17 Dec 2015 08:46
GRUPO CLARIN S.A.
Grupo Clarín Accepts Director Resignation, Calls Shareholder Meetings
On 16 December 2015, Grupo Clarín S.A. (the "Company") informed the Argentine Securities Commission and the Buenos Aires Stock Exchange that the Company's Board of Directors had held a meeting on December 15, 2015, at which the Company had accepted the resignation of Mr. Luis María Blaquier as Director appointed by the Class C Shares and appointed Mr. Gervasio Colombres (alternate director appointed by the Class C Shares) in his stead. The Board of Directors also called an Extraordinary Shareholders' Meeting to consider matters related to the Plan to conform the Company to the Audiovisual Communication Services Law.
Attached as Exhibit A is a complete free translation of the Minutes of the Meeting of the Board of Directors No. 341, held on 15 December 2015.
Enquiries:
In Buenos Aires:
Alfredo Marín/Agustín Medina Manson
Grupo Clarín
Tel: +5411 4309 7215
Email: investors@grupoclarin.com
In London:
Alex Money
Jasford IR
Tel: +44 20 3289 5300
Email: alexm@jasford.com
In New York:
Melanie Carpenter
I-advize Corporate Communications
Tel: +1 212 406 3692
Email: clarin@i-advize.com
Exhibit A
FREE TRANSLATION
Minutes of the Meeting of the Board of Directors No. 341: In the City of Buenos Aires, on the 15th day of the month of December 2015, at 11.00 hours, the Board of Directors of Grupo Clarín S.A. (the "Company") meets at the Company's headquarters on calle Piedras 1743, Federal Capital, with the presence of Messrs. Directors Jorge Carlos Rendo, Alejandro Alberto Urricelqui, Pablo César Casey, Héctor Mario Aranda, Ignacio Rolando Driollet, Horacio Eduardo Quirós, Lorenzo Calcagno, Alberto César José Menzani, Sebastián Salaber, Luis María Blaquier, Gervasio Colombres, and of the undersigned members of the Supervisory Committee. Mr. Jorge C. Rendo submits the first point of the agenda to the consideration of those present: 1) Consideration of the resignation tendered by Mr. Luis María Blaquier to the position of Director appointed by the Class C Shares. The President of the Board speaks and states that on the 14th of December of the current year, the Company received a communication from Mr. Luis María Blaquier, whereby he resigned to the position of Director appointed by the Class "C" Shares. Therefore, and pursuant to applicable laws, this Board of Director must consider and approve the resignation tendered [by Mr. Blaquier], which is neither intentionally [damaging] nor untimely, nor does it affect the normal development of the Company. After a brief discussion, [the Board] unanimously resolves, with the abstention of Mr. Luis Blaquier, to approve the resignation tendered by the Director Mr. Luis María Blaquier, expressing the recognition of the Company to the departing director for the excellence of the work performed throughout his tenure, and wishing the greatest success in the new tasks and functions that he may carry out. Next, [the President] submits the second point of the agenda to the consideration of those present: 2) Consideration of the replacement of Mr. Luis María Blaquier as Director appointed by the Class "C" Shares. The President continues to speak and states that as a consequence of the resignation tendered by Mr. Blaquier and its approval, pursuant to the General Corporate Law and the decision of the shareholders at the General, Annual Ordinary Shareholders' Meeting of 28 April, 2015, Mr. Gervasio Colombres must replace him in that position. The motion is submitted to a vote and is approved unanimously. Present at this meeting, Mr. Gervasio Colombres accepts the position of Director for the Class C shares by signing below as proof of his acceptance. Next, [the President] submits the third point of the agenda to the consideration of those present: 3) Status of the litigation "Grupo Clarín and Others v. National State and others re/ appeal." The President states that, as considered by the Board on 15 July of this year, when asked to extend the effectiveness of the injunction that was originally granted on 9 December 2014, the first instance judge, Dr. Horacio Alfonso, partially admitted the extension of the term of the injunction for six months, counted as from the date that such decision was notified. We must note, continued the President, that prior to issuing such injunction, the defendants (National State and AFSCA) had filed an appeal before the Court of Appeals on Federal Civil and Commercial Matters, Chamber 1, which had decided-on 19 February 2015-to confirm the decision of the first instance Judge in full. Next, the defendants filed an extraordinary appeal [to have the case heard by the Supreme Court] against the Decision of the Court of Appeals. The extraordinary appeal was rejected by the Supreme Court on 10 November 2015. In light of the above, Mr. Rendo states, the decision of Dr. Alfonso granting the injunction requested by the Company that suspends Resolution 1121/AFSCA-2014 and the Ex-Officio Transfer Procedure, is now final. With that explanation, the Directors take note of all actions of the Company in such litigation. Next, [the President] submits the fifth point of the agenda to the consideration of those present: 4) Suspension of the effects of Resolution 1121 AFSCA/2014 - The Plan to Conform [the Company to the Audiovisual Communication Services Law]. Conduct of Management. Duty to request instructions from the shareholders. Calling