Hot off the Bovespa's Plantão Empresas, dramas in the Bahamas: LDC gets cold feet at the altar?
Speaking of the Grand Caymans on the River Tietê, and pulling a Fastow one on the tax man, an interesting case of regulatory disclosure and crisis communications today from the Plantão Empresas of the Bovespa, the São Paulo exchange’s corporate actions newswire.
Agrenco ran into trouble in Brazil recently when two of its founding partners were arrested on money laundering and tax evasion charges. A summary by the Monitor Mercantil, which editorializes in favor of the Brazilian securities regulator kicking butt and taking names in the case:
…a Polícia Federal prendeu executivos da Agrenco junto com os sócios fundadores Antônio Augusto Pires Júnior e Antônio Iafelice, sob a acusação de terem maquiado balanços financeiros da companhia, para esconder desvios de recursos em benefício próprio.
… The Brazilian federal police arrested Agrenco executives and its founding partners, Pires and Iafelice, on charges of falsifying the company’s balance sheets to hide improper allocation of funds that benefited them.
A CVM declarou que “está promovendo uma avaliação preliminar do assunto”. O estudo envolve descobrir qual o seu poder de atuação no caso de BDRs. Nenhuma outra informação foi divulgada depois.
The CVM said that it was “making a preliminary study of the matter.” The study involves determining whether the security regulator has the power to act in the case of Brazilian Depositary Receipts. No other information has been forthcoming from the regulator.
Cantidiano explica que a atuação da CVM no mercado de BDRs deve ser similar ao que ocorre com a SEC, órgão regulador do mercado norte-americano no caso das ADRs. “Quando uma companhia brasileira lista uma ADR, se submete às normas dos EUA.”
Cantidiano argues that CVM’s oversight of the BDR market ought to resemble to the SEC’s oversight of ADRs. “When a Brazilian company lists an ADR, it submits to U.S. roles.”
Hence the booming market in Forms 20-F, translated (often very badly) into English.
Trading in Agrenco’s BDRs has been suspended today.
The company accordingly comes to the market to declare as follows:
Agrenco Limited, sociedade constituida e organizada sob as leis de Bermuda, sediada em Clarendon House, 2 Church Street, Hamilton, HM11, Bermudas, inscrita no CNPJ//MF sob o n. 08.943.312/0001-40, registrada perante a Comissao de Valores Mobiliarios (“CVM”) sob o n. 08008-0 (“Agrenco” ou “Companhia”), com sociedade controlada sediada no Brasil, denominada Agrenco do Brasil S.A., sociedade por acoes, com sede na Cidade de Sao Paulo, Estado de Sao Paulo, na Avenida Juscelino Kubitschek, n. 1400, 7o andar, CEP 04543-000, inscrita no CNPJ/MF sob o n. 01.806.966/0015-89 (“Agrenco Brasil”), vem, respeitosamente, pela presente, em atendimento a solicitacao contida no Oficio GAE 1908-08, datado de 10 de julho de 2008 (“Oficio”), prestar os esclarecimentos abaixo. Em atencao ao Oficio, transcreveremos o teor da consulta contida no Oficio, para um melhor entendimento do mercado.
Agrenco Limited, a corporation founded and organized under the laws of Bermuda … registered with the CVM … and controlling a publicly traded Brazilian subsidiary known as Agrenco do Brasil S.A. … respectfully submits by these presents, in compliance with CVM Order No. GAE 1908-08, the following clarifications. In response to the aforesaid Order, we transcribe the entire contents of the query contained in said Order so that the market may better understand it.
Consideracoes Iniciais
Initial Considerations
O Oficio informa a Companhia que esta Bolsa de Valores recebeu correspondencia da Louis Dreyfus Commodities Group (“LDC”), onde a LDC faz referencia ao Fato Relevante divulgado pela Agrenco em 09 de julho de 2008, contendo a informacao de que a LDC teria indicado que, sujeito a determinadas condicoes descritas no referido Fato Relevante, estaria em condicoes de confirmar a transacao com a Agrenco, nos termos do Memorando de Entendimentos assinado por Agrenco e LDC em 24 de junho de 2008 (“MOU”), no prazo de dois dias uteis.
The Order informs the Company that this Stock Exchange has received correspondence from the Louis Dreyfus Commodities Group (”LDC) in which LDC refers to the Disclosure of a Material Event published by Agrenco on July 9, 2008, containing the information that LDC had indicated that it was in a position, subject to the conditions set forth in said Disclosure of a Material Event, to confirm the transaction with Agrenco under the terms of the Memorandum of Understanding (the “MOU”) signed by Agrenco and LDC on June 24, within a period of two business days.
