On March 2, 2020, the SEC approved amendments to the financial disclosure requirements relating to debt offerings that include credit enhancements, such as subsidiary guaranties and affiliate collateralizations. Aside from seeking to improve the quality of disclosure, the amendments are designed to encourage issuers to conduct registered debt offerings, rather than private offerings. The amended rules will, among other things:
- Continue to allow the omission of separate financial statements of subsidiary issuers and guarantors, but will condition the omission on financial statement consolidation rather than 100% ownership of the subsidiary.
- Replace condensed consolidating financial information with new financial and non-financial disclosures.
- Require disclosure of specified financial and non-financial information about affiliates and collateral arrangements rather than separate financial statements.
- Require the proposed disclosure in all cases, unless immaterial, rather than only when certain numerical thresholds are exceeded.
The amendments are effective in January 2021, but issuers can voluntarily comply earlier.
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This publication is for general information only. It is not legal advice, and legal counsel should be contacted before any action is taken that might be influenced by this publication.
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