of an Extraordinary Shareholders' Meeting. The President continues to speak and indicates that, given the threat that the Company faced or being subjected to a mandatory process to divest its assets has been suspended by the final injunction referred to under the previous point, it is now imperative to consider, in light of all the facts and actions taken by both AFSCA and the Company, as well as the rest of the market players, the most adequate course of action for the Company in the best interest of its shareholders and with strict adherence to the law and the judicial decisions to which the Company is subject, within the framework of the application of Law No. 26,522. In that respect, it is relevant to note that when the Supreme Court rendered its decision in re "Grupo Clarún and others v. National Executive Branch and other re/ merely declarative action" on 29 October 2013, this Board was forced, without that implying any waiver of the Company's rights, to file a Plan to Conform [the Company to the Audiovisual Communication Services Law] that would prevent ex-officio divestments and that, pursuant to Law No. 26,522, would allow the Group to safeguard its rights and its economic value. The filing us such Plan was based, therefore, in a fundamental pillar: equal treatment pursuant to Article 16 of the National Constitution and a meticulous observance of applicable law, as detailed under the decision of the Supreme Court, for which purpose the Company made an express and unequivocal reservation of rights in order to (i) amend the submitted proposal in the event that the Authority shall allow and/or authorise the application of a more favourable interpretation of the law with respect to any other licensee or registered person and (ii) to challenge in court any violation of the guarantees of due process, equality before the law and the right of defence that may occur in the process to conform [the Company to the Audiovisual Communication Services Law]. All that in the understanding that the Company and its subsidiaries had and have to have access to all the same mechanisms guaranteed to the other licensees that were not given access to the judicial suspension of Law No. 26,522. Thus, under these conditions that always governed the Board's conduct, the Board decided to file a Plan to conform [the Company to the Audiovisual Communication Services Law] that resulted in the division of the structure of the Group into six audiovisual communication service units, which was later subject to certain amendments that were submitted to the Agency in supplementary filings. This Plan was declared formally admissible by AFSCA pursuant to Resolution 193/AFSCA/2014 on 18 February 2014, at which time the Board immediately called an extraordinary shareholders' meeting for the shareholders to issue the corresponding instructions in order to begin with the implementation of the Plan to conform [the Company to the Audiovisual Communication Services Law] that had been approved by AFSCA. Once the sharholders' meeting occurred, the Working Group for the Plan-which was especially created for that purpose-began to take the necessary steps and made the prior filings before the corresponding agencies to implement the Plan successfully. For that reason, and considering the strenuous time constraints set forth under the Rules of the National Securities Commission, as well as the brief term granted by AFSCA to execute the Plan to conform [the Company to the Audiovisual Communication Services Law], the Board after studying three different structuring formats-spinoff, merger and sale of the units identified under the Plan-reached the unanimous conclusion that only two alternatives were factually possible to achieve the purpose of a successful implementation of the Pan in the short term granted by the authorities. In its efforts to comply with the law, the decision of the [Supreme] Court and to dismiss any hint of a rebuke for any delays, this Board anticipated itself and in the event that the spinoff alternative was the one that was finally selected by the Shareholders of the Company and given the time constraints imposed by Law No. 19,550 and the Rules of the National Securities Commission: 1) instructed the auditors to prepare special spinoff financial statements as of 31 March 2014 following the premises given in terms of the division proposed in the Plan, to wit: a) the Company would maintain the assets not assigned to other units, and would remain subject to the public offering regime, reducing its equity to reflect the economic impact of the spun-off assets and maintaining its participation in the Units that were not under the scope of the Audiovisual Communication Services Law, b) Unit 2 would be a spun-off unit, as it received by way of spinoff the assets identified under the Plan, and would request authorization to enter the public offering regime, c) once the Prior Regulatory Authorisations (as such term was defined in the Spinoff Prospectus prepared by this Board) the Company would proceed to reduce its equity by having the spun-off company issue, in exchange, a set of new shares of the same classes as those issued by the Company pursuant to a relation that was set at that time-0.3896 shares of Grupo Clarín S.A. (after spinoff) and 0.6104 new shares of the spun-off company. d) the remaining units (3, 4, 5 and 6) would not be spun off but rather, given their size and their