14 May 2014 16:57
Minutes of the Meeting of the Board of Directors No.263 : In the City of Buenos Aires, on the 13th day of the month of May 2014, at 18.00 hours, the Board of Directors of Grupo Clarín S.A. (the "Company") meets at the Company's headquarters on calle Piedras 174, Federal Capital, with the presence of Messrs. Directors Jorge Carlos Rendo, Alejandro Alberto Urricelqui, Pablo César Casey, Saturnino Lorenzo Herrero Mitjans, Héctor Mario Aranda, Ignacio Rolando Driollet, Lorenzo Calcagno, Alberto César Menzani, Sebastián Salaber, Luis María Blaquier and of the undersigned members of the Supervisory Committee. The Chairman, who rejoins the Board today, opens the meeting and submits the following point of the agenda to the consideration of those present: Consideration of the tasks performed by the Task Force Created to Conform the Company [to the Audiovisual Communication Services Law]. Approval of the Spinoff Prospectus and of the Special Parent-Only Financial Statements as of 3.31.14 and of the Special Pro-Forma Parent-Only Statement of Changes in Equity as of 3.31.14. The Chairman states that, as the Directors present at the meeting know, this meeting of the Board has been called specially to adopt decisions relating to certain steps that must be taken to implement successfully the Plan to Conform the Company [to the Audiovisual Communication Services Law], which was considered by the shareholders of the Company on 20 March 2014 and is described in the Minutes of the Meetings of the Board of Directors dated 1 November 2013, which was adjourned and resumed on 3 November 2013, 18 February 2014 and 31 March 2014. The Chairman requests that-on behalf of the Directors who are part of the Task Force-the Vice Chairman Mr. Alejandro Urricelqui present the tasks performed to date, inform about the next steps that must be fulfilled and-consequently-motion to vote on the concrete measures on which this Board must decide in fulfilment of the purpose entrusted to them by the shareholders on 20 March 2014. Mr. Urricelqui speaks and, in that respect, makes the following presentation to the Board: (i) that as a consequence of the pressing time constraints set forth under the regulations issued by the Argentine Securities Commission (CNV), the exiguous term granted for the execution of the Plan to Conform the Company [to the Audiovisual Communication Services Law] and the constant and public threats to proceed with a forced divestiture procedure with the resulting risk that such a process would entail for the future of the Company, and precisely to fulfil the order of its shareholders to carry out diligently the Plan to Conform the Company [to the Audiovisual Communication Services Law], it is time for this Board to discuss the status of the various alternatives that they have been considering to that end and to reach a decision thereon; (ii) in that regard, [Mr. Urricelqui] must state for the record that [the Task Force] analysed potential transactions under three different structure formats: merger, spinoff and sale of the units that were identified in detail under the Plan to Conform the Company [to the Audiovisual Communication Services Law] that was discussed by the shareholders on 20 March 2014. With respect to a merger transaction, the Task Force analysed this alternative seriously, both from the perspective of possible candidates and taking into consideration the transaction in itself and the likelihood that it may be duly completed within the term imposed by the Audiovisual Communication Services Law. The Task Force unanimously concluded that this type of transaction should be discarded, given that, although in theory it could be an alternative to conform the Company to the Audiovisual Communication Services Law that may be worthy of analysis, from a practical standpoint, taking into account the timing framework for the implementation of the Plan to Conform the Company [to the Audiovisual Communication Services Law] and the strict legal framework relating to conditions of admissibility (nationality of the partners, who in addition cannot have direct of indirect relations to foreign audiovisual communication service companies, among others) and the rigorous regime governing multiple licenses set forth under the Audiovisual Communication Services Law, all make this alternative practically impossible to fulfil. Consequently, the Task Force recommends the Board not to spend time or devote resources of the Company to the pursuit of this alternative and that, consequently, this Board should place its efforts on the other two remaining alternatives: spinoff and sale, which have actual possibility of achieving the objective of successful implementation of the Plan to Conform the Company [to the Audiovisual Communication Services Law] in the extremely short time that was granted. To that end, and considering a spinoff transaction, this Board must consider various aspects that would make this form of corporate reorganisation provided under Law No. 19,550 compatible with the specific requirements of CNV Regulations and of the Audiovisual Communication Services Law, all of this naturally in the best interest of the shareholders and in full compliance with the legal duties of this Board of Directors. Mr. Urricelqui points out that in the course of analysis and design of this option, as he will detail later, [the Task Force] gave special value to the expressions of the minority shareholders at the shareholders' meeting of 20 March 2014. These shareholders held that the legal structure of the possible spinoff should have as its desired effect that the minority shareholders whose shares are freely tradable on