REPORT BY THE LEGAL REPRESENTATIVE OF THE HOLDERS OF CARULLA
VIVERO ORDINARY BONDS ISSUED IN 2005 TO THE GENERAL ASSEMBLY OF
HOLDERS OF CARULLA VIVERO BONDS ISSUED IN 2005
1.
Background.
1.1.
On 16 March 2005, a contract was signed for Legal Representation of Bondholders
by Carulla Vivero S.A. and Fiduciaria de Occidente S.A. The purpose of this contract
is for the financial institution (Fiduciaria) to act as legal representative for the holders
of bonds issued by Carulla Vivero S.A., in compliance with the applicable regulations
governing the issuance of bonds, especially “Resolución 400 de 1995” by the
Superintendencia de Valores (now called the Superintendencia Financiera de
Colombia or Financial Superintendence of Colombia). This regulation is included in
“Decreto 2555 of 2010.”
1.2.
In accordance with the above, titles with the following characteristics were issued on
April 26, 2005:
TITLES
Straight Bonds Issued in 2005
INITIAL RISK RATING
“AA” (Double A)
Duff and Phelps de Colombia S.A., now
called Fitch Ratings Colombia.
CURRENT RISK RATING
“AAA” (Triple A)
Duff and Phelps de Colombia S.A., now
called Fitch Ratings Colombia.
AMOUNT OF ISSUANCE
Amount Authorized
COP$150.000.000.000.00
Amount Issued COP$150.000.000.000,00
CIRCULATION LAW
Market Open, in place
NUMBER OF TITLES
Titles Authorized 15.000
Titles Issued 15.000
NOMINAL VALUE
One Million Pesos (COP$1.000.000)
INTEREST PAYMENT
At the end of each trimester after date of
issuance.
REDEMPTION
Upon maturity
ISSUER
Almacenes Éxito S.A., previously Carulla
Vivero S.A.
REGISTRATION
Bolsa de Valores de Colombia (Colombian
Securities Exchange)
DATE OF ISSUANCE
May 5, 2005
DATE OF MATURITY
May 5, 2015
CURRENT BALANCE
1.3.
COP$ 150.000.000.000.00
In 2007, Almacenes Éxito S.A. acquired more than 50% of the stocks in Carulla
Vivero S.A., and, in turn, Grupo Casino acquired the stock majority in Almacenes
Éxito in the same year.
1.4.
On April 24, 2008, the rating agency Duff & Phelps de Colombia, today called Fitch
Ratings, changed its initial “AA” (Double A) rating with a stable outlook to a “AAA”
(Triple A) rating for Carulla Vivero Straight Bonds Issued in 2005.
This increase in rating was due to Carulla Vivero S.A. being acquired by Grupo
Empresarial Almacenes Éxito and the strengthening of its operating as it became a
fundamental part of Grupo Empresarial Almacenes Éxito’s growth strategy.
1.5.
On September 9, 2008, the Almacenes Éxito S.A. Board of Directors authorized
signing an operation contract and a sales offer for assets and associated inventories
with Carulla Vivero S.A. in order to concede the operation and exploitation of Carulla
supermarkets and Frescampo supermarkets to Almacenes Éxito S.A., as well as the
sale of fixed assets and inventories associated with operation of the same, providing
brand licenses and any other intellectual property rights of Carulla Vivero S.A.
necessary for the operation and exploitation of Carulla Vivero S.A. supermarkets. In
return, Almacenes Éxito S.A. would pay a monetary compensation to Carulla Vivero
S.A.
1.6.
On April 23, 2009, the rating agency Duff & Phelps de Colombia, now called Fitch
Ratings, confirmed a “AAA” (Triple A) rating with a stable outlook for Carulla Vivero
Straight Bonds Issued in 2005.
1.7.
On October 26, 2009, with the signing of the Modified and Compiled Exit Agreement
between Almacenes Éxito S.A. and the remaining shareholders in Carulla Vivero
S.A., the parties agreed to move up the date for exercising the right to sale held by
the remaining shareholders for preferred stock in Carulla Vivero S.A.
Almacenes Éxito S.A. thereby acquired 7,969,390 preferred stocks in Carulla Vivero
S.A., equal to 22.5% of its capital; Almacenes Éxito now had 99.8% stock
participation in Carulla Vivero S.A.
1.8.
On 23 March 2010, the Carulla Vivero S.A. Board of Directors authorized beginning
the merger process with its parent company, Almacenes Éxito S.A.
1.9.