ability to generate cash, they were not suitable for spinoff and therefore the Working Group for the Plan continued with its efforts to sell them to third parties. Thus, it held business discussions with national and international interested parties with experience and reputation in the different industries, trying to obtain the best commercial terms in the framework that applied at that time: value of the assets that was negatively affected by the country risk, restrictions to access to the foreign exchange market, regulatory limitations that created competitive disadvantages, limitations to investment and financing, and the contingencies created by the various oversight agencies over the assets under consideration; and 2) prepared a spinoff prospectus for its prior filing with the National Securities Commission. Simultaneously, the Board approved those irrevocable offers that it received when it considered that their terms were commercially acceptable. Here it is worth noting again. Mr. Rendo states, that the prices that were offered were evaluated in light of both the valuations made by the Company as well as by third parties, taking into account not only the regulatory context in which the Company and the spun-off company 2 would operate, but also the quoted value of the shares of Grupo Clarín S.A. The shareholders finally decided, at the shareholders' meeting of 30 June 2014-which was adjourned and resumed on 11 July 2014-to approve the implementation of the Plan through a complex series of spinoffs and transfers, and at the extraordinary shareholders' meeting of 22 September 2014 they ratified the actions of the Board of Directors in connection with the acceptance of the firm and irrevocable offer to purchase the shares and the signals that composed Unit 4. Now, the President continues, notwithstanding the efforts of the Company to implement the Plan in the terms indicated [by AFSCA], AFSCA dispensed the Company an arbitrary and discriminatory treatment through a series of resolutions and notes whereby (i) it denied the request for an extension of the term to comply reasonably with the implementation of the Plan, (ii) it rejected the filing made timely by the Company and its subsidiaries expressing their desire to amend or rectify the proposal, exclusively with respect to the assets and shares of Unit 4, because, according to certain precedents of the Agency, it would be permissible to apply the limitations to be owner of closed television signals to the licensees but not to their shareholders, and (iii) finally, it crowned its manifest hostility with the issuance, on 8 October 2014, of AFSCA Resolution No. 1121/2014, which rejected the proposed spinoffs of the Company and Cablevisión S.A., the share transfers and provided for an ex-officio transfer. It is worth noting that, as the Company claimed in court, many of the other multimedia companies subject to Law No. 26,522 merely filed an apparent proposal to conform to the law, which in most cases they never implemented, with the obvious acquiescence of AFSCA, which manipulated the law to avoid the application of Law No. 26,522 to anyone but the Company. Given the arbitrarily selective application of the law by AFSCA, which did not apply the divestment provisions in some emblematic cases of operators that were subject to procedures to conform to the law in order to avoid the obligation to divest certain assets, or not to apply the admissibility conditions that should have been extended to their controlling shareholders, the Company was forced to resort once again to the courts in order to request that they declare that the treatment received by the Company in connection with the voluntary proceeding to conform to the law created by Law No. 26,22 was ilegitimate and discriminatory. AFSCA, in its dealings with the Company and other audiovisual communication service licensees in identical conditions before the requirements of the law, breached the rule of parity of Article 16 of the National Constitution. The Company and its subsidiaries did not receive equal treatment although they were in a situation that was identical to that of other audiovisual media groups, and that conduct was rendered unconstitutional because it was arbitrary and discriminatory. Therefore the Company requested judicial protection that would make the National State and AFSCA to cease with their behaviour. It was not casual that in this discriminatory scheme AFSCA delayed its decisions with respect to companies that had a gravitating market share, and that are competitors of the Company and its subsidiaries, such as: PRISA, which competes in AM and FM radio, TELEFE, which competes in free-to-air television, and SUPERCANAL, which competes in cable television, internet and audiovisual signals. However, the discriminatory treatment was not limited to the delay in the analysis of the plans to conform to the law filed by the competitors of the Company, but also in the verification and enforcement of such plans. Such is the case of Grupo Uno, a company that belongs to Messrs. Vila / Manzano (SUPERCANAL), whose plan was approved on the same day as Grupo Clarín's, but which as opposed to the latter, did not implement the proposal and all the terms to implement it expired with the most blatant permissibility of AFSCA. In the judicial claim filed by the Company, we have detailed how the law's application criteria were obscenely violated with