the Buenos Aires Stock Exchange and the London Stock Exchange, at the conclusion of this reorganisation-if this were the form that was finally approved at the corresponding shareholders' meeting-should maintain their condition of shareholders in the two main units (denominated as Unit 1 and Unit 2 under the Plan to Conform the Company [to the Audiovisual Communication Services Law]). Certainly, in the design and eventually the implementation of this option, one must also take into account other considerations that are no less relevant: (a) The holders of shares that are not listed in the stock exchanges mentioned above must adopt the necessary measures in order to comply with the Audiovisual Communication Services Law, meaning that the shareholders in Unit 1 may not have any participation in the equity of Unit 2, with the abovementioned exception of the holders of shares that are listed on the Buenos Aires Stock Exchange and the London Stock Exchange. To that end, mainly, Mr. Urricelqui proposes that among all the measures that are to be adopted by the Board on this date, they also send a letter to all the shareholders who signed the notes of 25 April 2014 (which were made public together with the Minutes of the Meeting of the Board of Directors of that date, disclosed to the market at large through the AIF of the CNV under ID No. 4-223520-D) as well as to the holder of the Class C shares of the Company, requesting that they expressly inform the Company-if the Company were to approve a spinoff transaction at the corresponding shareholders' meeting-how they will comply fully with the Audiovisual Communication Services Law with respect to Unit 1 and Unit 2; (b) That the timing provided under Law 19,550 to deal with corporate reorganisations of this kind imposes practical restrictions, such as the time limitation of having to anticipate accounting information that must be considered at the shareholders' meeting, which in turn must be made compatible with the provisions of the regulations of the Capital Markets Law issued by the CNV, particularly concerning the advanced filing of a spinoff prospectus. In anticipation of all that, then, and pursuant to the decision of the Board at the Meeting of 31 March 2014, the auditors were instructed to prepare special spinoff financial statements that, in compliance with the provisions of Law No. 19,550, are to have as their closing date 31 March 2014. These financial statements-which were distributed to the Directors for this meeting-will be attached to the prospectus that will be filed for the approval of the CNV, but must be subject to consideration of the shareholders at a shareholders' meeting that is to take place no later than 30 June 2014. In that sense, Mr. Urricelqui points out that the main premises of the financial statements, which were prepared following the division proposed under the Plan to Conform the Company [to the Audiovisual Communication Services Law] that was declared formally admissible by Resolution AFSCA/193, are the following: (A) Grupo Clarín S.A. (GCSA) will be the surviving company, and as such it will keep all the assets that are not allocated to the other units pursuant to this potential reorganisation; GCSA will remain subject to the public offering regime although, as a consequence of the effects of the spinoff it will reduce its equity to reflect the impact on such equity of the assets that are spun-off, a circumstance that will not entail any changes in terms of the pro rata participation of any of the holders of shares that are listed on stock exchanges. Additionally, due to synergies, economies of scale, affinity of business, functionality and commercial relevance, GCSA will maintain its participation in the Business Units that are Outside of the Scope of the Audiovisual Communication Services Law (the "Out-of-Scope BUs"); (B) Unit 2 will be the "spun-off company" as it receives, pursuant to a spinoff of GCSA, the assets identified under the Plan to Conform the Company [to the Audiovisual Communication Services Law] (in summary, shares of Cablevisión S.A. with all of its assets, liabilities, rights and obligations that are not spun off Cablevisión S.A.). Its admission to the public offering regime will be requested, as well as the listing of the shares that will be received as part of the exchange by the current holders of GCSA shares listed on stock exchanges; (C) Once the Company has obtained (i) the Prior Regulatory Authorisations (as defined in the prospectus), (ii) the registration of the Spinoff, (iii) the creation of the spun-off company registered with the Inspección General de Justicia (Argentine Superintendency of Legal Entities), and (iv) admission of the spun off company to the public offering regime, the Company will proceed with a reduction of its equity, covering all shareholders of the Company in each class of shares, and the spun off Company will issue in exchange a set of new shares of the same classes as those issued by the Company according to the following "exchange ratio": 1 share of the existing Grupo Clarín S.A. that will be equivalent to (i) 0.3896 shares of Grupo Clarín S.A. (after the Spinoff), and (ii) 0.6104 new shares of the spun-off company. (D) the remaining Units (3, 4, 5 and 6) identified in the Plan to Conform the Company [to the Audiovisual Communication Services Law] will not be spun off. [The Task Force] has concluded that, on account of their size and their aptitude to generate cash, they are not suited to replicate the model of Unit 2, and therefore, in their respect [the Task Force] shall continue with its efforts to cause the Company or the subsidiary that may be the direct owner of