A reason to come to London

How to access international capital through London’s public markets, Madrid

John Lane and Federico Briano

May 2014

Debt

1

London debt listings – your options

LSE’s Regulated

Market

Professional

Securities Market

> LSE’s Regulated Market

> an EEA regulated market under the Prospectus Directive

> European passport

> choice of market if denomination €1,000 or more

> Professional Securities Market (PSM)

> “exchange-regulated” market

> not a regulated market for purposes of Prospectus Directive

> no European passport

> choice of market irrespective of denomination

2

Choice of Market – General Considerations

> Investor requirements

> Listing and product requirements

> Continuing obligations

> Possibility of producing IFRS accounts

> Corporate image

3

Choice of Market – Listing Requirements

> LSE Regulated Market

> Prospectus Directive (content of prospectus)

> Transparency Directive (continuing obligations)

> Historical financial information (IFRS)

> Distinction between wholesale (denomination €100,000 or more) and retail (denomination below

€100,000) affecting financial reporting framework and prospectus content

> Professional Securities Market (PSM)

> Outside scope of Prospective Directive, rules of stock exchange govern content of listing particulars

> Outside scope of Transparency Directive, rules of stock exchange govern continuing obligations

> Historical financial information (local GAAP)

> No distinction between wholesale and retail

4

Choice of Market - Product

> LSE Regulated Market

> EMTN Programmes

> Standalone bonds

> High yield bonds

> Regulatory capital

> Professional Securities Market (PSM)

> Equity-linked (convertibles and exchangeables)

> Corporate hybrids

> U.S. private placments (144A)

> Spanish Tax

> Law 19/2013 (as amended)

> New Law on Organisation, Suspension and Solvency of Credit Institutions (Ley de Ordenación, Supervisión y Solvencia de Entidades de Crédito)

5

LSE Regulated Market – Content of Prospectus

Retail Investors Wholesale Investors

Historical financial information Two years of audited financial information (or such shorter period that the issuer has been in operation)

As a minimum, the most recent year’s financial information must be presented in a form consistent with that which will be adopted in the issuer’s next published annual financial statements, taking into account the relevant accounting standards and legislation

Interim financial information To be included if published since the last audited financial statements; if audited or reviewed, then the report is to be included

Not required

Must be included if more than nine months have elapsed since year end Not required

Trend information Statement on whether or not there has been any material adverse change in prospects since the last audited accounts

Information on trends, uncertainties, demands, commitments or events likely to have a material effect in the current year

Not required

Significant change Statement required for all debt securities listings

Profit forecast information If profit forecasts are included, a statement of assumptions is required

To be reported on by auditors if profit forecasts are included No auditor’s report required; statement by the issuer that forecasts have been properly prepared and the basis of accounting is consistent with its accounting policies

Expert’s report If a report is specifically prepared for the purposes of the prospectus, then the expert will need to consent to its inclusion

Incorporation by reference Information may be incorporated by reference if it has been filed with the relevant regulator or the competent authority of the issuer’s EU home member state

6

Professional Securities Market – Content of Listing Particulars

Historical financial information Two years of audited financial information (or such shorter period that the issuer has been in operation)

As a minimum, the most recent year’s financial information must be presented in a form consistent with that which will be adopted in the issuer’s next published annual financial statements, taking into account the relevant accounting standards and legislation

Interim financial information Not required

Trend information Statement on whether there has been any material adverse change in prospects since the last audited accounts

Information on trends, uncertainties, demands, commitments or events likely to have material effect in current year is not required

Significant change Statement required for all debt securities listings

Profit forecast information If profit forecasts are included, a statement of assumptions is required

No auditors’ report required; statement by the issuer that forecasts have been properly prepared and the basis of accounting is consistent with its accounting policies

Expert’s report If a report is specifically prepared for the purposes of the listing particulars, then the expert will need to consent to its inclusion

7

Equity

8

London listings – your options

Some key differences

> Admission criteria (e.g. three year track record of audited financial information, clean working capital statement)

> 25% free float requirement

> Eligibility for inclusion on FTSE UK indices

> Ongoing obligations to the market (e.g. comply-or-explain for corporate governance, shareholder approval for significant

transactions)

