Indicate by check mark whether the registrant files or will
file annual reports under cover Form 20-F or Form 40-F.
Indicate by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Nortel Inversora S.A. (“Nortel”
or the “Company”) announces to its shareholders that at its meeting held on October 24, 2016, the Board of Directors
decided, in accordance with Section 224, paragraph 2 of Law N° 19,550, to distribute as provisional cash dividends an amount
of AR$ 540,000,000. Payment of the provisional cash dividends shall be made available on November 7, 2016, or any following date
pursuant to applicable law at the jurisdictions where Nortel’s shares are listed.
Pursuant to the terms and conditions
of issuance of the “Class B” Preferred Shares, the provisional dividend approved for the holders of “Class B”
Preferred Shares represents 48.959214% of the provisional dividends referred to in paragraphs (a) and (b) of this notice, considered
in the aggregate, while the provisional dividend approved for the holders of shares of common stock represents the remaining 51.040786%.
Payment to the holders of Class “B”
Preferred Shares shall be made through Caja de Valores, at its domicile 25 de Mayo 362, Autonomous City of Buenos Aires, from 10am
to 3pm.
Holders of American Depositary Receipts
(ADRs) will receive their provisional dividends payment through JPMorgan Chase Bank N.A., Depositary of those ADRs, as from the
applicable date pursuant to the laws governing the jurisdiction where the Company’s ADRs are listed.
The accompanying notes are an integral part of these special unconsolidated
financial statements.
The following explanations
are not intended as technical definitions, but to assist the general reader to understand certain terms as used in these unaudited
consolidated financial statements.
NOTE 1 – PURPOSE OF THE SPECIAL
UNCONSOLIDATED FINANCIAL STATEMENTS
These special unconsolidated financial statements
have been approved by the Company’s Board of Directors on October 24, 2016 and were prepared for the purpose of making a
distribution of provisional dividends to the Company’s shareholders pursuant to Section 224 of the LGS and the CNV regulations
(Title II - Chapter III - Section IX) as amended. For this reason, use of these special unconsolidated financial statements may
not be appropriate for other purposes and the accounting information does not include all the main statements and supplementary
information required by the accounting standards and the CNV regulations.
NOTE 2 –
BASIS OF PREPARATION OF THE SPECIAL UNCONSOLIDATED FINANCIAL STATEMENTS
|
|
a)
|
The Company operations
|
The bylaws state that the purpose of the Company
is to invest in other companies, except for those activities regulated by the Law of Financial Entities No. 21,526.
As required by the CNV for most of public companies,
these special unconsolidated financial statements have been prepared in accordance with RT 26 of FACPCE (as amended by RT 29 and
RT 43) and in accordance with IFRS as issued by the IASB, as adopted by the CPCECABA. Given its specific purpose described in Note
1, these special unconsolidated financial statements do not include all the information required for a complete set of financial
statements prepared in accordance with generally accepted accounting principles and the regulations of the CNV.
So, they do not include the following statements:
the Income Statement, the Statement of Comprehensive Income and the Statement of Cash Flows. The notes do not include all the information
required by generally accepted accounting principles and the regulations of the CNV, nor are presented as supplementary information
the consolidated financial statements of the Company with its subsidiary Telecom Argentina.
The preparation of these special unconsolidated
financial statements in conformity with IFRS requires the Company’s Management to use certain critical accounting estimates.
Actual results could differ from those estimates.
These special unconsolidated financial statements
were prepared on an accrual basis of accounting. Under this basis, the effects of transactions and other events are recognized
when they occur. Therefore income and expenses are recognized at fair value on an accrual basis regardless of when they are perceived
or paid. When significant, the difference between the fair value and the nominal amount of income and expenses is recognized as
finance income or expense using the effective interest method over the relevant period.