In an extraordinary meeting, on May 24, 2010, the Carulla Vivero S.A. Shareholders
Assembly approved Carulla Vivero S.A.’s merger by acquisition with Almacenes
Éxito S.A.
1.10.
On June 18, 2010, the General Assembly of Holders of Carulla Bonds Issued in 2005
approved the merger by acquisition between the corporations Almacenes Éxito S.A.,
as acquiring corporation, and Carulla Vivero S.A., as corporation being acquired.
1.11.
On August 24, 2010, by Resolution No. 1685 dated August 20, 2010, the Financial
Superintendence of Colombia informed Carulla Vivero S.A. and Almacenes Éxito
S.A. of its approval of their merger by acquisition, authorizing the issuance of a public
deed to be enrolled in the chamber of commerce commercial registry.
1.12.
On September 2, 2010, Carulla Vivero S.A. and Almacenes Éxito S.A. signed the
public deed No. 5037, which formalized the merger by acquisition and was duly
enrolled in the commercial registry.
1.13.
On October 12, 2010, in Relevant Information, Almacenes Éxito S.A. made public the
termination of Carulla Vivero S.A. corporation’s enrollment in the Registro Nacional
de Valores y Emisores (RNVE) (National Registry of Securities and Issuers), by
Resolution 1949 dated October 5, 2010, issued by the Financial Superintendence of
Colombia.
Consequently, the issuance of Carulla Vivero S.A. Straight Bonds Issued in
2005 currently in circulation, due to the merger, became an integral part of the
Almacenes Éxito S.A.’s liabilities, this corporation being enrolled in the RNVE.
1.14. On April 25, 2011, the rating agency Duff & Phelps de Colombia, now called
Fitch Ratings, confirmed a “AAA” (Triple A) rating with a stable outlook for
Almacenes Éxito S.A. (previously Carulla Vivero S.A.) Straight Bonds.
1.15. On December 5, 2011, Almacenes Éxito S.A. published as Relevant
Information the fact that Casino Guichard Perrachon (“Casino”) signed an
agreement with the Bolivarian Republic of Venezuela for the sale of 80.1% of
the stock in Cadena de Venezolanas S.A. (“Cativen”), which included all the
shares belonging to Almacenes Éxito S.A., equal to 28.62% of Cativen’s
capital in virtue of a contract of sale of stocks signed by Almacenes Éxito S.A.
and a subsidiary of Casino.
1.16. On April 19, 2012, the rating agency Duff & Phelps de Colombia, now called
Fitch Ratings, confirmed a “AAA” (Triple A) rating with a stable outlook for
Almacenes Éxito S.A. straight bonds.
1.17. On July 17, 2012, Almacenes Éxito S.A. published as Relevant Information
the renewal of its contract with the financing company Tuya S.A. (“Tuya”) to
the Business Collaboration Agreement signed on October 2, 2006 by
Almacenes Éxito S.A. and Tuya. The goal of this agreement is the
development of the Éxito Card alliance, which will remain in effect until
October 2, 2018.
1.18. On April 16, 2013, the rating agency Duff & Phelps de Colombia, now called
Fitch Ratings, confirmed a “AAA” (Triple A) rating with a stable outlook for
Almacenes Éxito S.A. Straight Bonds Issued in 2005.
1.19. On May 15, 2013, Almacenes Éxito S.A. published in Relevant Information
the launch of a new mobile phone product called “Móvil Éxito” (“Éxito Mobile”),
which offers mobile phone services through a virtual mobile operator. The
service provider is a subsidiary of Grupo Éxito.
1.20. On April 14, 2014, the rating agency Duff & Phelps de Colombia, now called
Fitch Ratings, confirmed a “AAA” (Triple A) rating with a stable outlook for
Almacenes Éxito S.A. Straight Bonds Issued in 2005.
1.21. On March 20, 2014, the General Assembly of Almacenes Éxito S.A.
Stockholders approved changes to subparagraphs a) and d) of the clause four
(4) of the company’s articles of incorporation, which is related to the corporate
purpose. These subparagraphs basically cover the provision of various
complementary services such as credit granting for the acquisition of
merchandise, insurance granting, transfers and remittances, provision of
mobile phone services, travel and tourist package sales, repair and
maintenance of movable assets (home appliances, electrical and electronic
goods), bureaucratic procedures and errands, and real estate business, along
with the provision in rent or under any other title of stores or commercial
spaces in supermarkets or shopping malls.