Na referida correspondencia a LDC confirma seu esforco e empenho em concluir a transacao descrita no MOU no menor prazo possivel, na medida em que a LDC, na carta enviada a esta Bolsa informa que: “a LDC entende ser necessario esclarecer que continua a envidar seus melhores esforcos, inclusive no que diz respeito ao processo de due diligence, com a mesma elevada intensidade, no sentido de ser capaz de informar a Agrenco, quanto a sua intencao de concretizar ou nao a operacao objeto do MOU antes do prazo nele fixado.” (grifamos)
In this correspondence, LDC confirms the efforts it has made to conclude the transaction described in the MOU in the shortest time possible, inasmuch as LDC states in its letter to the CVM: “LDC acknowledges the need to put forth its best effort, including with respect to the process of due diligence, and work with highest degree of intensity in order to be able inform Agrenco of whether or not it intends to consummate the transaction that is the subject of the MOU by the deadline set therein (our emphasis.)
Entretanto, a LDC informa, ainda, na referida correspondencia que: “com relacao as informacoes contidas no Fato relevante e a luz das informacoes que se tornaram disponiveis nesta data, a LDC nao podera precisar quando estara em posicao de manifestar-se sobre a concretizacao ou nao da operacao objeto do MOU, a qual tambem depende das acoes e diligencias da Agrenco que estao em andamento”. (grifamos) Desta forma, esta Bolsa de Valores solicitou manifestacao da Companhia a respeito dos esclarecimentos da LDC, considerando que a LDC nao confirma o prazo de dois dias uteis mencionado no item 3 do seu fato relevante de 09 de julho de 2008.
LDC also states in the aforesaid letter that: “as to the information contained in the Disclosure of a Material Events and in light of information that became available to us on that date, LDC cannot specify precisely when it will be in a position to announce its intentions with respect to the transaction that is the subject of the MOU, which will depend on activities and due diligence that are still in progress (emphasis ours).” Thus, this Stock Exchange has asked the Company for a statement in response to LDC’s explanations, in the belief that LDC has not, in fact, confirmed the deadline of two business days mentioned in our Disclosure of a Material Event of July 9, 2008.
Em relacao a esta questao, o Fato Relevante divulgado em 9 de julho de 2008 dizia o seguinte:
With respect to that issue, the Material Event issued by the Comany on July 9, 2008, declared as follows:
“Subsequentemente, a LDC indicou que, sujeito as condicoes mencionadas abaixo, estara [sic] em condicoes de confirmar a transacao com a Agrenco tal como disposta no MOU em dois dias uteis. Imediatamente apos este prazo, o capital social da Agrenco Holding B.V. (“Holding”) sera aumentado em um valor total de US$ 33.521.000,00. Como resultado deste aumento a LDC se tornara o acionista controlador da Holding” (grifamos)
“Subsequently, LDC indicated that, subject to the conditions described below, it would be in a position to confirm the transaction with Agrenco in accordance with the terms of the MOU within two business days. Upon the expiration of this period, the current capital of Agrenco Holding B.V. (the “Holding Company”) will incrase to a total of US$33,521,000. As a result of this increase in capital, LDC will become the Holding Company’s controlling shareholder (emphasis ours.)
Cumpre ressaltar que a divulgacao do Fato Relevante de 9 de julho de 2008 se deu apos um dia de intensas tratativas com a LDC, com vistas a iniciar o processo de capitalizacao da Companhia no menor prazo possivel, uma vez que a injecao de capital relativa a operacao com a LDC traria aos mercados e acionistas da Companhia maior seguranca e previsibilidade sobre suas perspectivas e atividades.
It should be emphasized that the publication of the Material Event of July 9, 2008 came after a day of intense negotiations with LDC over initiating the process of capitalizing the Company in the shortest time possible, since an injection of capital through the transaction with LDC would provide the market and the Company’s shareholders with more security and predictability with respect to the Company’s prospects and business activities.
Durante tais tratativas, varios prazos para o inicio do processo de capitalizacao da Companhia foram discutidos, dentre eles o prazo de dois dias uteis mencionado no Fato relevante de 9 de julho p.p. Ao final das tratativas duas coisas ficaram claras para a Agrenco e para a LDC: (i) ambas as partes concordaram que a conclusao celere das tratativas que antecedem a capitalizacao seria extremamente benefica para a Companhia e para a LDC; e (ii) ambas as partes concordaram que tentariam concluir tais tratativas em 2 dias uteis.
During these talks, various deadlines for the beginning of this process of capitalization of the Company were discussed, among them the deadline of two business days mentioned in the Material Event of July 9. At the conclusion of these talks, two things were clear to both Agrenco and LDC: (i) both parties agreed that the swift conclusion of talks on capitalization of the Company would be extremely beneficial to both LDC and the Company; and (ii) both parties agreed that they would try to conclude these talks within two business days.