These special unconsolidated financial statements
are presented in millions of pesos, so the accounting balances have been rounded. The effect of the aforementioned rounding is
non-material for the special unconsolidated financial statements taken as a whole.
|
|
c)
|
Special unconsolidated financial statement formats
|
The special unconsolidated
financial statement formats adopted are consistent with IAS 1, In particular:
|
|
·
|
the special unconsolidated statements
of financial position
have been prepared by classifying assets and liabilities according to “current and non-current”
criterion. Current assets and liabilities are those that are expected to be realized within twelve months after the period-end;
|
|
|
·
|
the special unconsolidated statement of changes in equity
has
been prepared showing separately (i) profit (loss) for the period, (ii) other comprehensive income (loss) for the period, and (iii)
transactions with shareholders.
|
NOTE
3 – SIGNIFICANT ACCOUNTING POLICIES
The
special unconsolidated financial statements have been prepared on a going concern basis as there is a reasonable expectation that
Nortel will continue its operational activities in the foreseeable future (and in any event with a time horizon of more than twelve
months).
b.1)
Financial assets
Financial
assets and liabilities, on initial recognition, are measured at transaction price as of the acquisition date. Financial assets
are derecognized in the financial statement when the rights to receive cash flows from them have expired or have been transferred
and the Company has transferred substantially all the risks and benefits of ownership.
Upon
acquisition, in accordance with IFRS 9, financial assets are subsequently measured at either
amortized cost
, or
fair
value
, on the basis of both:
(a) the
entity’s business model for managing the financial assets; and
(b) the
contractual cash flow characteristics of the financial asset.
A
financial asset shall be measured at
amortized cost
if both of the following conditions are met:
(a) the
asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows, and
(b) the
contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
Additionally,
for assets that met the abovementioned conditions, IFRS provides for an option to designate, at inception, those assets as measured
at
fair value
if doing so eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred
to as an ‘accounting mismatch’) that would otherwise arise from measuring assets or liabilities or recognizing the
gains and losses on them on different bases.
A
financial asset that is not measured at
amortized cost
according to the paragraphs above is measured at
fair value
.
Financial
assets include:
Cash
and cash equivalents
Cash
equivalents are short-term and highly liquid investments that are readily convertible to known amounts of cash, subject to an
insignificant risk of changes in value and their original maturity or the remaining maturity at the date of purchase does not
exceed three months.
Cash
and cash equivalents are recorded, according to their nature, at fair value or amortized cost.
Investments
in other short-term investments are carried at fair value.
Other
receivables
Other
receivables classified as either current or non-current assets are initially recognized at fair value and subsequently measured
at amortized cost using the effective interest method, less allowances for doubtful accounts.
b.2)
Financial liabilities
Financial
liabilities comprise trade payables, salaries and social security payables and certain other liabilities.
Financial
liabilities are initially recognized at fair value and subsequently measured at amortized cost. Amortized cost represents the
initial amount net of principal repayments made, adjusted by the amortization of any differences between the initial amount and
the maturity amount using the effective interest method.
|
|
c)
|
Equity
investments in subsidiaries
|
Equity investments in Telecom Argentina, Personal
and Micro Sistemas were valued using the equity method, based on separate financial statements at the end of each period/year
which were prepared with similar accounting policies, as required by RT 26 (as amended by RT 29 and RT 43).
The Management of the Company is not aware of
facts which modify the equity, financial position or results of these companies at June 30, 2016 since the date of approval of
their financial statements, which have a significant impact on the valuation of equity investments at the date of issuance of
these special unconsolidated financial statements.
For the valuation of its equity investment in
these companies at June 30, 2016, the Company has considered their financial statements at June 30, 2016, which were approved
in the respective Board Meetings held on August 9, 2016.
The Company is subject to different taxes and
levies such as tax on deposits to and withdrawals from bank accounts, turnover taxes over financial income and income taxes, among
others, that represent an expense for the Company. It is also subject to other taxes over its activities that generally do not
represent an expense (tax on personal property – on behalf of shareholders).
