prospectus - Grupo Argos

Transcription

PROSPECTUS
STRAIGHT BOND AND COMMERCIAL PAPER ISSUANCE
AND PLACEMENT PROGRAM
August 2014
ISSUER
Issuer:
GRUPO ARGOS S.A.
Address:
TIN: 890.900.266-3
Carrera 43A No. 1A Sur - 143, Medellín.
Main Business Activity: Grupo Argos S.A.'s main business activity is the investment in all types of movable and immovable property, especially stocks, shares or
equity securities, in corporations, bodies, organizations, funds, or any other legal entity that allows investment of resources. Likewise, it can
invest in variable or fixed income papers or documents, whether registered or not in the public stock market. In any case, issuers and/or
receivers of investment can be of public, private or mixed nature, national or foreigner.
FEATURES OF STRAIGHT BOND AND COMMERCIAL PAPER OFFERINGS
Type of Securities: Straight Bonds.
Number of Series: Eighteen (18) series: A, B, C, D, E, F, G, H, I, J, K, L, M,
N, O, P, Q and R.
Maturity Term: Between one (1) and fifteen (15) years as of
the Date of Issuance of Straight Bonds.
Rating of
Straight Bonds: BRC Investor Services S.A. awarded a rating of AAA to Straight Bonds.
See Annex A to the Fourth
Part of this Prospectus.
Type of Securities: Commercial Papers.
Number of Series: Four (4) series: A, B, C and D.
Maturity Term: More than fifteen (15) days and less than one (1) year
as of the Date of Subscription of
Commercial Papers.
Rating of
Commercial Papers: BRC Investor Services S.A. awarded a rating of
BRC 1+ to Commercial Papers. See Annex A to
the Fourth Part of this Prospectus.
GENERAL INFORMATION OF STRAIGHT BONDS AND COMMERCIAL PAPERS
Overall Issuance Quota: One trillion Colombian pesos (COP$ 1,000,000,000,000).
Number of Securities: One million (1,000,000) of Straight Bonds and/or Commercial Papers.
Nominal Amount: One million Colombia pesos (COP$ 1,000,000). Law on
Circulation: To order.
Offerees: The investing public in general, including pension fund and severance pay administering companies and funds managed by them.
Subscription Price: See subsection 6, Section B, Chapter 1 of this Prospectus. Minimum Investment Amount: See subsection 5,
Section B, Chapter 1 of this Prospectus.
Maximum Interest Rate: See Section C, Chapter 2 of this Prospectus. Rights Entailed by Securities: See Section N,
Chapter 1 of this Prospectus.
Target Market: Straight Bonds and Commercial Papers will be offered through a Primary Market Public Offering.
Placement Mechanism: Best-Efforts Placement.
Form of Registration: Straight Bonds and Commercial Papers subject to the offering subject matter of this Prospectus have been registered with the National Registry of
Securities and Issuers (RNVE) under regular registration.
Exchange: Securities are registered with the Colombian Stock Exchange [Bolsa de Valores de Colombia]. Placement
Term and Offering Validity: See Section A, Chapter 3 of this Prospectus.
Program Manager: Depósito Centralizado de Valores de Colombia Deceval S.A. Legal Representative of Bondholders:
Alianza Fiduciaria S.A.
Commissions and Related Expenses for Subscribers: See Section F, Chapter 1 of this Prospectus.
The financial information included in this Prospectus is updated to March 31, 2014. As of this date, this information can be consulted in the National Registry of Securities and Issuers and/or the Colombian Stock Exchange.
At the date of publication of this Prospectus, Grupo Argos S.A. has a Good Governance Code that can be viewed at www.grupoargos.com. Additionally, Grupo Argos S.A. prepares an annual report on Corporate Governance practices contained in the Código País in
accordance with Regulation Letter 028 of 2007, amended by Regulation Letter 056 of 2007 and Regulation Letter 007 of 2011 of the Colombian Financial Superintendency, and will continue preparing such report.
