Form 8937 | Report of Organizational Actions | ||||||||||
Affecting Basis of Securities | OMB No. 1545-0123 | ||||||||||
(December 2017) | |||||||||||
Department of the Treasury | ▶ See separate instructions. | ||||||||||
Internal Revenue Service | |||||||||||
Part I | Reporting | Issuer | |||||||||
1 Issuer's name | 2 Issuer's employer identification number (EIN) | ||||||||||
Telecom Argentina S.A. | 3063945373 | ||||||||||
3 Name of contact for additional information | 4 Telephone No. of contact | 5 Email address of contact | |||||||||
Fernando Balmaceda | (5411) 4968 3628 | relinver@teco.com.ar | |||||||||
6 Number and street (or P.O. box if mail is not delivered to street address) of contact | 7 City, town, or post office, state, and ZIP code of contact | ||||||||||
Alicia Moreau de Justo 50 | Buenos Aires Arentina - C1107AAB | ||||||||||
8 Date of action | 9 | Classification and description | |||||||||
August 6, 2020 | Debt for debt exchange | ||||||||||
10 CUSIP number | 11 Serial number(s) | 12 Ticker symbol | 13 | Account number(s) |
See attached.
Part II Organizational Action Attach additional statements if needed. See back of form for additional questions.
14 Describe the organizational action and, if applicable, the date of the action or the date against which shareholders' ownership is measured for the action ▶ See attached.
15 Describe the quantitative effect of the organizational action on the basis of the security in the hands of a U.S. taxpayer as an adjustment per share or as a percentage of old basis ▶ See attached.
16 Describe the calculation of the change in basis and the data that supports the calculation, such as the market values of securities and the valuation dates ▶ See attached.
For Paperwork Reduction Act Notice, see the separate Instructions. | Cat. No. 37752P | Form 8937 (12-2017) |
Form 8937 (12-2017) | Page 2 | |
Part II | Organizational Action (continued) | |
17 List the applicable Internal Revenue Code section(s) and subsection(s) upon which the tax treatment is based ▶ | See attached. | |
18 Can any resulting loss be recognized? ▶ See attached.
19 Provide any other information necessary to implement the adjustment, such as the reportable tax year ▶ See attached.
Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than officer) is based on all information of which preparer has any knowledge.
Sign | ||||||||||
Here Signature ▶ | Date ▶ | |||||||||
Print your name ▶ | Title ▶ | |||||||||
Paid | Print/Type preparer's name | Preparer's signature | Date | Check | if | PTIN | ||||
Preparer | self-employed | |||||||||
Use Only | Firm's name ▶ | Firm's EIN ▶ | ||||||||
Firm's address ▶ | Phone no. | |||||||||
Send Form 8937 (including accompanying statements) to: Department of the Treasury, Internal Revenue Service, Ogden, UT 84201-0054
Telecom Argentina S.A.
Date of Action: August 6, 2020
Attachment to Internal Revenue Service Form 8937
The information contained herein is being provided pursuant to the requirements of Section 6045B of the Internal Revenue Code of 1986, as amended, and includes a general summary regarding the application of certain U.S. federal income tax laws and regulations relating to the effects of the Exchange (as defined below) on the tax basis of the New Notes (as defined below) issued by Telecom Argentina S.A. ("TEO") to holders of Old Notes (as defined below) in exchange therefor. The information contained herein does not constitute tax advice and does not purport to be complete or to describe the consequences that may apply to particular categories of holders. TEO does not provide tax advice to holders of its debt obligations and the examples provided below are based on certain assumptions and are merely illustrative. Holders should consult their own tax advisors regarding the particular tax consequences of the Exchanges to them, including the applicability and effect of all U.S. federal, state and local and foreign tax laws.
10. CUSIP Numbers.
New Notes:
144A: 879273 AT7
Reg S: P9028N AZ4
Old Notes:
144A: 12686N AT2
Reg S: P19157 AR0
14. Describe the organizational action and, if applicable, the date of the action or the date against which shareholders' ownership is measured for the action.
On August 6, 2020, holders of TEO's 6.500% senior notes due 2021 ("Old Notes") exchanged their Old Notes for TEO's newly issued 8.500% senior amortizing notes due 2025 ("New Notes") and cash (the "Exchange"). Holders tendering their Old Notes and delivering their proxies on or prior to 5:00 p.m., New York City time, on July 20, 2020 (the "Early Participation Date") received $700 principal amount of New Notes and $320 cash in exchange for $1000 principal amount of Old Notes. Holders tendering their Old Notes and delivering their proxies after the Early Participation Date and whose Old Notes were accepted for exchange by TEO received $700 principal amount of New Notes and $250 cash in exchange for $1000 principal amount of Old Notes.
The Exchange was made on the terms and subject to the conditions set forth in the Exchange Offer and Consent Solicitation Memorandum, dated July 7, 2020.
On August 6, 2020, TEO also issued $135,425,000 of notes of the same series and with identical terms as the New Notes for cash.
15. Describe the quantitative effect of the organizational action on the basis of the security in the hands of a U.S. taxpayer as an adjustment per share or as a percentage of old basis.
TEO will treat the Exchange of Old Notes for New Notes as an exchange of securities that qualifies as a recapitalization for U.S. federal income tax purposes.