The principal taxes that represent an expense
for the Company are the following:
- Income taxes
Income taxes are recognized in the consolidated
income statement, except to the extent that they relate to items directly recognized in Other comprehensive income or directly
in equity. In this case, the tax is also recognized in Other comprehensive income or directly in equity, respectively. The income
tax expense for the year comprises current and deferred tax.
As per Argentinean Tax Law, income taxes payables
have been computed on a separate return basis (i.e., the Company is not allowed to prepare a consolidated income tax return).
All income tax payments are made by each of the subsidiaries as required by the tax laws of the countries in which they operate.
The Company records income taxes in accordance with IAS 12.
Deferred taxes are recognized using the “liability
method”. Temporary differences arise when the tax base of an asset or liability differs from their carrying amounts in the
special unconsolidated financial statements.
The statutory income tax rate in Argentina is
35% for all years presented.
Changes in the Income Tax
Law
Law No. 26,893 and Decree N 2,334/13 have incorporated
amendments to the Income Tax in connection with, among others, the taxation of results derived from transfers of shares and dividend
distributions.
|
|
·
|
Results derived
from transfers of shares
|
The effective tax rate applicable for individuals
is 15% (for local companies the applicable rate is 35%). Negative results arising from such operations will have the character
of specific and can only be offset against future earnings from operations of the same nature.
However, results from the transfer of such securities
are exempt from such income tax when they are listed on stock exchange markets authorized by the CNV (as in the case of Telecom
Argentina’s shares) and the gains are realized by individuals or undivided estates residents in Argentina.
When both the seller and the buyer are nonresidents,
the person liable to pay the tax shall be the buyer of the shares, quotas, equity interests and other securities transferred.
Dividends and other profits paid in cash or
in kind —except for stock dividends or quota dividends— by companies and other entities incorporated in Argentina
were subject to income tax at a 10% rate, except for dividends received by domestic companies and other domestic entities, which
continued to be not subject to income tax. Dividends distributed to nonresidents should be subject to a 10% withholding tax, as
a unique and definitive payment. Consequently, any dividend distribution made by the Company to its shareholders was subject to
this broadened tax, except for those beneficiaries that were domestic corporate taxpayers “sujetos empresa” (such
as, for instance, distributions made from Nortel to Sofora) and regardless of, if applicable, the so called “Equalization
Tax”.
Law No. 27,260 repealed the above mentioned
provision, as a result of which, as from July 23, 2016 all dividends and profits, in cash or in any kind, made by companies and
other entities established in the country (such as Nortel and Telecom Argentina), regardless their beneficiary, are not subject
to the aforementioned withholding.
- Turnover tax
Under Argentine tax law, the companies are subject
to a tax levied on revenues and other income. The Company is subject to this tax, levied on interest on other short-term investments
at a rate of 5%.
Dividends payable are reported as a change in
equity in the year in which they are approved by the Shareholders’ Meeting.
|
|
f)
|
Acquisition
of treasury shares of Telecom Argentina
|
Telecom Argentina’s Ordinary Shareholders’
Meeting held on April 23, 2013, which was adjourned until May 21, 2013, approved at its second session of deliberations, the creation
of a “Voluntary Reserve for Capital Investments” of $1,200, granting powers to Telecom Argentina’s Board of
Directors to decide its total or partial application, and to approve the methodology, terms and conditions of such investments.
On May 22, 2013, Telecom Argentina’s Board
of Directors approved the terms and conditions of Telecom Argentina’s Treasury Shares Acquisition Process. Pursuant to Section
221 of the LGS, the rights of treasury shares shall be suspended until such shares are sold, and shall not be taken into account
to determine the quorum or the majority of votes at the Shareholders’ Meetings. In accordance with IFRS, the economic rights
of an investor in a company that holds treasury shares must be calculated taking into account the amount of shares held by such
investor against the aggregate amount of outstanding shares of the subsidiary/associate. As a result, Telecom Argentina’s
treasury shares acquisition has caused Nortel to increase its political and economic rights from 54.74% to 55.60% of the outstanding
capital stock of Telecom Argentina as of June 30, 2016.
