SEC Developments: Offshore Press Activities

On October 10, 1997, the SEC adopted two new safe harbors for offshore press activities (including offshore press conferences, meetings with the issuer or selling security holder representatives conducted offshore or press-related materials released offshore) in which an offering or tender offer by a foreign private issuer or foreign government issuer is discussed. The new rules become effective on November 17, 1997. Please contact the undersigned if you have any questions regarding the new rules or would like a copy of the SEC release (Release No. 33-7470).

New Rule 135e under the Securities Act provides for a safe harbor with respect to offshore press activities in which a present or proposed offering of securities is discussed. The safe harbor applies to all foreign private issuers and foreign governments regardless of whether they file periodic Exchange Act reports and also applies to representatives of the issuer and the selling security holders, such as underwriters and public relations firms. Under the new rule, a foreign private issuer or foreign government may provide foreign and U.S. journalists with access to offshore press activities without being deemed to offer any security for purposes of Section 5 of the Securities Act or to be engaged in general solicitation or advertising within the meaning of Regulation D or "directed selling efforts" in the U.S. within the meaning of Regulation S. To qualify under the safe harbor, the offshore press activity must satisfy four conditions. First, the press activity must occur offshore (e.g. the press conference must be held outside the U.S. and press materials must be released outside of the U.S.). Second, the offering must not occur solely within the U.S. (i.e., at least a part of the offering must be made offshore). Third, the offshore press activity must be available to foreign journalists, as well as to U.S. journalists. Fourth, any written materials with respect to an offering which is conducted in part in the U.S. must contain specified legends and cannot contain any purchase order that could be returned indicating interest in the offering.

Rule 14d-1 under the Exchange Act has been amended to provide for a safe harbor with respect to offshore press activities in which a present or proposed tender offer is discussed. The safe harbor is available to both U.S. and foreign bidders, but is only available with respect to a target company that is a foreign private issuer. Under the amended rule, a bidder for the securities of a foreign private issuer, as well as the foreign target company, the representatives of either and any other person who may have a filing obligation under the Williams Act would not be deemed to have triggered the filing and procedural requirements of the Williams Act by virtue of providing U.S. or foreign journalists with access to offshore press activities at or in which a present or proposed tender offer of securities is discussed. To qualify under the safe harbor, both U.S. and foreign journalists must have access to the offshore press activity and, if significant U.S. investor interest in the tender offer is likely, written materials must contain specified legends, including a statement that the written press-related materials are not an extension of a tender offer in the U.S. If the bidder intends to extend the offer into the U.S. in the future, a statement to this effect must be included, together with a statement that the requirements of the Williams Act will be satisfied at that time. In addition, no means to tender securities or to indicate interest in the tender offer may be provided in the written materials. Once a tender offer is commenced and documents are filed under Regulation 14D, the safe harbor is no longer available.