Any information disclosed through the Colombian Financial Superintendency as Relevant Information shall be understood as incorporated into this Prospectus.
WARNINGS
IT IS CONSIDERED ESSENTIAL TO READ THIS PROSPECTUS SO THAT POTENTIAL INVESTORS CAN ADEQUATELY ASSESS THE APPROPRIATENESS OF INVESTMENT.
REGISTRATION WITH THE NATIONAL REGISTRY OF SECURITIES AND ISSUERS AND AUTHORIZATION OF THE PUBLIC OFFERING DO NOT IMPLY ANY RATING OR LIABILITY BY THE COLOMBIAN FINANCIAL SUPERINTENDENCY ON THE INDIVIDUALS
OR LEGAL ENTITIES REGISTERED OR ON THE PRICE, GOODNESS, OR NEGOTIABILITY OF SECURITIES OR THEIR RESPECTIVE ISSUE, OR ON THE SOLVENCY OF THE ISSUER.
REGISTRATION OF SECURITIES WITH THE COLOMBIAN STOCK EXCHANGE DOES NOT IMPLY CERTIFICATION ON THE GOODNESS OF SECURITIES OR THE SOLVENCY OF THE ISSUER.
SUPERVISED BYSUPERINTEN
THE D
ENC Y
COLOMBIAN FINANCIAL
THE PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR AN INVITATION BY OR ON BEHALF OF THE ISSUER, THE STRUCTURING AGENT, THE LEGAL ADVISOR, THE LEADING PLACEMENT AGENT OR THE OTHER PLACEMENT AGENTS TO
SUBSCRIBE OR PURCHASE ANY OF THE SECURITIES MENTIONED HEREIN.
STRUCTURING AGENT AND LEADING PLACEMENT AGENT
PLACEMENT AGENT
LEGAL ADVISOR
PROSPECTUS
INTENTIONALLY BLANK PAGE
PROSPECTUS
NOTICE
This document has been prepared with the sole purpose of facilitating the potential Investor's general knowledge of Grupo Argos S.A. ("Grupo
Argos", the "Issuer" or the "Company") and the Public Offering. Accordingly, for all legal purposes, any interested party shall consult all the
information contained in the body of this Prospectus before making any investment decision.
The information contained herein has been prepared to assist potential Investors interested in carrying out their own assessment of this Straight
Bond and Commercial Paper Issuance and Placement Program (the "Program"). This Prospectus contains all the information required in
accordance with applicable regulations. Notwithstanding the foregoing, it is not intended to contain all the information that a possible Investor
could require from time to time. Unless stated otherwise, the source of figures and calculations included herein is the Issuer.
The information contained herein or subsequently provided to any person, either oral or written, with respect to a transaction involving securities
issued by Grupo Argos should not be considered as legal, tax, fiscal, accounting, financial, technical or other type of advice to any of such
persons by Grupo Argos or Banca de Inversión Bancolombia S.A. Corporación Financiera ("Banca de Inversión" or the "Structuring Agent"), or
Prieto & Carrizosa ("Legal Advisor"), or Valores Bancolombia S.A. ("Valores Bancolombia").
It shall be understood that references to laws, rules and other regulations cited herein include those that regulate, modify or replace them.
Neither Grupo Argos nor the advisers shall have the obligation to reimburse or compensate the potential Investors for any costs or expenses
incurred by them when evaluating the Prospectus or otherwise incurred with respect to the subscription of Securities. In no event they shall file
a lawsuit or claim of any kind against the Issuer or any of its agents, advisors or employees as a result of the decision to invest or not in the
Securities that make part of the Program.
Neither the Structuring Agent nor the Legal Advisor have independently audited the information supplied by the Issuer and used as the basis
for the preparation of this Prospectus, as this is not within the scope of their functions. Therefore, they shall not be liable for any omission,
statement or certification (explicit or implicit) contained herein.