prejudice to the Company. There, we pointed out some violations that on account of their legal grossness, they reach the category of emblematic and scandalous. Among them, a) term for implementation: the Company was denied an extension twice. Other actors did not meet the term for implementation without suffering any consequence, even though sanctions are provided in the Law. b) ownership of signals: the Company was denied to possibility to maintain its ownership through a related company. Grupo Uno and Direct TV were allowed to preserve ownership through a related company. c) Programming of closed signals that replicate for the rest of the country the free-to-air signals: the Company was forced to divest El Trece Satelital and was then accused because the purchaser could not continue to buy content from ARTEAR, which is necessarily the same. Grupo Uno was allowed to maintain under its ownership (without even having to divest) America Satelital, and Direct TV participates in companies that register closed signals in breach of the multiplicity regime. d) Indirect relationships between companies that are not under the scope of the procedure to conform to the law: the alleged "existence" of these relationships was used to justify the illegitimate decision to impose an ex-officio transfer in the case of Grupo Clarín, whereas in the case of Telefonica there is an actual incompatible common control that is forbidden under the admissibility conditions set forth under Law No. 26,522, but was authorised by AFSCA. e) Divestment in favour of sons, daughters and relatives: Grupo Clarín received the most direct threats by the head of the Agency, Mr. Sabbatella, when it considered the possibility of divesting in favour of the sons and daughters of the shareholders of the Company. In the proposals of Grupo Uno, Ick, El Hombre Mil, Inversat, we detect transactions in favour of direct family relations without receiving any observation from AFSCA. f) Discriminatory application of the admissibility conditions: the Company is made subject to Section 55 to prohibit trusts when is a provision that applies to licensees. Direct TV is not required to comply with Section 54 (listing of shares) or Section 25, subsection e). g) Other breaches that are grossly not noted by AFSCA within the framework of the plans to conform to the law: Grupo Moneta and Grupo Indalo disguised the transfer of services (prohibited under the new regulatory framework) in a subsequent amendment, when they had earlier incurred (because they did no have prior approval) in a delegation of the exploitation that was in breach of Section 41 and 44. Canal 9 alleged that it was owned 70% by national capital in its composition, when in truth it is 100% owned by foreign (Mexican) capitals, in breach of the law. Next, Mr. Urricelqui asks to speak and states that without prejudice to this entire inventory of iniquities that the Company had to endure vis a vis the treatment before AFSCA and other market players, it also suffered ostensible damage because, due to the inevitable passage of time, consumed in administrative delays and litigation, the sale transactions contemplated under the Plan to conform [the Company to the Audiovisual Communication Services Law] for Units 3, 4, 5 and 6, approved by the shareholders have lost effectiveness in spite of the efforts made to preserve their legal effect. In that regard, Mr. Urricelqui indicates that (i) in the case of the sale of Unit 3, [the Company] had to receive the authorisations of the regulatory agencies, including AFSCA, and the effective spinoff of Cablevisión S.A. prior to 31 March 2015; (ii) in the cases of Units 4 and 6, [the Company] had to have the authorizations of the regulatory agencies, including AFSCA, prior to 31 December 2014, (iii) in the case of Unit 5, [the Company] had to have the authorizations of the regulatory agencies, including AFSCA, prior to 30 June 2015. Mr. Urricelqui continues saying that thanks to the offices of this Board and although the offers have expired, offerors have expressed their desire to proceed with the purchase and sale transactions and would consequently be willing to renew such transactions as soon as there is a decision in the litigation in which the ex-officio divestment is under discussion. Moreover, Mr. Urricelqui adds that the context for valuations at the time that such offers were negotiated and approved by the shareholders was very different from the current context. The following indicators evidence that fact: (i) the Merval index, composed of the shares of the most important and liquid companies listed in the Buenos Aires Stock Exchange, reflects an increase of 72% between May 2014 and December 2015; (ii) the Country Risk of Argentina, measured with the EMBI+ index prepared by JP Morgan, shows a reduction of almost 300 basis points, from 788 points in mid-May 2014 to 499 points in early December 2015, which directly induces to a substantial increase in the values of Argentine companies; (iii) the value of the share of Grupo Clarín S.A. in the Buenos Aires Stock Exchange increased by 424%, from $25.2 in mid-May 2014 to $132.00 in early December 2015. For all these facts, the Vicepresident states that the terms of the offers that were considered commercially acceptable, today are not convenient for the Company. Therefore, in light of the new indicators, one would have to proceed to renegotiate [such offers] when the time comes