As of December 31, 2013, Telecom Argentina had
acquired 15,221,373 treasury shares, which were carried at their transaction cost of $461, reducing its equity in such amount.
This accounting treatment has caused a reduction of Nortel’s investment in Telecom Argentina and a reduction of its equity
of $155, which is disclosed in the Equity as “Subsidiary’s treasury shares acquisition effect”.
The Treasury Shares Acquisition Program, which
had been approved by Telecom Argentina’s Board of Directors Meeting held on May 22, 2013, finished on April 30, 2014. Telecom
Argentina’s Board of Directors, at its meeting held on June 27, 2014, decided to request an opinion from the CNV to confirm
whether Telecom Argentina is obliged to refrain from acquiring treasury shares in the market under Section 13, Chapter I, Title
II of the CNV rules (NT 2013).
Pursuant to Section 67 of Law No. 26,831, Telecom
Argentina must sell its treasury shares within three years of the date of acquisition. Pursuant to Section 221 of the LGS, the
rights of treasury shares shall be suspended until such shares are sold, and shall not be taken into account to determine the
quorum or the majority of votes at the Shareholders’ Meetings. No restrictions apply to Retained Earnings of Telecom Argentina
as a result of the creation of a specific reserve for such purposes named “Voluntary Reserve for Capital Investments”,
which, as of June 30, 2016 amounted to $3,191. On April 29, 2016, the Ordinary and Extraordinary Shareholders’ Meeting of
Telecom Argentina approved an additional 3 year extension for the disposal due date of treasury shares provided by Section 67
of Law No. 26,831.
|
NOTE
|
|
4 –
BREAKDOWN OF THE MAIN ACCOUNTS OF THE SPECIAL
UNCONSOLIDATED STATEMENTS OF FINANCIAL POSITION
|
|
|
June
30,
|
December
31,
|
|
CURRENT
ASSETS
|
2016
|
2015
|
|
a)
Cash and cash equivalents
|
|
|
|
Banks
in foreign currency
|
14
|
13
|
|
Banks
in local currency
|
1
|
1
|
|
Other
short-term investments
|
35
|
53
|
|
|
50
|
67
|
|
b)
Other receivables
|
|
|
|
Tax
on personal property – on behalf of shareholders
|
5
|
10
|
|
Prepaid
expenses
|
5
|
-
|
|
Dividends
receivable (Note 7.b)
|
723
|
-
|
|
|
733
|
10
|
|
NON-CURRENT
ASSETS
|
|
|
|
c)
Other receivables
|
|
|
|
Tax
on personal property – on behalf of shareholders
|
13
|
13
|
|
Tax
credits
|
17
|
17
|
|
Subtotal
|
30
|
30
|
|
Allowance
for doubtful accounts (tax on personal property)
|
(13)
|
(13)
|
|
Allowance
for other tax credits
|
(17)
|
(17)
|
|
|
-
|
-
|
|
d)
Investments (*)
|
|
|
|
Telecom
Argentina
|
9,493
|
9,561
|
|
Personal
|
1
|
1
|
|
|
9,494
|
9,562
|
(*)
|
Telecom
Argentina’s equity
|
17,074
|
17,194
|
|
Percentage
of participation in capital stock of Telecom Argentina
|
55.60%
|
55.60%
|
|
Investments
|
9,493
|
9,561
|
|
Telecom
Personal’s equity
|
10,276
|
10,082
|
|
Percentage
of participation in capital stock of Telecom Personal
|
0.01%
|
0.01%
|
|
Investments
|
1
|
1
|
|
Financial
statements used for the equity method:
|
|
|
|
Telecom
Argentina
|
|
|
|
-
Board of Directors’ approval date
|
08.09.2016
|
02.26.2016
|
|
-
Date of Report of the Independent Accountants
|
08.09.2016
|
02.26.2016
|
|
-
Audit scope
|
Limited
review
|
Full
audit
|
|
-
Type of report
|
Without
observations
|
Without
observations
|
|
-
Net income for the period/year
|
1,725
|
3,403
|
|
Personal
|
|
|
|
-
Board of Directors’ approval date
|
08.09.2016
|
02.26.2016
|
|
-
Date of Report of the Independent Accountants
|
08.09.2016
|
02.26.2016
|
|
-
Audit scope
|
Limited
review
|
Full
audit