Potential investors should only consider the information contained in this Prospectus. Neither the Issuer, nor the Structuring Agent, nor the
Legal Advisor have authorized any person to deliver information that is different or additional to that contained herein. If someone provides
additional or different information, it shall not be considered valid.
Potential Investors shall assume that the information in this financial Prospectus is accurate only on the date appearing on its cover, regardless
of the date of delivery of this Prospectus or any subsequent sale of Straight Bonds or Commercial Papers.
The financial condition, the results of operations and the Prospectus may vary after the date appearing on the cover of this Prospectus.
The complete reading of this Prospectus t is considered essential for potential Investors to do an adequate assessment of the investment.
Grupo Argos reserves the right, at its sole discretion and without giving any explanation, to check out the schedule or procedures related to any
aspect of the process of registration of Straight Bonds and Commercial Papers with the RNVE or authorization of the Public Offering with the
Colombian Financial Superintendency. In no event, neither Grupo Argos nor any of its agents, advisors or employees shall assume responsibility
for the adoption of such decision.
FORWARD-LOOKING STATEMENTS
This Prospectus contains forward-looking statements about Grupo Argos, which are included in several sections hereof. Such statements
include information regarding current estimates or expectations of Grupo Argos, relating to future financial condition and operating results.
Potential Investors are warned that such forward-looking statements are not a performance bond, that there is a risk or uncertainty that they
may occur in the future, and that actual results may vary substantially with regard to the projections about the future due to various factors.
APPROVALS AND AUTHORIZATIONS
The Grupo Argos Board of Directors approved the program by Minutes number 2627 of June 16, 2014.
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PROSPECTUS
In addition, the Grupo Argos Board of Directors approved by Minutes number 2629 of July 18, 2014 the Issuance and Placement Regulation.
Registration of the Program with the National Registry of Securities and Issuers and its respective Public Offering were authorized by the
Colombian Financial Superintendency ("SFC") through Resolution 1381 of August 12, 2014.
Such registrations and approval do not constitute an SFC's opinion regarding the quality of securities or the solvency of the Issuer.
OTHER ISSUER'S SECURITIES OFFERINGS
Grupo Argos S.A. has no other public or private securities offerings in process along with this Issue.
Grupo Argos S.A. has also requested other authorizations to make public or private securities offerings, whose decision by a competent
authority is still pending.
PEOPLE AUTHORIZED TO PROVIDE INFORMATION OR STATEMENTS ABOUT THE CONTENTS OF THE PROSPECTUS
The people authorized to provide information or statements about the contents of this Prospectus are:
Issuer
Alejandro Zuluaga Sierra
Corporate Finance Manager
Carrera 43A No. 1A Sur - 143
Medellín
[email protected]
María Uriza Pardo
Corporate and Stock Exchange Affairs
Manager Calle 24A No. 59 – 42, Torre
Argos Bogotá
[email protected]
Structuring Agent
Camila Ayala Álvarez Senior
Project Manager
Capital Markets Structuring
Banca de Inversión Bancolombia S.A. Corporación Financiera
Calle 31 No. 6 - 39, Piso 14
Bogotá
[email protected]
Juan Manuel Uribe Restrepo
Lawyer
Capital Markets Structuring
Calle 48 No. 26 - 85, Piso 10E
Medellín
[email protected]
INFORMATION ABOUT PEOPLE INVOLVED IN THE VALUATION OF LIABILITIES OR ASSETS OF THE COMPANY
The information contained in this Prospectus has been supplied by Grupo Argos S.A. and, in some cases, by various sources, which are
properly identified herein.
For purposes of the Issue, we did not require to perform the valuation of the Issuer's liabilities or assets; therefore, there are no valuers who
may have a direct or indirect economic interest that depends on the success of the placement of Securities.