> Requirement for a sponsor (premium listing)

Premium listing Standard listing

(equity)

Standard listing

(GDRs of overseas

issuers)

9

Alternative routes to list in London

Some key differences – AIM

> An issuer on AIM must at all times retain a firm approved by the LSE as a nominated adviser (a “Nomad”)

> “Exchange regulated” market-admission documents not vetted by UKLA

> No requirement for shareholder approval for Class 1 or related party transactions

> No prior trading record required

> No minimum free float requirement

Some key differences - High Growth Segment > Issuer must be incorporated in the EEA

> Only equity shares will be admitted

> A minimum free float of 10% and a value of at least £30m is required

> The issuer must have demonstrated a compound annual growth rate of 20% CAGR over the prior 3 year period

> “Key adviser” required

Alternative

Investment Market

(AIM)

High Growth

Segment

10

Premium listings in London

Eligibility requirement

Minimum free float 25%

Minimum market capitalisation £700,000

Audited historical financial information 3 years

75% of business supported by revenue earning record for the 3-year period Yes

Independent business and control over majority of assets Yes

Working capital statement Yes

Sponsor required Yes

Eligible for electronic settlement Yes

Why have a premium listing?

> Premium listed issuers meet the UK’s highest standards of regulation and corporate governance

> Attracting investors – the “super-equivalent” rules are aimed at protecting the investor and investor confidence is thereby increased. Premium

listing is seen as the “gold standard” by investors and has associated prestige

> To achieve inclusion in the FTSE UK Index Series

> A premium listing is available to companies incorporated outside the UK, subject to the issuer being able to meet the key eligibility requirements,

as set out in the table below:

11

FTSE inclusion requirements

What are the eligibility requirements for inclusion in the UK series of the FTSE indices?

> The issuer must have a premium listing – issuers with a standard (equity) listing or GDR listing are not eligible

> Issuers incorporated outside the UK must (among other things) have a free float of not less than 50%, apply the

principles of the UK Takeover Code and meet FTSE’s other nationality criteria

> Listings outside the UK can complicate matters, but in general having higher liquidity in the UK than anywhere else

is the key requirement

Structuring for inclusion

> Using a UK plc holding company is the most straightforward route into the FTSE UK indices but can have adverse

effects for certain issuers and their shareholders

> Linklaters has extensive experience of working efficiently with non-UK issuers on IPOs and other capital markets

transactions

12

Due diligence requirements

U.S. requirements

Why is the U.S. relevant?

> The U.S. continues to be the world’s largest capital market, and a significant potential source of funding for

issuers. As a result, many companies, wherever they are seeking a listing, will want to market their offering to

U.S. investors

> Rule 144A offerings are exempt from registration requirements with the SEC provided certain conditions are

satisfied

> Due diligence process must meet SEC standards (e.g. comfort letters and disclosure letters from reporting

accountants and legal advisors)

Sponsor requirements

• Accountants long form report, working capital report, financial reporting procedures

• Director questionnaires, warranties, training.

13

Other considerations

- Prospectus approval requirements (UKLA or CNMV?)

- Continuing obligations

- Financial reporting

- Market updates

- Restrictions on share dealings

- Secondary capital raising

- Transactions

- New requirements on 30% + “controlled” companies

- FCA enforcement environment

14

Linklaters LLP.

Linklaters LLP is a limited liability partnership registered in England and Wales with registered number OC326345. It is a law firm authorised and regulated by the Solicitors Regulation Authority. The term partner in relation to Linklaters LLP is used to refer

to a member of the LLP or an employee or consultant of Linklaters LLP or any of its affiliated firms or entities with equivalent standing and qualifications. A list of the names of the members of Linklaters LLP and of the non-members who are designated as

partners and their professional qualifications is open to inspection at its registered office, One Silk Street, London EC2Y 8HQ, England or on www.linklaters.com and such persons are either solicitors, registered foreign lawyers or European lawyers.

Please refer to www.linklaters.com/regulation for important information on our regulatory position.

DX: A18111854