the asset that is part of a given unit, to sell such asset to third parties. Mr. Urricelqui continues to speak and indicates that now it is time to consider-because it is an alternative formula to the one considered before-the steps that have been taken with respect to the eventual implementation of the Plan to Conform the Company [to the Audiovisual Communication Services Law] through a sale, which would differ from a spinoff precisely because under this transaction hypothesis, one of the two largest units of the Company must be acquired by a third party, who, additionally, will have to be approved by the different regulating agencies involved. [Mr. Urricelqui] states for the record that there are on-going business discussions with local and international parties that have expressed interest, with experience and recognition in the different industries. It is worth noting that the value of the assets In Argentina are negatively affected by country risk, by the restrictions to access to the currency exchange market, by the regulatory limitations that cause competitive disadvantages and limitations to investment and financing; this in addition to the contingencies caused by the various controlling agencies over the assets under consideration. Mr. Urricelqui also summarises the negotiations, their degree of progress, their potential to arrive at a firm offer and the general terms and conditions that have been presented, as well as the concerns expressed by the various prospective investors. In the best interest of the Company and pursuant to confidentiality clauses that are in force, this Board does not consider it wise to reveal the aspects that have been discussed so far with these prospective purchasers; however, taking into account the principles of diligence and good faith under which this Board has been conducting these discussions, the Board ratifies to its shareholders and to the abovementioned parties that it will continue to apply its best efforts with the objective that these discussions may eventually be fruitful, transforming that current interest into firm offers, with terms and conditions that may be considered commercially acceptable to be presented to the shareholders. The Company shall inform such offers to the market if this Board should accept them, subject to the subsequent approval of the shareholders. Next, the Chairman speaks and states that the members of the Audit Committee who are present at the meeting have had a prior opportunity to analyse both the Special Parent-Only Financial Statements as of 3.31.14 and the Special Pro-Forma Parent-Only Statement of Changes in Equity, as well as the Exchange Ratio as of 3.31.14 that will be incorporated to the spinoff prospectus and have issued their "report on the partial spinoff and equity reduction of the Company", which was delivered to the Directors prior to this Meeting of the Board, where they state for the record that they have no observations with respect to such documents. With that clarification made, the Directors analyse the documents that have been distributed and exchange opinions, after which they unanimously reach the following decisions: (i) To Approve the language of the spinoff prospectus of Grupo Clarín S.A. and the Special Parent-Only Financial Statements as of 3.31.14 and the Special Pro-Forma Parent-Only Statement of Changes in Equity as of 3.31.14, which are attached to the prospectus together with the opinion of the auditor, documents that will be filed with the CNV pursuant to Section 88, subsection 2º of Law No. 19,550 and Section 18 and related Sections of Title II, Chapter X of the CNV Rules, stating before the CNV that the spinoff reflected in the prospectus is a reorganisation transaction that this Board is only considering, as of this date, as one of the alternatives under which the Plan to Conform the Company [to the Audiovisual Communication Services Law] may eventually be implemented, but that does not prevent the Board of Directors from continuing with the commercial discussions with parties interested in acquiring the units of GCSA, the results of which shall be made known when such disclosure becomes necessary in order to preserve the interests of the Company, (ii) to approve the proposed exchange ratio and the criteria to give effect to the reorganisation of Cablevisión and other involved subsidiaries, as well as the allocation of assets, liabilities and equity to the spun off company and assets, liabilities and equity that the Company will keep as surviving company; (iii) to send a note to all of the shareholders that signed the letters referred to under the Minutes of the Meeting of the Board of Directors of 25 April 2014, and to the holder of the Class C shares, so that they may state promptly how, if the spinoff were to be the way in which the Company implements its Plan to Conform the Company [to the Audiovisual Communication Services Law], they will fully comply with the Audiovisual Communication Services Law at the time the reorganisation occurs, both in Unit 1 and in Unit 2. Additionally, the Board unanimously decides to authorise, individually and interchangeably, the Chairman of the Company and María Lucila Romero, María de los Milagros Páez, Martín Guillermo Ríos, Sebastián Ricardo Frabosqui Díaz, Vanesa Claudia Rodriguez and Eugenia Prieri Belmonte to make all necessary filings before the CNV, AFSCA and any other agency as may be necessary, in connection with the above decisions, with the power to be served notice of observations and to intervene in any proceedings that may be necessary on behalf of the Company. With no further items to discuss, the meeting is adjourned at 20.00 hours.