Apart from the normal operation of the business, there are no appraisals, assessments or evaluations of Grupo Argos S.A.'s assets or
liabilities that have been taken into account to report Grupo Argos S.A.'s financial information.
ECONOMIC INTEREST OF THE STRUCTURING AGENT, THE PLACEMENT AGENTS AND THE LEGAL ADVISOR
The Structuring Agent and the Placement Agents have a direct economic interest that depends on the placement of Securities, in accordance
with the terms of the respective best-efforts placement agreements entered into for such purpose.
Prieto & Carrizosa S.A. does not have any direct or indirect economic interest that depends on the success of the placement of Securities.
There is no other advisor in the process having a direct or indirect economic interest that depends on the success of the placement of
Securities.
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PROSPECTUS
INFORMATION ABOUT LINKAGES BETWEEN THE ISSUER AND THE STRUCTURING
AGENTS
Grupo Argos is a shareholder of Bancolombia S.A., parent company of Banca de Inversión, Bancolombia, Structuring Agent and Leading
Placement Agent of the Issuance and Placement Program.
WARNINGS
The Investors interested in acquiring Securities shall obtain, at their own expense and prior to the acceptance of the Public Offering, any legal,
government, corporate or other authorization that they may require due to their particular conditions.
In addition to those previously listed, this Prospectus does not require prior authorization so that Investors can participate in the Securities
offering; however, each Investor must review and confirm that, in accordance with their applicable legal system, they have the corporate and
regulatory authorizations required to make the investment and that their investment is allowed within its permitted investment limits.
This Prospectus does not constitute an offer or an invitation by or on behalf of the Issuer, the Structuring Agent, the Legal Advisor, the Leading
Placement Agent or the other Placement Agents to subscribe or purchase any of the securities mentioned herein.
It is considered essential to read this Prospectus so that potential Investors can adequately assess the appropriateness of making the
investment.
We clarify that the Grupo Argos' figures and operational, commercial and business references mentioned herein were taken from the figures
and operational, commercial and business references of the Issuer itself and the companies in which it has invested.
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PROSPECTUS
TABLE OF CONTENTS
PART I - ABOUT SECURITIES ................................................................................................................................................ 12
CHAPTER 1 - FEATURES OF SECURITIES, CONDITIONS AND RULES OF THE PROGRAM......................................... 12
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.
L.
M.
N.
O.
P.
Q.
R.
S.
TYPE OF SECURITIES OFFERED, LAW ON CIRCULATION AND SECONDARY TRADING. .............................................. 12
OVERALL QUOTA AMOUNT FOR THE PROGRAM, NUMBER OF SECURITIES OFFERED, DENOMINATION, NOMINAL
VALUE, MINIMUM AMOUNT TO BE REQUESTED, AND SUBSCRIPTION PRICE ............................................................... 12
1.
Overall quota amount for the Program ................................................................................................................................ 12
2.
Number of Securities offered ............................................................................................................................................... 12
3.
Denomination ...................................................................................................................................................................... 13
4.
Nominal value ...................................................................................................................................................................... 13
5.
Minimum investment ........................................................................................................................................................... 13
6.
Subscription price ................................................................................................................................................................ 13
OFFEREES ................................................................................................................................................................................ 14
RULES RELATING TO THE REPLACEMENT, FRACTIONING AND AGGREGATION OF SECURITIES. ............................ 14
DEFINITION OF DATES OF SUBSCRIPTION, ENTRY, ISSUE, AND MATURITY ................................................................. 14
1.
Date of Subscription ............................................................................................................................................................ 14
2.
Date of Entry ....................................................................................................................................................................... 15
3.
Date of Issuance ..................................................................................................................................................................... 15
4.
