[Federal Register Volume 65, Number 240 (Wednesday, December 13, 2000)]
[Notices]
[Pages 77939-77940]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-31716]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 24786; International Series Release
No. 1239/812-12334]
Telco Finance N.V.
December 7, 2000.
AGENCY: Securities and Exchange Commission (``SEC'' or ``Commission'').
ACTION: Notice of application for exemption under section 6(c) of the
Investment Company Act of 1940 (the ``Act'') from all provisions of the
Act.
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SUMMARY: Applicant requests an order under section 6(c) of the Act
exempting applicant from all provisions of the Act. The order would
permit applicant to sell certain debt securities and use the proceeds
to finance the business activities of Telsim Mobile Telekomunikayson
Hizmetleri A.S. (``Telsim'').
Filing Date: The application was filed on November 29, 2000.
Hearing or Notification of Hearing: An order granting the
application will be issued unless the SEC orders a hearing. Interested
persons may request a hearing by writing to the SEC's Secretary and
serving applicant with a copy of the request, personally or by mail.
Hearing requests should be received by the SEC by 5:30 p.m. on January
2, 2001, and should be accompanied by proof of service on applicant, in
the form of an affidavit or, for lawyers, a certificate of service.
Hearing requests should state the nature of the writer's interest, the
reason for the request, and the issues contested. Persons who wish to
be notified of a hearing may request notification by writing to the
SEC's Secretary.
ADDRESSES: Secretary, SEC, 450 Fifth Street, NW., Washington, DC 20549.
Applicant, c/o Intertrust Management (Antilles) N.V., Attn: Robert R.
Stroeve, Curacao, Netherlands Antilles.
FOR FURTHER INFORMATION CONTACT: Bruce R. MacNeil, Senior Counsel, at
(202) 942-0634, or Nadya B. Roytblat, Assistant Director, at (202) 942-
5064 (Division of Investment Management, Office of Investment Company
Regulation).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee at the
SEC's Public Reference Branch, 450 Fifth Street, NW., Washington, DC
20549 (tel. 202-942-8090).
Applicant's Representations
1. Applicant is a Netherlands Antilles limited liability
corporation. Applicant was organized specifically to raise funds for
the operations of Telsim by issuing debt securities (``Notes'') and
lending the proceeds to Telsim. Telsim is a joint stock company
organized under the laws of the Republic of Turkey and is a cellular
telecommunications company in Turkey.
2. Telsim has determined to raise capital through applicant because
the
[[Page 77940]]
direct issuance of the Notes by Telsim would not be feasible under
Turkish tax and corporate law. In addition, under Turkish law,
significant tax disadvantages may be borne by Telsim were it to own or
control applicant and/or directly guarantee the Notes. For these
reasons, all of applicant's common shares will be held by a Netherlands
Antilles stichting (the ``Foundation'') for the benefit of an existing
charity named in the Foundation's articles of organization
(``Charity''). The Foundation will be prohibited by its articles of
organization from transferring the shares of applicant to any other
party. The Foundation will have no answers or shareholders, but will be
managed by a Netherlands Antilles trust company. The Charity will have
no ownership or other rights with regard to the Foundation. Neither the
Foundation nor the Charity will pay any consideration in connection
with its involvement in the activities described in the application.
3. Applicant intends to issue the Notes in reliance on rule 144A
under the Securities Act of 1933 (``1933 Act'') and shortly thereafter
file a registration statement under the 1933 Act. Applicant will loan
the proceeds of the Notes to Telsim and assign applicant's right to
receive interest and principal payments on the loan to an indenture
trustee for the noteholders (the ``Trustee''). The Trustee, which will
be a major U.S. commercial bank, will have the right to proceed
directly against Telsim in the event of default on the loan payments.
the loan agreement will provide that a default under the Notes and the
trust indenture agreement constitutes a default under the loan
agreement. In the event of a default under the Notes, the Trustee may
declare the outstanding amount of the loan and any accrued but unpaid
interest with respect to the loan to be immediately due and payable.
Under the trust indenture agreement, if the Trustee does not exercise
its rights following a default, holders of at least 25% in aggregate
principal amount of the Notes outstanding may direct the Trustee to
exercise the rights, or may themselves accelerate the Notes.
