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Introduction
As previously presented, Euronext offer three different markets for the admission to trading: the Regulated market – Euronext Lisbon – and two MTF markets – Euronext Access and Euronext Growth. It’s worth highlighting that the admission requisites and the obligations arising from the admission to trading on the MTFs are much less burdensome when compared to the Regulated market. In particular, if you decide to proceed in a Public Offering or a Private Placement following the admission to trading on one of these MTFs that does not require to prepare a Prospectus, the offering process will be even simpler. A Prospectus will not be required for an offering that will be admitted in an MTF if:
► The Offer is only directed at Professional Investors;
► The Offer has total consideration in the European Union lower than € 8 000 000, calculated over a period of 12 months;
► The Offer is addressed to fewer than 150 Non-Professional Investors (“Retail Investors”);
► The Offer has a denomination per unit amounts to at least € 100 000;
► The Offer is addressed to investors who acquire securities for a total consideration of at least € 100 000 per investor.
Planning
Even though the Company must prepare itself to become a company with publicly traded bonds, given the simpler process involved and the lower requisites and obligations that must fulfill if it chooses an MTF market, the planning phase will be much simpler and will mostly focus firstly on assuring the Bond Offering is the best option for obtaining the intended financing and, if so, assuring the Company (and the intended offered bonds) will generate interest from investors. Please refer to chapter 5.1.1. Planning for further information regarding the considerations of the planning phase of a Bond Offering.
Eligibility criteria
When choosing one of the MTFs for admission to trading, there are no requirements regarding:
► The time the Company has been operating (i.e. companies recently operating may proceed with a Bond Offering)
► The Board members and supervision bodies composition
Financial Accounts
When choosing an MTF for the admission to trading, you won’t need to adapt your financial accounts to a different accounting standard. In what regards having audited accounts, MTFs are in general less onerous when compared to the regulated market.
In particular, if you choose Euronext Access you won’t need to have audited financial accounts at all to execute a Bond Offering (and you won’t need to have audited accounts upon the operation).
Appointment of Advisors
Given a simpler process is involved for offering and request admission to trading on MTFS, the Issuer/Offeror may not require hiring a third party to instill project management into the Bond Offering and guarantee the project management function internally. Portuguese companies have successfully been able to execute Bond Offerings without a PMO office hired. In what regards the need to appoint other Advisors, when choosing the MTF markets the Issuer/Offeror will only be obliged to hire a Listing Sponsor which will help to navigate the Bond Offering process and with the interactions with Euronext. If a company has internally legal and finance capabilities and no help is necessary to promote the Company’s bonds to investors, it may not require hiring financial advisors and/or lawyers to conduct the Bond Offering. Advisors may be very helpful and beneficial, but depending on the Company’s internal resources, their job on the Bond Offering process, in particular in MTFs, can be successfully executed internally.
Preparation
Presentation document
The preparation of Prospectus is usually one of the most onerous parts of the Bond Offering process. If an MTF is chosen, the Offeror/Issuer may be able to avoid the obligation to prepare a Prospectus if the offering of bonds is done (i) through a private placement or (ii) if the offering amount is lower than €8 million. In these cases, it will only be required to prepare an Information Document or a Technical Note which are much simpler than the Prospectus (see chapter 5.1.2.3. Prospectus).
Information document
What is an Information Document?
For offers in non-regulated markets and if the Offer does not exceed €8 million, instead of a Prospectus, companies may prepare an Information Document. The Information Document is significantly more concise and flexible than a Prospectus, with the aim to reach a balance between simplifying access to finance for SMEs and protecting investors, by ensuring accurate and sufficient information. The document must be written in comprehensible language with accurate, fair, clear and non-misleading content and must include the necessary information to allow investors to make their investment decisions, such as the Issuer’s assets and liabilities, financial position, profit and losses, and prospects of the Issuer and any guarantor (when applicable), the rights attaching to such securities, among other information specified in Appendix III of the Euronext Growth Rulebook and Appendix IV of the Euronext Access Rulebook.
| Language | The Information Document is accepted in English or in Portuguese and translated by a certified translator, if necessary. |
| Legal Responsible | The Issuer, its board of executives, management or supervisory bodies are liable for any damage caused by the misleading or inaccurate nature of the content on the information document and respective amendments, or by the absence of the required information defined in the Euronext Rulebook for the Growth and Access markets. |
| Approval | The Information Document is not subject to approval by the CMVM, as the Prospectus is. It is instead approved by Euronext, which is responsible for reviewing the document’s completeness, consistency and comprehensibility. |
| Publication | Euronext Growth market: The Issuer should make the Information Document public by posting it on its website and making it available to Euronext for posting on its website. Both publications need to be done at the latest on the day of the scheduled first admission to trading of securities, accompanied by an issued notice by Euronext. The Information Document should remain online for a period of at least five years succeeding the date of publication and should be posted online at the same time as it is published in any other media. Euronext Access market: An Issuer should announce that the Information Document, shall be available by issuing a press release/announcement that the Information Document shall be put on the Issuer’s website not later than two business days prior to the first trading day. |
Technical Note
What is a Technical Note?