Date of Maturity ................................................................................................................................................................... 15
COMMISSIONS AND EXPENSES ............................................................................................................................................ 15
STOCK EXCHANGE WHERE SECURITIES WILL BE REGISTERED .................................................................................... 15
ECONOMIC AND FINANCIAL OBJECTIVES OF THE PROGRAM ......................................................................................... 15
MEDIA THROUGH WHICH INFORMATION OF INTEREST FOR INVESTORS WILL BE RELEASED
................................................................................................................................................................................................... 15
TAXATION SYSTEM APPLICABLE TO SECURITIES ............................................................................................................. 15
PROGRAM MANAGING ENTITY .............................................................................................................................................. 16
TOTAL DEMATERIALIZATION OF ISSUES ............................................................................................................................. 17
COLLATERALS AND PRECEDENCE ...................................................................................................................................... 17
RIGHTS ENTAILED BY SECURITIES ...................................................................................................................................... 17
RIGHTS OF SECURITIES HOLDERS ...................................................................................................................................... 17
OBLIGATIONS OF SECURITIES HOLDERS ........................................................................................................................... 18
OBLIGATIONS OF THE ISSUER .............................................................................................................................................. 18
LEGAL REPRESENTATIVE OF BONDHOLDERS, ITS DUTIES, RIGHTS AND OBLIGATIONS ........................................... 18
GENERAL ASSEMBLY OF STRAIGHT BOND HOLDERS ...................................................................................................... 20
1.
Call for meeting ................................................................................................................................................................... 20
2.
Report ................................................................................................................................................................................. 21
3.
Quorum ............................................................................................................................................................................... 21
4.
Special deciding majorities ................................................................................................................................................. 21
CHAPTER 2 - FINANCIAL CONDITIONS OF SECURITIES ................................................................................................ 23
A.
B.
C.
D.
E.
F.
G.
SERIES IN WHICH ISSUANCE IS DIVIDED ............................................................................................................................ 23
TENORS OF SECURITIES ....................................................................................................................................................... 24
RETURNS OF SECURITIES ..................................................................................................................................................... 24
METHOD AND PERIODICITY OF PAYMENT OF INTEREST ................................................................................................. 27
REPAYMENT OF PRINCIPAL .................................................................................................................................................. 28
PLACE OF PAYMENT OF PRINCIPAL AND INTEREST ......................................................................................................... 29
RATING GRANTED TO THE PROGRAM AND ISSUES .......................................................................................................... 29
CHAPTER 3 - PUBLIC OFFERING AND PLACEMENT CONDITIONS ................................................................................ 30
A.
B.
C.
D.
E.
VALIDITY OF PROGRAM AUTHORIZATION, TERM OF PLACEMENT AND VALIDITY OF THE OFFERING ...................... 30
MODE TO CARRY OUT THE OFFERING ................................................................................................................................ 30
MEDIA THROUGH WHICH THE OFFERING WILL BE PUBLISHED ...................................................................................... 30
GENERAL RULES FOR PLACEMENT AND TRADING ........................................................................................................... 30
SECONDARY MARKET AND VALUATION METHODOLOGY ................................................................................................ 32
PART II - INFORMATION OF THE ISSUER ............................................................................................................................ 34
CHAPTER 4 - GENERAL INFORMATION............................................................................................................................ 34
A.
1.
2.
TRADE NAME, LEGAL STATUS, DURATION AND GROUNDS FOR DISSOLUTION ........................................................... 34
Trade name ......................................................................................................................................................................... 34
Legal status and duration of the Issuer ................................................................................................................................ 34
6
3.
B.
C.
D.
E.
F.
G.
PROSPECTUS
Grounds for dissolution .............................................................................................................................................................34
SUPERVISION OVER THE ISSUER ..............................................................................................................................................34
PRINCIPAL PLACE OF BUSINESS AND REGISTERED ADDRESS ...........................................................................................34
MAIN CORPORATE PURPOSE .....................................................................................................................................................34
BRIEF HISTORY .............................................................................................................................................................................35
SHAREHOLDING STRUCTURE AND INFORMATION ON THE MAJOR SHAREHOLDERS ......................................................36
CORPORATE GOVERNANCE PRACTICES .................................................................................................................................37
CHAPTER 5 - ORGANIZATIONAL STRUCTURE OF THE ISSUER
............................................................................. 38
A.