4. Telsim and applicant, in connection with the offering of the
Notes, will submit to the jurisdiction of any state or federal court in
the Borough of Manhattan in the City of New York, and will appoint an
agent to accept any process which may be served, in any suit, action,
or proceedings brought against Telsim or applicant based upon their
obligation to the Trustee as described in the application. The consent
to jurisdiction and appointment of an authorized agent to accept
service of process will be irrevocable until all amounts due and to
become due with respect to all outstanding obligations of Telsim to the
Trustee as described in the application have been paid.
5. Applicant will loan at least 85% of any cash or cash equivalents
raised by applicant to Telsim as soon as practicable, but in no event
later than six months after applicant's receipt of the cash or cash
equivalents. In the event that applicant borrows amounts in excess of
the amounts to be loaned to Telsim at any given time, applicant will
invest the excess in temporary investments pending lending the money to
Telsim. All investments by Telsim, including all temporary investments,
will be made in government securities, securities of Telsim or a
company controlled by Telsim, or debt securities which are exempted
from the provisions of the 1933 Act by section 3(a)(3) of that Act.
Applicant's articles of incorporation and the trust indenture relating
to the Notes will limit applicant's activities to issuing the Notes or
other debt securities, loaning the proceeds to Telsim and assigning all
of applicant's rights to repayment from Telsim to the Trustee.
Applicant's Legal Analysis
1. Applicant states that it may be viewed as falling technically
within the definition of an investment company under section 3(a)(1) of
the Act. Applicant requests an exemption under section 6(c) of the Act
from all provisions of the Act. Section 6(c) of the Act permits the SEC
to grant an exemption from the provisions of the Act if, and to the
extent that, such exemption is necessary and appropriate in the public
interest, consistent with the protection of investors, and consistent
with the purposes fairly intended by the policy and provisions of the
Act.
2. Applicant states that rule 3a-5 under the Act provides an
exemption from the definition of investment company for certain
companies organized primarily to finance the business operations of
their parent companies or companies controlled by their parent
companies. Applicant states that it meets all of the requirements of
rule 3a-5 except for two, which it cannot meet for Turkish tax reasons.
3. Rule 3a-5(b)(1)(i) under the Act requires that all of
applicant's common stock be owned by Telsim or a company controlled by
Telsim. Applicant argues that, even though for Turkish tax reasons
applicant's common stock will be held by the Foundation, applicant was
organized to serve solely as a conduit for Telsim's capital raising
activities. Applicant further states that its functions will be limited
by its articles of incorporation and the trust indenture agreement to
those of a traditional finance subsidiary.
4. Rule 3a-5(a)(1) under the Act requires that applicant's debt
securities be directly guaranteed by Telsim. Applicant states that
under the arrangement described in the application, the Trustee will
have the right to proceed directly against Telsim. Applicant argues
that this arrangement is necessitated by Turkish tax law and that the
arrangement will provide the noteholders with the functional equivalent
of a guarantee by Telsim. For the above stated reasons applicant argues
that it is not the type of entity intended to be regulated under the
Act.
Applicant's Condition
Applicant agrees that any order granting the requested relief will
be subject to the following condition:
Applicant will comply with all provisions of rule 3a-5 under the
Act except (i) with respect to rule 3a-5(b)(1)(i), applicant's common
shares will be owned by the Foundation for the benefit of the Charity,
and (ii) with regard to rule 3a-5(a)(1), the noteholders will have
recourse to Telsim for payment of principal and interest on the Notes
as described in the application. Applicant's articles of incorporation
and the trust indenture agreement will: (i) limit applicant's
activities to issuing Notes or other debt securities; loaning the
proceeds to Telsim, and assigning all of its rights to repayment from
Telsim to the Trustee; (ii) prohibit the sale of applicant's common
shares held by the Foundation; and (iii) enable the Trustee in the
event of a payment default to proceed directly against Telsim, as
assignee of the loan agreement between applicant and Telsim.
For the Commission, by the Division of Investment Management,
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-31716 Filed 12-12-00; 8:45 am]
BILLING CODE 8010-01-M