1.22. On May 29, 2014, Almacenes Éxito S.A. reported these changes to Fiduciaria
de Occidente S.A. and requested that, as legal representative of holders of
Almacenes Éxito S.A. Bonds Issued in 2005, Fiduciaria de Occidente S.A. will
call a meeting of the General Assembly of Bondholders in order for said
Assembly to authorize changes to its corporate purpose in the same terms
approved by the issuer’s General Assembly of Shareholders.
1.23. In accordance with article 6.4.1.1.42 of Decree 2555 of 2010, during the
validity period of a bond issuance, the issuing entity may not change its
corporate purpose unless so authorized by the assembly of bondholders with
the majority necessary for approving changes to the borrowing conditions;
that is, with a favorable vote by a plural number representing the numerical
majority of the bondholders present and 80% of the outstanding loan
(subsection 2 of article 6.4.1.1.22 of Decree 2555 of 2010).
2.
Changes to Almacenes Éxito S.A.’s Corporate Purpose
The General Assembly of Almacenes Éxito S.A. Shareholders approved the following
changes to the company’s corporate purpose:
Current Text
Modified Text
“Article 4. - Corporate purpose. - The social “Article 4. - Corporate purpose. - The
enterprise or constitutive business of the social enterprise or constitutive business
company’s purpose consists of:
a)
–
The
transformation,
of the company’s purpose consists of:
acquisition,
and,
in
processing, a)
general,
–
The
acquisition,
the transformation,
and,
in
processing,
general,
the
distribution and sale in any commercial form, distribution and sale in any form, including
including
financing,
merchandise
and
of
all
domestic
kinds
and
of financing, of all kinds of merchandise and
foreign domestic and foreign products, including
products, including pharmaceutical articles, pharmaceutical articles, medical supplies,
medical supplies, and similar products, in and similar products, in wholesale or retail
wholesale or retail.
by physical or virtual means. Likewise,
the
provision
of
complementary
services such as credit granting for the
acquisition of merchandise, insurance
granting, transfers and remittances, the
provision of mobile phone services,
travel and tourist package sales, repair
and maintenance of movable assets,
bureaucratic procedures and errands,
and the provision in rent or under any
other title of stores or commercial
spaces in supermarkets or shopping
malls;
–
b)
The
acquisition,
organization,
creation,
establishment,
administration, and exploitation of stores,
supermarkets,
drugstores
and
b) – The acquisition, creation, organization, pharmacies, warehouses, and other
establishment, administration, and exploitation business premises intended for the
of
stores,
supermarkets,
drugstores and acquisition of merchandise and products
pharmacies, warehouses, and other business of all kinds in order to sell them, the
premises intended for the acquisition of disposal of said merchandise or products
merchandise and products of all kinds in order in wholesale or retail, the sale of goods
to sell them, the disposal of said merchandise and
the
provision
of
saleable
or products in wholesale or retail, the sale of complementary services in accordance
goods and the provision of saleable with modern sales systems in specialized
complementary services in accordance with stores with multiple sales types and/or
modern sales systems in specialized stores self-service stores, among them the stores
with multiple sales types and/or self-service known by the commercial
stores, among them the stores known by the “ALMACENES ÉXITO.”
name
commercial name “ALMACENES ÉXITO.”
c)
–
To
give
or
receive
in
lease
commercial spaces, to give or receive in
c) – To give or receive in lease commercial lease or under another holding title spaces
spaces, to give or receive in lease or under or points of sale or commerce within its
another holding title spaces or points of sale business premises, equipment, and
fixtures intended for the exploitation of the
or commerce within its business premises, business
of
merchandise
equipment, and fixtures intended for the distribution and for
or
product
the provision of
exploitation of the business of merchandise or complementary services.
product distribution and for the provision of
complementary services.
d) – To constitute, finance, promote, and
participate with other natural or legal
persons for the creation of enterprises or
d) – To constitute, finance, promote, and
participate with other natural or legal persons
for the creation of enterprises or business
whose goal is the production
of objects,
merchandise, articles, or elements, or the
provision of services related to the exploitation
of the commercial establishments detailed in
the previous paragraphs, and create business
relationships with said companies through
business whose goal is the production of
objects,
merchandise,
articles,
or
elements, or the provision of related
services to the exploitation of the
commercial establishments detailed in
the previous paragraphs, and create
business
relationships
with
said
companies through monetary contributions
or the contribution of goods or services.
monetary contributions or the contribution of
goods or services.