B.
C.
ORGANIZATIONAL STRUCTURE OF THE ISSUER ....................................................................................................................38
GENERAL ASSEMBLY OF SHAREHOLDERS ..............................................................................................................................38
BOARD OF DIRECTORS. ..............................................................................................................................................................39
1.
Members forming the Board of Directors. .................................................................................................................................39
2.
Mechanisms for appointing members .......................................................................................................................................39
3.
Functions and powers of the Board of Directors .......................................................................................................................39
4.
Mechanisms adopted to ensure independence ........................................................................................................................40
D.
LINKS BETWEEN THE MEMBERS OF THE BOARD OF DIRECTORS AND THE CORPORATION OR ITS RELATED
CORPORATIONS . ...................................................................................................................................................................................40
E.
SENIOR STAFF ..........................................................................................................................................................................41
F.
PEOPLE PERFORMING THE STATUTORY AUDIT .....................................................................................................................41
G.
STOCK INTEREST OF MEMBERS OF THE BOARD OF DIRECTORS AND SENIOR OFFICIALS IN THE ISSUER ........... 42
H.
AGREEMENTS OR PROGRAMS FOR GRANTING INTEREST TO EMPLOYEES IN THE ISSUER'S CAPITAL
42
I.
SUBORDINATION CONDITION .....................................................................................................................................................42
J.
SUBORDINATE CORPORATIONS ................................................................................................................................................42
K.
EMPLOYMENT RELATIONSHIPS .................................................................................................................................................45
CHAPTER 6 - ASPECTS RELATED TO THE BUSINESS ACTIVITY OF THE ISSUER
A.
B.
C.
CHAPTER 7 - FINANCIAL INFORMATION
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.
L.
M.
N.
O.
P.
Q.
R.
S.
T.
U.
V.
W.
............................................... 46
DESCRIPTION OF THE MAIN PRODUCTIVE AND SALES ACTIVITIES OF THE ISSUER ........................................................46
DEPENDENCE ON MAJOR SUPPLIERS ......................................................................................................................................46
DEPENDENCE ON MAJOR CUSTOMERS ...................................................................................................................................46
.................................................................................................................... 47
AUTHORIZED, SUBSCRIBED AND PAID CAPITAL OF THE ISSUER, NUMBER OF OUTSTANDING SHARES AND RESERVES.
.................................................................................................................................................................................................47
PUBLIC OFFERINGS FOR PURCHASING THE ISSUER'S SHARES LAUNCHED IN THE PAST YEAR ...................................47
PROVISIONS AND RESERVES FOR REPURCHASING SHARES ..............................................................................................47
INFORMATION ON DIVIDENDS ....................................................................................................................................................47
1.
Dividend policy..........................................................................................................................................................................47
2.
Profit and dividends decreed ....................................................................................................................................................47
3.
