonable insofar as it is appropriately documented and explained. Furthermore, the conversion ratio of the Bonds into Criteria shares, with exclusion of the pre-emptive rights, and the adjustment formulas for compensating a possible dilution of the economic participation of shareholders, as proposed, are suitable. This special report and the information it contains have been prepared exclusively for the purposes provided in articles 414, 417 and 511 of the Capital Companies Act and, therefore, they must not be used for any other purpose. Amparo Solis Partner KPMG Auditores, S.L. 17 May