e) – To acquire real estate intended for the
establishment of stores, shopping malls,
or other sites suited for the distribution of
merchandise and the selling of goods or
services; to build commercial premises for
e) – To acquire real estate intended for the use as its own commercial establishments
establishment of stores, shopping malls, or without prejudice to the disposal or rent of
other sites suited for the distribution of floors, stores, or departments, or their
merchandise and the selling of goods or exploitation in another suitable manner,
services; to build commercial premises for use with the criterion of rational use of the
as its own commercial establishments without land. Likewise, to invest in real estate,
prejudice to the disposal or rent of floors, promote and execute real estate or
stores, or departments, or their exploitation in property projects of any kind and invest in
another suitable manner, with the criterion of them directly or indirectly, creating
consortiums,
or
joint
rational use of the land. Likewise, to invest in corporations,
real estate, promote and execute real estate ventures, either on the company’s plots or
or property projects of any kind and invest in those of others, to participate in programs
or plans for parceling, urbanization, or
them
directly
or
indirectly,
creating division of real estate, housing, shopping
corporations, consortiums, or joint ventures, malls, industrial installations of offices, and
either on the company’s plots or those of to sell, rent, or exploit in another form the
others, to participate in programs or plans for respective
lots,
parcels,
houses,
parceling, urbanization, or division of real departments, offices, or stores.
estate, housing, shopping malls, industrial
installations of offices, and to sell, rent, or
exploit in another form the respective lots,
parcels, houses, departments, offices, or f) – To apply investment resources to the
stores.
acquisition of stocks, bonds, commercial
securities, and other securities in free
market
circulation,
according
to
the
judgment of the Board of Directors, in
order to effect stable investments or as a
f) – To apply investment resources to the
acquisition of stocks, bonds, commercial
lucrative and temporary use of excess
cash or excess liquidity.
securities, and other securities in free market
circulation, according to the judgment of the
Board of Directors, in order to effect stable
g) - The wholesale distribution of liquid
fuels derived from petroleum.
investments or as a lucrative and temporary
use of excess cash or excess liquidity.
h) - Retail distribution of liquid fuels
derived from petroleum at gas stations.
g) - Wholesale distribution of liquid fuels
derived from petroleum.
i) - Distribution of alcohols, biofuels,
natural gas for vehicles, and any other fuel
or mixture useable in the automotive,
h) - Retail distribution of liquid fuels derived industrial,
from petroleum at gas stations.
fluvial,
maritime,
or
aerial
industry of any kind.
i) - Distribution of alcohols, biofuels, natural In the pursuit of its goal, the corporation
gas for vehicles, and any other fuel or mixture may
acquire
movable
or
immovable
useable in the automotive, industrial, fluvial, assets and/or tangible or intangible assets
required for the fulfillment of its corporate
maritime, or aerial industry of any kind.
purpose;
and
likewise
acquire
and
possess stocks, shares, or participations
in commercial partnerships or civil law
In the pursuit of its goal, the corporation may companies, securities of any kind intended
acquire movable or immovable assets and/or for stable investments or for promotion or
tangible or intangible assets required for the development
investments for the
fulfillment of its corporate purpose; and exploitation of tax incentives established
likewise acquire and possess stocks, shares, by law; make temporary investments in
or participations in commercial partnerships or securities soon to be liquid in order to
civil law companies, securities of any kind make productive temporary use of excess
intended
for
stable
investments
promotion or development
or
for cash or excess liquidity or other available
investments for funds not immediately necessary for the
the exploitation of tax incentives established development of company business; import
by law; make temporary investments in and export merchandise, products, and/or
securities soon to be liquid in order to make manufactured goods of all kinds; issue
productive temporary use of excess cash or bonds and/or commercial paper or other
excess liquidity or other available funds not titles of mass issuance authorized by legal
immediately necessary for the development of regulations for public sale, receive shared
company business; import and export monies, develop or execute firm factoring
merchandise, products, and/or manufactured operations with the company’s own
goods of all kinds; issue bonds and/or resources, constitute guarantees on its
commercial paper or other titles of mass movable and immovable assets, and
issuance authorized by legal regulations for execute financial operations that allow it to
public sale, receive shared monies, develop or acquire funds or other assets or to assure
execute firm factoring operations with the the supply of goods and/or services as
company’s
own
resources,
constitute necessary
for
the
company’s
guarantees on its movable and immovable development;
act
as
agent
or
assets, and execute financial operations that representative of national or foreign
allow it to acquire funds or other assets or to businesspersons, and sign any kind of
assure the supply of goods and/or services as contract related to the distribution of
necessary for the company’s development; merchandise and/or the sale of goods and
act as agent or representative of national or services; promote and constitute or invest
foreign businesspersons, and sign any kind of in companies for the development of any
contract
related
to
the
distribution
of activities that fall within the corporate
merchandise and/or the sale of goods and purpose indicated, merge with them or
services; promote and constitute or invest in with other companies, acquire them, or
companies for the development
of
any split; acquire brands, logos, commercial
activities that fall within the corporate purpose names, patents, or other industrial or
indicated, merge with them or with other intellectual property rights, exploit them or
companies, acquire them, or split; acquire surrender their exploitation to third parties
brands, logos, commercial names, patents, or under contractual license; and, in general,
other industrial or intellectual property rights, execute all acts and sign all contracts,
exploit them or surrender their exploitation to whatever their nature, related to the
third parties under contractual license; and, in corporate purpose or whose objective is
general,
execute
all
acts
and
sign
all for the company to exercise its rights or
contracts, whatever their nature, related to the fulfill
its
obligations,
legally
or
corporate purpose or whose objective is for conventionally derived from its existence
the company to exercise its rights or fulfill its and activities.”