Information on the Issuer's Shares ...........................................................................................................................................47
INFORMATION ON THE GENERATION OF EBITDA IN THE LAST THREE (3) YEARS.............................................................50
EVOLUTION OF CAPITAL STOCK IN THE LAST THREE (3) YEARS .........................................................................................51
CONVERTIBLE OR EXCHANGEABLE LOANS OR LIABILITIES OR BONDS CONVERTIBLE INTO SHARES .........................51
MAJOR ASSETS OF THE ISSUER ................................................................................................................................................51
INVESTMENTS EXCEEDING 10% OF THE TOTAL ASSETS OF THE ISSUER .........................................................................53
RESTRICTIONS ON THE SALE OF THE ASSETS COMPRISING THE PORTFOLIO OF INVESTMENTS OF THE ISSUER 53
MAJOR INVESTMENTS IN PROCESS ..........................................................................................................................................53
FIRM COMMITMENTS FOR THE ACQUISITION OF FUTURE INVESTMENTS ........................................................................54
DESCRIPTION OF DELIMITED, FIXED ASSETS IN LEASING, RENTALS AND OTHER ...........................................................54
PATENTS, TRADEMARKS AND OTHER PROPRIETARY RIGHTS OF THE ISSUER BEING USED UNDER AGREEMENTS
WITH THIRD PARTIES, SPECIFYING EARNED AND PAID ROYALTIES .............................................................................. 56
INFORMATION ON ANY GOVERNMENTAL PROTECTION AND DEVELOPMENT INVESTMENT AFFECTING THE ISSUER
....................................................................................................................................................................................................... 56
OPERATIONS WITH RELATED COMPANIES HELD DURING THE IMMEDIATELY PRECEDING YEAR .................................56
CREDITS OR CONTINGENCIES REPRESENTING FIVE PERCENT (5%) OR MORE OF THE TOTAL LIABILITIES OF THE
CONSOLIDATED FINANCIAL STATEMENTS FOR THE LAST FINANCIAL YEAR ................................................................ 58
FINANCIAL OBLIGATIONS OF THE ISSUER ...............................................................................................................................58
PENDING LEGAL PROCEEDINGS AGAINST THE ISSUER ........................................................................................................59
SECURITIES REGISTERED WITH THE NATIONAL REGISTRY OF SECURITIES AND ISSUERS ...........................................59
ONGOING DEBT SECURITIES WHICH HAVE BEEN OFFERED PUBLICLY BUT NOT REDEEMED .......................................60
SECURITY INTEREST GRANTED IN FAVOR OF THIRD PARTIES ............................................................................................60
CONSERVATIVE ASSESSMENT OF THE ISSUER'S PERSPECTIVES ......................................................................................60
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PROSPECTUS
CHAPTER 8 - COMMENTS AND ANALYSIS OF THE MANAGEMENT ON THE RESULTS OF OPERATION AND
FINANCIAL CONDITION OF THE ISSUER AND ITS SUBORDINATES ......................................................................... 62
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.
TRENDS, COMMITMENTS, OR KNOWN EVENTS THAT MAY OR WILL SIGNIFICANTLY AFFECT THE LIQUIDITY OF THE
ISSUER, ITS RESULTS OF OPERATION OR ITS FINANCIAL CONDITION ..
.................................................................................................................................................................................................62
RESULTS OF THE BALANCE SHEET ..................................................................................................................................... 63
OPERATING RESULTS FOR THE LAST YEAR ...................................................................................................................... 64
PENSION LIABILITIES AND SOCIAL BENEFITS BURDEN .................................................................................................... 65
IMPACT OF INFLATION AND FLUCTUATIONS ON THE EXCHANGE RATE ....................................................................... 65
LOANS OR INVESTMENTS IN FOREIGN CURRENCY POSSESSED BY THE ISSUER ...................................................... 65
RESTRICTIONS AGREED WITH SUBORDINATES ON THE TRANSFER OF FUNDS TO THE ISSUER ............................. 65
INFORMATION ABOUT THE DEBT LIMIT AT THE END OF THE THREE (3) LAST FISCAL YEARS 65
INFORMATION ABOUT LOANS OR TAX LIABILITIES THAT THE COMPANY HAS HAD IN THE LAST FISCAL YEAR. .... 66
INFORMATION RELATING TO CAPITAL INVESTMENTS THAT WERE COMMITTED AT THE END OF THE LAST FINANCIAL
YEAR AND THE LAST REPORTED QUARTER ....................................................................................................................... 67
PROGRESS IN THE IMPLEMENTATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS ............................67
CHAPTER 9 - FINANCIAL STATEMENTS ........................................................................................................................... 68
CHAPTER 10 - INFORMATION ABOUT RISKS OF THE ISSUER ...................................................................................... 71
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.
