SEC exemptive order permits five-business-day nonconvertible debt tender and exchange offers

Key takeaways

• The SEC Division of Corporation Finance issued an exemptive order shortening the minimum offering period for certain tender and exchange offers for nonconvertible debt securities to just five business days.
• Numerous conditions must be satisfied to utilize the shortened five-business-day period.

On June 30, 2026, the Securities and Exchange Commission’s Division of Corporation Finance (the Division) issued an exemptive order shortening the minimum offering period for certain tender and exchange offers for nonconvertible debt securities from the standard 20-business-day period required under Exchange Act Rule 14e-1(a) to just five business days. The order supersedes prior no-action letters on abbreviated offering periods for these offers.

Similar to the exemptive order from April 16, 2026, which provided for 10-business-day equity tender offers and which we previously discussed, the Division “believes it is appropriate and consistent with investor protection goals to further expand the availability of a five business day minimum offering period in certain types of debt tender offers in order to address market inefficiencies, better reflect technological advancements, reduce exposure to fluctuations in the market and in interest rates, and facilitate the availability of tender offers as debt management transactions.”

Key conditions to use the five-business-day period

The shortened five-business-day period is available for tender or exchange offers for any class or series of nonconvertible debt securities, regardless of credit rating, if the following conditions are satisfied:

1. Eligible offeror: The offer must be made by the issuer of the debt, a direct or indirect wholly owned subsidiary, or a parent that directly or indirectly owns 100% of the issuer’s capital stock (other than directors’ qualifying shares).
2. Consideration: The offer must be made solely for cash, “Qualified Debt Securities,” or both. Qualified Debt Securities are nonconvertible debt securities substantially similar in all material respects to either (1) the debt securities subject to the tender or exchange offer or (2) the most recent issuance of debt securities that are pari passu with the subject debt securities.
3. Pro rata acceptance: If the offer is for less than all outstanding securities and holders tender more than the offeror will purchase, the offeror must purchase securities on a pro rata basis.
4. Eligible participants: If the exchange offer is for Qualified Debt Securities, participation is restricted to qualified institutional buyers under Rule 144A, non-U.S. persons under Regulation S, and institutional accredited investors under Rule 163B(c)(2), and the transaction must be exempt from registration under the Securities Act.
5. Not in connection with consent solicitations: The offer must not be made in connection with a consent solicitation to amend the indenture, form of security or note, or other agreement governing the debt securities that requires the consent of holders of more than a simple majority of the outstanding principal amount of the subject securities.
6. No events of default: The offer must not be made if a default or event of default exists under any indenture or material credit agreement to which the issuer is a party.
7. No bankruptcy or insolvency: The offer must not be made while the issuer is in bankruptcy, insolvency, or creditor restructuring proceedings.
8. Launch-day press release by 10:00 a.m. ET: The offer must be announced in a press release by 10:00 a.m. ET on the date the tender offer commences. The offeror should also use commercially reasonable efforts to disseminate the announcement to investors and, after consummating the offer, issue a press release setting forth the results.
9. Announce material changes: Changes to the percentage sought or the consideration offered must be announced by 9:00 a.m. ET on the third business day before expiration, subject to a limited ability to accept up to an additional 2% of the class. Other material changes must be announced by 9:00 a.m. ET on the second business day before expiration.
10. Withdrawal rights: Withdrawal rights must remain available at least until the earlier of expiration and, if the offer is extended, the 10th business day after commencement. They must also be available after the 60th business day if the offer has not been completed by then.
11. Announce proration: If the offer is for less than all of the outstanding class or series of debt securities, the offeror must use commercially reasonable efforts to announce the proration factor by 10:00 a.m. ET on the next business day after expiration or as soon as practicable.
12. Payment timing: The offeror must pay promptly after expiration.
13. No extraordinary-transaction overlap: The offer must not launch within 10 business days of the issuer’s announcement or consummation of a change of control. It also must not be made in anticipation of, or in response to, another tender offer for issuer securities; run concurrently with an offer for other issuer securities that would add obligors, guarantors, or collateral or improve lien priority; or launch within 10 business days of the issuer’s announcement or consummation of a material business or asset transaction requiring pro forma financials under Article 11 of Regulation S-X.