Tanto isto e verdade, que a propria LDC reconhece a confirma em sua correspondencia a esta Bolsa de valores que: “continua a envidar seus melhores esforcos (…), com a mesma elevada intensidade, no sentido de ser capaz de informar a Agrenco, quanto a sua intencao de concretizar ou nao a operacao objeto do MOU antes do prazo nele fixado”. As palavras da LDC sao auto-explicativas e demonstram o seu genuino interesse em abreviar as tratativas que antecederao a capitalizacao da Companhia.
That this is true is attested to by the fact that LDC acknowledges and confirms in its letter to the Bovespa that: “it continues to make its best efforts and to work with the utmost intensity [...]” These words from LDC are self-explanatory and show that Dreyfus has a genuine interest in concluding negotiations over the capitalization of the Company in short order.
Ao final das referidas tratativas do dia 9 de julho p.p., a Companhia e a LDC acordaram em exercer seus melhores esforcos para iniciar o processo de capitalizacao da Agrenco em dois dias uteis. Neste sentido, a Agrenco, fiel ao seu compromisso de manter o mercado a par de quaisquer desenvolvimentos nas tratativas com a LDC no menor prazo possivel, divulgou o Fato Relevante de 9 de julho de 2008, onde a indicacao da vontade da LDC foi comunicada aos mercados.
At the end of the above-mentioned talks on July 9 past, the Company and LDC agreed to make their best effort to initiate the capitalization of Agrenco within two business days. Thus, Agrenco, in keeping with its promise to inform the market in as timely a manner as possible about any developments in its talks with LDC, released the Material Event disclosure of July 9, 2008, in which tis indication of LDC’s intentions was communicated to the markets.
Entretanto, apos a leitura da versao publicada do Fato Relevante, a LDC deve ter mudado de ideia em relacao a este prazo, uma vez que publicou a Nota a Imprensa e enviou comunicacoes diretamente a esta Bolsa de Valores. Esta atitude muito surpreendeu a Companhia, uma vez que o texto do Fato Relevante de 9 de julho de 2008 havia sido expressamente acordado com a LDC.
In the meantime, after reading the published version of this Material Event, LDC must have changed its mind in relation to this deadline, given that it published a press release and sent a letter directly to this Stock Market. This action surprised the Company greatly, given that the text of the Material Event published July 9, 2008 had been expressly agreed upon with LDC.
Em que pese tudo isso, gostariamos de ressaltar que, por cautela, na elaboracao do Fato Relevante de 9 de julho, a Companhia utilizou a palavra “indicou”, a qual, por si so, ja apresenta um elemento de incerteza e flexibilidade. Tal medida mostrou-se adequada, na medida em que a LDC decidiu nao confirmar o prazo acordado com a Companhia.
Despite all this, we would like to underscore that, out of an abundance of caution, in preparing the Material Event of July 9, the Company used the word “indicated,” which, in itself, has connotations of uncertainty and flexibility. This wording proved to be adequate inasmuchas LDC decided not to confirm the deadline it had agree upon with the Company.
Consideracoes Finais
Final Considerations
A Companhia se compromete a tornar publicas novas informacoes relevantes em relacao a este processo, provendo, desta forma, as informacoes relevantes que venham ao seu conhecimento ao mercado, aos seus investidores, fornecedores, parceiros comerciais e instituicoes financeiras as quais a Companhia mantem relacionamento.
The Company commits itself to making public new relevant information with respect to this process, forwarding all relevant information that comes to its attention to the market, its investors, its suppliers, its business partners and the financial institutions with which the Company maintains relationships.
Comunicacoes A Companhia solicita que todas as correspondencias, oficios e exigencias que venham a ser expedidos por essa Bolsa de Valores sejam encaminhados para o endereco indicado abaixo:
Communications. The Company ask that all correspondence, requests and orders addressed by this stock market be dispatched to the address provided below:
Nota: Continuam suspensos os negocios com os BDRs dessa empresa, no aguardo de outros esclarecimentos que foram solicitados no dia de ontem.
Note: Trading in the Company’s BDRs remains suspended as further explanations, requested yesterday, are awaited.
That’s my draft-quality translation.
Give me twenty minutes to do a “copy desk” job on it and I would feel secure in zapping that off to a corporate actions newswire pra inglês ver.
In the meantime, you have the bilingual text, so you can check my work for any brain farts that may have crept in (as they sometimes do).
Or not. According to some people, the copy desk as an institution is as dead and gone as the Roman Senate.
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