|
|
-
Type of report
|
Without
observations
|
Without
observations
|
|
-
Net income for the period/year
|
1,348
|
2,839
|
CURRENT LIABILITIES
|
|
|
|
e)
Trade payables
|
|
|
|
For
the acquisition of other assets and services
|
2
|
1
|
|
|
2
|
1
|
|
f)
Salaries and social security payables
|
|
|
|
Annual
complementary salaries, vacation and bonuses
|
1
|
1
|
|
|
1
|
1
|
|
g)
Income tax payables
|
|
|
|
Income
tax payables
|
6
|
12
|
|
Income
tax retentions and payments in advance
|
(3)
|
(1)
|
|
|
3
|
11
|
|
h)
Other taxes payables
|
|
|
|
Tax
on personal property – on behalf of shareholders
|
5
|
10
|
|
|
5
|
10
|
|
i)
Other liabilities
|
|
|
|
Compensation
for directors and members of the Supervisory Committee
|
5
|
8
|
|
|
5
|
8
|
|
NON-CURRENT
LIABILITIES
|
|
|
|
j)
Deferred income tax liabilities
|
|
|
|
Investments
valuation differences
|
1
|
3
|
|
|
1
|
3
|
NOTE 5 - ENCUMBERED ASSETS AND OTHER COMMITMENTS
Pursuant to the terms and conditions for Class
“B” preferred shares, the Company may not sell, transfer, assign or otherwise dispose of, under any title, or encumber
its shareholding in Telecom Argentina, unless, after such operation has been concluded, more than 50% of those shares remain in
direct or indirect ownership of the Company without being encumbered in any manner, or unless the above-mentioned actions are
expressly approved by the holders of two-thirds of the preferred shares outstanding.
The Bidding Terms and Conditions for the privatization
of the telecommunication service created obligations for both the Company and Telecom Argentina, non-fulfillment of which could
in some cases lead to the subsidiary's license being revoked. Such a situation would require the Company to transfer its shareholding
in Telecom Argentina to the Regulatory Authority, which would proceed to sell the shares by public auction. Such obligations,
among others, are as follows:
|
|
a)
|
not to reduce its participation in Telecom Argentina to less than
51% of the share capital without the authorization of the Regulatory Authority, which
could lead to the subsidiary's license being revoked; and
|
|
|
b)
|
not to reduce the participation of the holders of common stock
in the Company to less than 51% of the share capital with voting rights, without the
authorization of the Regulatory Authority.
|
At the moment, all shares of common stock
of Nortel belong to Sofora.
The Decree of Need and Urgency (“Decreto
de Necesidad y Urgencia”) No. 267/2015 amended the requirement of prior authorization for changes of control included in
the LAD, replacing it for a new set of rules in which the transfers of licenses and of shareholdings of licensee companies that
imply a loss of control are deemed to have been made
ad referendum
of the ENACOM approval, must be notified to the Regulatory
Authority within 30 business days of their closing and will be deemed tacitly approved if they have not been expressly rejected
within 90 business days of such notification.
The obligations assumed by Telecom Argentina
are detailed in section 13.10.6 of the Bidding Terms and Conditions, excluding sub-sections h) and n).
NOTE 6 – EQUITY
Class "B" Preferred Shares are listed
on the Mercado de Valores de Buenos Aires S.A. (Buenos Aires Securities Market). In addition, Morgan Guaranty Trust of New York,
as depositary under the Deposit Agreement dated May 27, 1997 has issued ADSs (American Depositary Shares) representing rights
over Class "B" Preferred Shares pursuant to the terms of the above mentioned Deposit Agreement.
