Shipping and mini-bond

Shipping and mini-bond
Avv. Michele Autuori
Associate, Watson, Farley & Williams
Shipping and the Law 2013
- Italian companies rely mostly on traditional bank financing as source of
funding and this is particularly true, with some exceptions of certain
listed companies, for the Italian shipping industry
- The banks, due to the financial crisis and in order to comply with the
requirements of Basel III, are lending less
- Italian unlisted companies were formerly excluded from the capital
market with a consequential reduction of their competitiveness
Accessing the bond market would allow Italian companies to:
 Diversify their source of funding
 Obtain better conditions which are potentially more favourable than
those offered by the banking system, either in terms of pricing, which
takes into account the specific characteristics of the companies and in
terms of duration, which better suits long term projects
The legal framework
Law decree no. 83 of 22 June 2012, published on the Official Gazette (Gazzetta
Ufficiale) with no. 147 on 26 June 2012, converted into law, with
amendments, by Law no. 134 of 7 August 2012 (the “Development Decree”)
Law decree no. 179 of 18 October 2012, converted into law by law no. 221 of 17
December 2012 (the “Development Decree Bis”)
Law no. 43 of 13 January 1994 providing the legal regime of the financial
promissory note (cambiale finanziaria), as amended by the Development Decree
(the “Financial Promissory Note Regime”)
Legislative decree no. 385 of 1 September 1993, as amended and
supplemented (“TUB” (i.e. the Consolidated Statute on Banking Law))
The context
Art. 32 of the Development Decree, as amended and supplemented,
Financial promissory note: short term debt instruments, and
Mini-bond: mid to long term debt instruments (bonds and similar
instruments, bonds with subordination and participation clauses)
Main targets:
• Enhancing financing instruments alternative to the bank financing by making
more attractive different forms of funding
• Allowing SMEs to access the capital market so as to attract professional
investors (investitori qualificati)
Financial promissory note in the former regime
• Instruments to order issued in series, duration comprised between 3
and 12 months and minimum value of € 50,000
• Similar to the ordinary promissory notes which constitute title for
enforcement (titolo esecutivo)
• Limit to the issuance: not exceeding twice of share capital, legal
reserve and available reserves
• In case of issuance by an unlisted company:
 Last three profitable financial years
 Secured, for 50% of the subscribed value, by banks or financial
institutions provided under art. 107 of the TUB
Debenture loans in the former regime
• Instruments provided under art. 2414 of the Italian c. c.
• Issuer: Italian SpAs (i.e. joint stock companies), Italian Sapas (i.e.
limited liability partnerships by shares)
• Limit to the issuance, pursuant to art. 2412 of the Italian c.c.: not
exceeding twice of share capital, legal reserve and available
reserves, unless:
 The amount in excess is subscribed by professional investors
 The issuance is secured by first ranking mortgage over owned real estate
up to 2/3 of the real estate value
 The bonds are issued by a listed company but within the limit of the bonds
to be listed on regulated markets
Financial promissory notes and mini-bond in the
actual regime
Financial promissory note
Duration: from 1 to 36 months
Duration: not less than 36 months
(ii) Purpose: working capital
(ii) Purpose: investments
(iii) Limit: current assets (attivo circolante)
(iii) Limit: none (if listed)
(iv) Sponsor: needed (non SMEs may (iv) Sponsor: not required
avoid it)
(v) Stamp duty
Debenture loans: a comparison
Art. 2412, paragraph 5, Italian civil code
Prior to the Development Decree
Following the Development Decree
The maximum amount for which bonds
may be issued (twice of share capital,
legal reserve and available reserves) shall
not apply to debenture loans:
(i) Issued by listed companies and,
(ii) To be listed on a regulated market
The maximum amount for which bonds
may be issued shall not apply to the
issuance of bonds:
(i) To be listed on regulated markets or
on multilateral trading facilities
(MTFs), or
(ii) Which give the right to acquire or to
subscribe shares
The deletion of the requirement for the issuer to be listed has reduced the
competitive gap between listed and unlisted companies
Mini-bond: an integrated process
Recent transactions
After the entering into force of the Development Decree, 11 debenture loans
have been issued by mid to large companies by listing, inter alia, either
financial promissory note or mini-bond on the ExtraMot PRO:
Aggregate amount roughly equal to 2 billion euro
How “mini” are the mini bonds?
C.A.A.R. S.p.A. and Fide S.p.A. - the only mini-bond experiences
 Amount of 3 million euro each
 Duration 5 years and 3 years, respectively
 Yield 6.5% and 2.95%, respectively
Shipping companies?
There seems to be a lack of interest in the new instruments
All references to ‘Watson, Farley & Williams’ and ‘the firm’ in
this presentation mean Watson, Farley & Williams LLP and/or
its affiliated undertakings. Any reference to a ‘partner’ means
a member of Watson, Farley & Williams LLP, or a member or
partner in an affiliated undertaking, or an employee or consultant
with equivalent standing and qualification. This presentation
constitutes attorney advertising.
© Watson, Farley & Williams 2013

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