The Technical Note is a document containing information of the Issuer and of the debt securities to be admitted to trading on the Euronext Access. This document has much less information required when compared to a Prospectus or an information Document. For further information consult APPENDIX V of Euronext Access Rule Book.
As previously presented, the Technical Note is required for the admission on the Euronext Access, in the case of a Private Placement or Direct Admission of bonds.
| Language | The Technical Note must be written in the national language, Portuguese, or in English. |
Other preparation considerations
Additionally, when no Prospectus is required, the Offeror/Issuer will only have to liaise with Euronext (otherwise with would also have to liaise with CMVM for the approval of the Prospectus). Euronext encourages early engagement with companies and their advisers to discuss the application of the eligibility criteria for listing, suitability for listing and application of the listing rules. Early engagement is crucial to identify any issues early in the process which may need to be the subject of additional explanation and argument. Additionally, at the beginning of the offer process, the Issuer and Euronext shall jointly agree on a timetable for the process of admission to trading of securities. For further details see section 5.1.2.4. Listing application.
The Due Diligence phase (see chapter 5.1.2.2. Due Diligence) will in principle only be required in case there is either a formal underwriting of bonds by the arrangers or managers of the issuance or some sort of offering / roadshow to institutional investors, to give comfort to the underwriters or these investors.
Marketing
The marketing efforts of the issuer are usually tied to the size of the offering and the involvement of institutional investors. A limited offer, with no prospectus, will most likely not require the issuer to prepare and get the regulator’s approval to advertising materials. Moreover, a bond offering that is not placed with institutional investors (other than, perhaps, the arranger or manager of the issuance) will also not require any roadshow.
All in all, the marketing of debt issuances without prospectuses tends to be much simpler – or even inexistent – when compared to larger offerings with a prospectus. For those situations where some efforts may apply, even if in a limited manner, see chapters 5.1.2.5. Marketing and Communication Planning and 5.1.2.6. Early-look meetings with investors / pilot fishing for further information.
Offering and placement
Pricing
The pricing of the offering will be established by the financial advisors during the preparation of the Information Document. The financial Advisors together with the Issuer will define a fixed price for the securities being offered according to valuation techniques described in chapter 5.1.3.2.1. Bond valuation.
Placement of the Offering
The Information Document and the offer process are not directly subject to the legal rules applicable to Public Offers, being applicable the rules established in the Information Document itself. From recent practical experience in Portugal, the information documents tend to reflect in a simplified manner some legal rules regarding the term, amendment, revocation and acceptance of the offer, a summary information on the issuer, the destination of the proceeds of the offer, as well as the risk factors of investing in the securities offered, reproducing in a very abridged manner the essential contents of a Prospectus. This approach ensures high standards of investor protection and allows investors to have access to the minimum information necessary to make an investment decision.
Although the CMVM neither assumes any direct supervisory power over the offer nor has the authority to approve the Information Document or any amendments thereto, the Regulator plays an important practical role, particularly as the CMVM will become responsible for supervising the Issuer and the trading of securities once the offer has been completed and the securities are trading on the MTF. Therefore, in order to protect the market and potential investors, it is common that the CMVM is consulted before and during the offering process. Eventually, the Information Document may even be published on the CMVM’s website, at the issuer’s request, although there is no obligation to do so.
Allocation of bonds
The allocation of bonds in the Public Offering determines the number of bonds allocated to the investors that have accepted the Public Offering. In accordance with the principle of fair and equal treatment of investors, the Company will ensure, in consultation with the members of the placing/underwriting syndicate, that a balanced treatment of all investors is in place.
The Information Document should contain information on how the securities will be allocated in the event of oversubscription. A general rule, the allotment method should be made on a pro-rata basis, but other methods may be chosen.
Assessment of Results, Settlement and Listing
At the end of the offer period, the final number of bonds is allocated to the Public Offering. On the following day, the results of the Public Offering are assessed, by the Company’s financial advisor or in a Euronext’s special stock exchange session. On the following day, the results of the Public Offering are assessed, by the Company’s financial advisor or in a special Euronext’s stock exchange session.
In case of a private placement, the issuance of bonds is subject to commercial registration, a formality necessary for the settlement of the offer.
The settlement occurs with the payment to the Company of the proceeds of the offering vs. the delivery of bonds to the investors (made through the credit of their securities accounts by the financial intermediaries through which the subscription orders were processed).
The bonds will only be effectively admitted to trading on the stock market following the settlement of transaction.