The Class "B" Preferred Shares and
the ADSs have been registered with the SEC and, as from June 16, 1997, the ADSs are listed on the NYSE. The ADSs are also listed
on the Luxemburg Exchange since 1992.
(a) The Company’s capital stock
On September 9, 2003 Nortel took note of the
agreement reached by the France Telecom Group with W de Argentina - Inversiones S.A. for the sale of their interest in the Company.
In December 2003, the France Telecom Group and the Telecom Italia Group transferred their interests in Nortel to a new company
called Sofora, while France Telecom Group sold its entire stake in Sofora to W de Argentina - Inversiones S.A.
Thus, all shares of common stock of Nortel
belong to Sofora. As of June 30, 2016, these shares represent 78.38% of Nortel capital stock.
(b) Class “B” preferred shares
Class “B” preferred
shares are subject to Argentine laws and to the jurisdiction of the City of Buenos Aires commercial courts.
The
Terms of Issuance of Class “B” preferred shares provide, among other terms, that:
a)
Class “B” preferred shares are not redeemable.
b)
A non cumulative dividend equivalent to a percentage (49.46%) of the Company’s profits legally available for distribution.
On April 25, 1997, an Extraordinary Shareholders’ Meeting resolved to amend section 4(a) (“right to dividends”),
reducing the formula for the calculation of dividends by 50 basic points (0.50%, currently 48.96%) beginning on June 16, 1997.
This resolution was filed with the Public Registry of Commerce on July 16, 1997 under number 7,388.
c)
Holders of Class “B” preferred shares are entitled to attend the shareholders’ meetings of the Company but their
attendance shall not be required to reach quorum and they shall not have the right to vote under any circumstances, except as
specifically set forth in Section 6 of the Terms of Issuance, which provides that the Class “B” preferred shares shall
have the right to vote only in the following circumstances: (i) lack of complete payment of Class “B” preferred
dividends; ii) non-compliance with any of the obligations provided for in Section 9 of the Terms of Issuance; or iii) in any of
the events specifically provided for in the LGS. If such right to vote were triggered, each holder of Class “B” preferred
shares shall be entitled to cast one vote per share and shall vote jointly with the shares of common stock; except for those matters
relating to the election of Directors, in which case the holders of Class “B” preferred shares shall be entitled to
elect one regular director and one alternate director, pursuant to Section 15 of the Company’s Bylaws, Class “B”
preferred shares’ right to vote shall cease upon the disappearance of the circumstances that triggered such right.
d)
Class “B” preferred shares rank
pari passu
without any preference among them, and in case of winding up have
priority with respect to the shares of common stock of Nortel.
The
Company was admitted to the public offering regime on December 29, 1997, pursuant to CNV Resolution No. 12,056. On January 27,
1998, as a result of such admittance, the BCBA authorized the listing of the Company's Class "B" preferred shares.
NOTE 7 – RELATED PARTY BALANCES
All shares of common stock
of Nortel belong to Sofora. As of June 30, 2016 these shares represent 78.38% of Nortel’s capital stock.
Sofora’s capital stock consists of shares
of common stock, with a par value of $1 argentine peso each and one vote per share. As of June 30, 2016, Sofora’s shares
are held by Fintech Telecom LLC (68%) and W de Argentina Inversiones S.A. (32%). Additionally, Fintech holds 18,086,059 Class
B shares of Telecom Argentina, which represent 1.837% of Telecom Argentina’s total capital stock.
Fintech Telecom LLC, a Delaware (United States)
limited liability company, is a wholly-owned direct subsidiary of Fintech Advisory Inc. and its primary purpose is to hold, directly
and indirectly, the securities of Telecom Argentina. Fintech Advisory Inc., a Delaware (United States) company, is directly controlled
by Mr. David Martínez (a member of Telecom Argentina’s Board of Directors). Fintech Advisory Inc. is an investor
and investment manager in equity and debt securities of sovereign and private entities primarily in emerging markets.