Recapitalizations generally do not result in the recognition of gain or loss, subject to two exceptions:
First, holders that are subject to U.S. income tax may be required to recognize gain equal to the lesser of (x) the cash payments (other than accrued interest payments), including the amount of any withholding taxes and any additional amounts paid with respect thereto ("boot") and (y) the gain realized by such holder. The gain realized
generally will equal the excess of (x) the sum of (i) the issue price of the New Notes (as described in the response to Question 19) received and (ii) boot, over (y) the holder's tax basis in the Old Notes surrendered therefor.
A holder's initial tax basis in each New Note is the same as the holder's tax basis in the Old Note exchanged therefor, increased by the amount of gain recognized by the holder in the Exchange, if any, and decreased by the amount of boot that is received by the holder in respect of such Old Note.
Second, a holder that received cash in lieu of fractional New Notes will be treated as having received fractional New Notes in the Exchange and sold the fractional New Notes for the cash. Accordingly, the holder will recognize gain or loss equal to the difference between holder's tax basis in the fractional New Notes deemed received (as described above) and the amount of cash received. A holder's tax basis in the New Notes actually received in the Exchange will be reduced by the tax basis allocable to the fractional New Notes.
16. Describe the calculation of the change in basis and the data that supports the calculation, such as the market values of securities and the valuation dates.
See the response to Question 15. The following simplified examples (which include fractional portions of New Notes, rather than cash payments in lieu, for purposes of the examples) illustrate a hypothetical holder's calculation of its initial tax basis in the New Notes received in the Exchange. The examples below use simplified numbers and assumptions, are for illustrative purposes only, and do not purport to fully describe the actual facts or tax consequences that may apply to a particular holder. Holders should consult their own tax advisors regarding the particular tax consequences of the Exchange to them.
Assumptions:
- Investor A exchanged $1,000 principal amount of Old Notes for New Notes with a principal amount of $700 and cash of $320.
- The New Notes were issued at a fair market value ("FMV") and issue price of $1,000 per face amount of $1,000, or 100.000%.
- The tax basis of the Old Notes exchanged in Example 1 and in Example 2 is $950 and $1,050, respectively, per $1,000 of principal of Old Notes.
Example 1 (A's basis in the Old Notes is less than its face amount):
Exchange Old | Principal Amount of Old Notes: $1,000 | Tax Basis of Old Notes: $950 | ||||||||
Notes of $1,000: | ||||||||||
Exchange Terms | Gain on the Exchange | New Notes | ||||||||
Received | ||||||||||
Principal | Issue | Cash | Boot = Cash Payment | Gain/(Loss) | Gain Recognized | Tax Basis in | ||||
Exchanged for: | Amount of | Price of | Payment | Realized | = | New Notes | ||||
New Notes | New | = Issue | Lesser of Boot and | = | ||||||
Notes1 | Price + Cash | Gain realized | Tax Basis in Old | |||||||
Payment - | Notes + Gain | |||||||||
Tax Basis | Recognized - | |||||||||
Cash Payment | ||||||||||
$700 | $700 | $320 | $320 | $70 | $70 | $700 |
1 See assumptions. Represents issue price of the New Notes ($1,000 per $1,000) received in exchange for $1,000 principal amount of Old Notes.
2
Example 2 (A's basis in the Old Notes is greater than its face amount):
Exchange Old | Principal Amount of Old Notes: $1,000 | Tax Basis of Old Notes: $1,050 |
Notes of $1,000: |
Exchange Terms | Gain on the Exchange | New Notes | |||||||||||||||
Received | |||||||||||||||||
Principal | Issue Price of | Cash | Boot = Cash | Gain/(Loss) | Gain Recognized | Tax Basis in | |||||||||||
Amount of | New Notes1 | Payment | Payment | Realized | = | New Notes | |||||||||||
Exchanged for: | New Notes | = Issue | Lesser of Boot and | = | |||||||||||||
Price + Cash | Gain realized | Tax Basis in Old | |||||||||||||||
Payment - | Notes + Gain | ||||||||||||||||
Tax Basis | Recognized - | ||||||||||||||||
Cash Payment | |||||||||||||||||
$700 | $700 | $320 | $320 | $(30) | $0 | $730 |
1 See assumptions. Represents issue price of the New Notes ($1,000 per $1,000) received in exchange for $1,000 principal amount of Old Notes.
17. List the applicable Internal Revenue Code section(s) and subsection(s) upon which the tax treatment is based.
Section 1001; Section 368(a)(1)(E); Section 354; Section 356; Section 358; Sections 1271-1275; Treasury Regulations section 1.1273-2; Treasury Regulations section 1.1275-1; Treasury Regulations section 1.1275-2.
18. Can any resulting loss be recognized?
Holders generally cannot recognize loss pursuant to the Exchange, except to the extent they recognize loss as a result of the disposition of fractional New Notes they were entitled to receive in the Exchange, as described in question 15.
19. Provide any other information necessary to implement the adjustment, such as the reportable tax year. For a holder whose taxable year is the calendar year, the reportable tax year is 2020.
TEO has determined that, within the meaning of U.S. Treasury Regulations section 1.1273-2:
- The issue price of the New Notes represents the first price at which a substantial amount of the New Notes was sold for money.
- The issue price of New Notes is $1,000 per $1,000 face amount of such New Notes, or 100.000%.
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Telecom Argentina SA published this content on 17 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 September 2020 07:14:06 UTC