CNMV Seeks Plan to Scare ´Vulture Funds´Smelling Carcass in Stock Off

24/01/2014 – El Confidencial

The chairwoman of CNMV,  Elvira Rodríguez, wishes to bolt all the so-called “vulture funds” that came too close to the Spanish stock market´s honeycomb to enjoy the offal of the countless quoted companies being in the arrangement or financial restructuring processes. The regulatory firm is currently preparing the waybill that will help the legal units in struggle against the speculative movements that do not guarantee long-term financial viability of the companies in crisis.

The present regulation allows the buyers who acquire more than 30% of the quoted company´s capital non-payment of 100% of the takeover bid (OPA in Spain), if the shareholding position is backed by credit conversion or capitalization. The exceptional regulation described above is provided for in Article 8, the letter d) corresponding to the Royal Decree 1066/2007 on the takeover bids. The CNMV is afraid that the regulation will act as a filter for the investors of prey flying over Spain in seach for the stock market opportunities.

The dispute between Juan Miguel Villar Mir and Canadian entity Brookfield about the control over Colonial, finally resolved in favor of the Spanish businessman, opened the Securities Commission´s eyes. The regulatory institution does not however want to be perceived as clearly discriminative towards the international investment funds.

(…) The situation of other firms like Eroski, Pescanova, Service Point, Amper or Codere posts forthcoming problems for the entity.

Elvira Rodríguez would like to have a plan B at hand that will show clearly CNMV´s side in case of potential conflicts between the Spanish and international investors. The regulation in force touches the regulatory entity´s sore when CNMV is granted the decision power, within 15 days´s term, whether is authorises the purchase request or not, that do not involve the takeover bids payment of the total of the capital.

(…) The entity takes the “No chance, no risk” motto ahead, particularly the risk of incuring the activities that might affect the Spanish brand in regard to the legal security offered by the country.

In the same plan, the Securities Commission´s policy (…) currently foresees automatic suspension of the quotation but the entity sees that probably it would be more convenient to intruduce more drastic measures, even such as exclusion from the stock market, when the arrangement proceedings lead to the companies´liquidations. The CNMV does not want “zombies” wandering through the market.

Source: El Confidencial