so as to safeguard the economic value of the Company, which was one of the pillars on which the Plan that was submitted was based. Consequently, considering that (i) in the Plan to Conform [the Company to the Audiovisual Communication Services Law] that was declared formally admissible by AFSCA, the Company and its subsidiaries reserved the express right, in the event that the Authority may permit and/or authorise the application of a more favourable interpretation of the law with respect to any other licensee and/or registered person, to amend the Plan to Conform [the Company to the Audiovisual Communication Services Law] that was filed in order to apply in equal manner the same interpretation, (ii) that in fact the Company has received from the Administration a discriminatory treatment that was brought before the judiciary and, (iii) the valuation context in which the offers were considered has varied substantially on account of the time that has passed without fulfilment o the conditions to which such offers were subject, the Vicepresident proposes that [the Board] call an Extraordinary Shareholders' Meeting to inform fully to the shareholders what the practical results for the Company would be if its Plan to Conform [the Company to the Audiovisual Communication Services Law] were to take into account exactly the same interpretative criteria on which the Administration grounded the admission of the plans of other media groups such as Grupo TELEFE and Direct TV. These would only allow Grupo Clarín to preserve the indirect ownership of the services and/or Business Units that are to be divested, to the extent that each one of these conforms to the limits to multiple licenses provided by the Audiovisual Communication Services Law. In addition, the shareholders should review the valuation context of the assets that the Company may decide to sell in light of this new information. Finally, Mr. Urricelqui considers that calling a shareholders' meeting is imperative for all Directors in fulfilment of their functional duties, so that in this transcendental moment of the Company and given the possibility to mitigate in an actual manner the damage that the Company would otherwise suffer, the shareholders may consire the current Plan to Conform [the Company to the Audiovisual Communication Services Law] and eventually decide to instruct this Board of Directors to amend it. After a long exchange of questions and answers, the Board of Directors decides unanimously to call an Extraordinary Shareholders' Meeting, on first call, for 12 January 2015 at 12.00 at the Company's headquarters located on Calle Piedras 1743, City of Buenos Aires. in order to consider the following agenda: 1) Appointment of two shareholders to sign the meeting minutes; 2) In connection with the Plan to Conform the Company [to the Audiovisual Communication Services Law] that was declared formally admissible by AFSCA: (i) Consideration and analysis of the various interpretative criteria used by AFSCA to approve the plans filed by other subjects bound by the obligations of Law No. 26,522 to conform [to the Audiovisual Communication Services Law]; (ii) Consideration of the results that the application of such criteria would have caused on the Company's and its subsidiaries' Plan to Conform [to the Audiovisual Communication Services Law]; (iii) Decision on the amendment [of such Plan to Conform [to the Audiovisual Communication Services Law] following the criteria already utilised by AFSCA. If applicable: (a) To render without effect, in all relevant aspects, the decisions of the shareholders at the shareholders' meetings of 20 March 2014, of 30 June 2014-including the subsequent reconvened meeting after its adjournment on 11 July 2014-and of 22 September 2014, at which the shareholders made corporate decisions to implement such Plan to Conform the Company [to the Audiovisual Communication Services Law], including without limitation the partial spinoff of the Company and its subsidiaries and the divestment of assets. Consequently, to instruct the Board of Directors to appear before the various regulatory agencies involved and to render without effect all pending requests for authorisation and/or registrations relating to the Plan to Conform the Company [to the Audiovisual Communication Services Law] to be amended; (b) Instruction to the Board of Directors of the Company to analyse, propose and submit to the consideration of the Shareholders, an amended Plan to Conform the Company [to the Audiovisual Communication Services Law] that, taking into account the best interest of the Company, reflects each and all of the criteria applied by AFSCA, always expressly reserving the right to subsequent amendments in the event of a change in the regulatory framework or if another subject bound by the obligations of Law No. 26,522 is given more favourable treatment. In addition, the Board resolves unanimously to authorize the President to execute and publish the notices to call the meeting. With no more matters to consider, the meeting is adjourned at 12.30 pm.
Signors:
Directors: Jorge Carlos Rendo, Alejandro Alberto Urricelqui, Pablo César Casey, Héctor Mario Aranda, Ignacio Rolando Driollet, Horacio Eduardo Quirós, Lorenzo Calcagno, Alberto César José Menzani, Sebastián Salaber, Luis María Blaquier, y Gervasio Colombres.
Supervisory Committee: Carlos Alberto Pedro Di Candia, Raúl Antonio Morán, y Pablo San Martín.