In connection with the Shareholders’ Agreement
entered into by the Telecom Italia Group and W de Argentina Inversiones S.A., as last amended on October 24, 2014 (“the
New Shareholders’ Agreement”), Fintech Telecom LLC adhered as a party to the New Shareholders’ Agreement by
means of execution of a Deed of Adherence, following its acquisition of 17% of Sofora’s capital stock. On March 8, 2016,
as a result of its acquisition of 51% of Sofora’s shares, Fintech acquired all the rights and obligations of the Telecom
Italia Group under the New Shareholders´ Agreement.
|
|
b)
|
Balances
with related parties
|
|
CURRENT
ASSETS
|
|
Type
of related party
|
June
30,
|
December
31,
|
|
Dividends
receivable
|
|
|
2016
|
2015
|
|
Telecom
Argentina
|
|
Subsidiary
|
723
|
-
|
|
|
|
723
|
-
|
NOTE
8 – RESTRICTIONS ON DISTRIBUTION OF PROFITS
|
|
1.
|
Under
the LGS, the by-laws of the Company and rules and regulations of the CNV, a minimum of
5% of net income for the year in accordance with the statutory books, plus/less previous
years adjustments and accumulated losses, if any, must be appropriated by resolution
of the shareholders to a legal reserve until such reserve reaches 20% of the outstanding
capital (common stock plus inflation adjustment of common stock).
|
Nortel
reached the maximum amount of its Legal Reserve according to LGS provisions.
|
|
2.
|
Without
prejudice to the application of the income tax referred to in Note 3.d), dividends and
other profits paid in cash or in kind by companies and other entities organized in the
country exceeding the accumulated earnings as of the year-end immediately prior to the
date of such payment or distribution (and determined based on the Income Tax Law), shall
be subject to a withholding tax of 35% over such excess as sole and final payment ("Equalization
Tax").
|
For
purposes of the above, the earnings to be considered each fiscal year will be those resulting from (i) subtracting the income
tax paid each fiscal year(s) on those earnings, or their pro-rata portion thereof, pursuant to the general rules of the Income
Tax Law, and (ii) adding the dividends or other profits distributed by other Argentine corporate taxpayers that are not taxable
for purposes of assessing such earnings in those fiscal years.
Pursuant
to the above mentioned rules, dividend payments made by the Company have not been reached by the Equalization Tax.
NOTE 9 –SUBSEQUENT EVENTS TO JUNE 30, 2016
1. Cash dividends from Telecom Argentina
Telecom Argentina’s Board of Directors,
at its meeting held on August 9, 2016, made available to its shareholders a cash dividend of $1,300 (of which $723 corresponded
to the Company) as from August 26, 2016.
2. Cash dividends from Nortel
The Company’s Board of Directors, at its
meeting held on August 9, 2016, resolved to deduct an amount of $172 from its “Voluntary reserve for future cash dividends
payments” and made it available to the shareholders since August 30, 2016 as cash dividends.
As of the date of issuance of these special
unconsolidated financial statements, Cash and cash equivalents amounts to approximately $604 (unaudited).
3. Cash dividends in advance
For purposes of approving a distribution of
provisional cash dividends corresponding to the net income for the six-month period ended June 30, 2016, the Company’s Board
of Directors approved the hiring of Price Waterhouse & Co. S.R.L. - for the performance of a full audit of these special unconsolidated
financial statements.
The work of the independent external auditors
required the performance of their audit procedures in Nortel and their extension to Nortel’s direct controlled company,
Telecom Argentina, and its indirect controlled company, Personal, as of June 30, 2016. The costs of this audit were accrued and
included in these special unconsolidated financial statements.
On October 24, 2016 the Company’s Board
of Directors approved the payment of provisional cash dividends in an amount of $540 corresponding to the net income for the six-month
period ended June 30, 2016, based on these special unconsolidated financial statements.
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Baruki
González
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Chairman
of the Board of Directors
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"Free
translation from the original in Spanish for publication in Argentina"