obligations, legally or conventionally derived
from its existence and activities.”
(The section in bold is to be added and
the
crossed-out
section
is
to
be
removed).
Almacenes Éxito S.A.’s justification for making these changes is that “(…) the Company, in
alliance with leading companies in their respective sectors and always bearing the client in
mind as the axis of its strategy, has been working to implement an offering of
complementary businesses with products and services in addition to retail. These products
and services can be obtained not only in the Company’s stores, but also in all the supply
channels it makes available as part of its Omni-channel strategy.”
Said businesses (…) have been growing considerably within the organization, reaching 35%
of operational profitability in 2013.
Looking toward the future, the organization’s plans include continuing to promote these
important businesses in order to diversify its sources of income, widen its client base, and
achieve higher margins, especially in the real estate market. The General Assembly of
Shareholders has therefore decided to make specific reference to the aforementioned
businesses.”
3.
Concept of the Legal Representative of Holders of Almacenes Éxito Bonds
Issued in 2005.
Fiduciaria de Occidente S.A., as the Legal Representative of the Bond Issuance of
Almacenes Éxito S.A. (previously Carulla Vivero S.A.) Issued in 2005, presents below its
analysis made in order to determine whether the changes to the company’s corporate
purpose approved by the issuing entity’s Assembly of Shareholders in its meeting held on
March 20 of this year impact the interests of the current holders of Almacenes Éxito Bonds
Issued in 2005:
3.1. First, Fiduciaria de Occidente S.A. finds that the proposed changes to Almacenes Éxito
S.A.’s corporate purpose imply no additional latent financial risk that may affect the credit
risk on investment, and therefore the interests of the current holders of Almacenes Éxito
Straight Bonds Issued in 2005 are not affected. Bearing in mind that the matter at hand is an
updating of Almacenes Éxito S.A.’s articles of incorporation to bring them in line with its
current economic reality, we consider them to be pertinent.
3.2. Notwithstanding the foregoing, this financial institution deems it appropriate to clarify to
the bondholders that some of the complementary activities in subparagraph a) of clause four
(4) of Almacenes Éxito S.A.’s articles of incorporation, such as insurance granting and the
provision of mobile phone services, are activities that require government permits in order to
be carried out directly by the issuing corporation, and therefore, the fact that they are
allowed in the company’s corporate purpose does not mean they may be carried out without
said permits. It must be clear to the bondholders that at this time, Almacenes Éxito S.A. may
not directly provide these services, in accordance with the law.
If Almacenes Éxito wishes to provide these services directly in the future, it will have to
request permission from the Colombian Government and complete all the necessary
procedures with the relevant authorities in order to obtain said government permits.
We understand that these activities are currently provided by Almacenes Éxito S.A. through
agreements with third parties authorized for the development of such activities and that the
proposed changes aim to provide greater clarity to a significant part of the company’s
operational profitability through December 31, 2013.
3.3. Fiduciaria de Occidente deems that there will be no adverse financial impact for the
bondholders given the proposed changes to Almacenes Éxito S.A.’s corporate purpose
since, as of June 2014, the company has the solid financial structure necessary for payment
in May 2015 of the bonds. This structure is supported by its capitalization levels; appropriate
capital structure; liquidity; low debt level; revenue growth and the last year’s EBITDA;
generation of positive cash flow and coverage of financial expenditure.
Sincerely,
ADRIANA PINZON DE NASSAR
Legal Representative
FIDUCIARIA DE OCCIDENTE S.A.