Panama Stock Exchange and Latin Clear in a strategic reorganization

Arias, Fábrega & Fábrega acted as counsel to the Panama Stock Exchange (Bolsa de Valores de Panamá, S.A.), and Latin Clear (Central Latinoamericana de Valores, S.A.) in connection with the design and implementation of a strategic reorganization. The two exchanges would become indirect wholly owned subsidiaries of Latinex Holdings, Inc., a newly created corporation whose shares would be registered with the Panama National Securities Commission and listed on the Panama Stock Exchange.

This reorganization has two aims: crystallize the evident synergies between the exchanges, and better position the two to compete as part of a unified group in the Central American and Andean markets. The reorganization will be implemented through a complex array of transactions including reverse mergers, terminating the public listing and registration of both entities, and public registration of Latinex Holdings shares. 

The implementation of the reorganization plan, approved, separately by the Panama Stock Exchange and Latin Clear, is subject to regulatory approvals from the Superintendence of Banks and the Panama National Securities Commission.

The Panamanian Stock Exchange and Latin Clear are, respectively, the only licensed stock exchange and clearance and depositary agency in the country. The most significant banking groups and broker-dealers in Panama are participants in the Panamanian Stock Exchange and in Latin Clear. As of December 31, 2009, the balance of all assets under custody by Latin Clear was US$4.6 billions and as of March 31, 2010, the total amount of principal of the debt securities listed on the Panamanian Stock Exchange was approximately US$2.8 billions.

This was the first time that a reorganization of this magnitude and complexity, involving the most important players of the Panama securities market, had been attempted in Panama. Following the successful reorganization, the resulting group will leverage the competitive position of Panama's financial centre (by far, the largest banking centre in Central America, measured in terms of assets) and its liquidity to become also one of the leading regional stock exchanges of Latin America. It would allow Latinex to compete as part of a unified group in the Central American and Andean markets.