L.
M.
N.
O.
P.
Q.
S.
T.
U.
V.
W.
RISKS ASSOCIATED WITH MACROECONOMIC FACTORS ................................................................................................. 71
DEPENDENCE ON KEY STAFF ............................................................................................................................................... 71
DEPENDENCE ON A SINGLE BUSINESS SEGMENT ............................................................................................................ 71
INTERRUPTION OF THE ISSUER'S ACTIVITIES CAUSED BY FACTORS OTHER THAN EMPLOYMENT RELATIONSHIPS
....................................................................................................................................................................................................... 72
ABSENCE OF A SECONDARY MARKET FOR THE SECURITIES OFFERED ...................................................................... 72
ABSENCE OF A TRACK RECORD WITH RESPECT TO THE OPERATIONS OF THE ISSUER .......................................... 72
OCCURRENCE OF NEGATIVE, ZERO OR INSUFFICIENT OPERATIONAL RESULTS IN THE PAST 3 YEARS..
................................................................................................................................................................................................. 72
DEFAULTS IN THE PAYMENT OF BANK AND STOCK EXCHANGE LIABILITIES ................................................................ 73
RISKS RELATED TO THE LINE OF BUSINESS ...................................................................................................................... 73
RISKS CAUSED BY SOCIAL BENEFITS AND PENSION BURDEN AND UNIONS ............................................................... 73
RISKS OF THE CURRENT STRATEGY OF THE ISSUER ...................................................................................................... 74
VULNERABILITY OF THE ISSUER TO VARIATIONS IN THE INTEREST RATE, INFLATION AND/OR EXCHANGE RATE 74
DEPENDENCE OF THE BUSINESS WITH RESPECT TO LICENSING, CONTRACTS, TRADEMARKS, AND OTHER
VARIABLES THAT ARE NOT OWNED BY THE ISSUER ........................................................................................................ 74
SITUATIONS RELATING TO THE COUNTRIES IN WHICH THE ISSUER OPERATES ........................................................ 74
ACQUISITION OF ASSETS OTHER THAN THOSE OF THE ORDINARY LINE OF BUSINESS OF THE ISSUER ............... 75
EXPIRATION OF SUPPLY AGREEMENTS .............................................................................................................................. 75
IMPACT OF REGULATIONS AND STANDARDS RELATING TO THE ISSUER AND POSSIBLE CHANGES THEREIN 75 R.
IMPACT OF ENVIRONMENTAL PROVISIONS ........................................................................................................................ 75
EXISTENCE OF CREDITS THAT REQUIRE THE ISSUER TO RETAIN CERTAIN PROPORTIONS IN ITS FINANCIAL
STRUCTURE ..............................................................................................................................................................................75
OPERATIONS TO BE CARRIED OUT THAT COULD AFFECT THE NORMAL COURSE OF BUSINESS ............................ 76
POLITICAL FACTORS SUCH AS SOCIAL INSTABILITY, STATE OF ECONOMIC EMERGENCY, ETC. ............................. 76
COMMITMENTS KNOWN BY THE ISSUER THAT MAY MEAN A CONTROL CHANGE IN ITS SHARES ............................ 76
POTENTIAL DILUTION OF INVESTORS ................................................................................................................................. 76
PART III - CERTIFICATES ....................................................................................................................................................... 77
CHAPTER 11 - DUE DILIGENCE CERTIFICATES .............................................................................................................. 77
A.
B.
C.
D.
CERTIFICATE OF THE LEGAL REPRESENTATIVE OF THE ISSUER .................................................................................. 77
CERTIFICATION OF THE LEGAL REPRESENTATIVE AND PUBLIC ACCOUNTANT OF THE ISSUER ............................. 78
CERTIFICATION OF THE STRUCTURING AGENT AND LEADING PLACEMENT AGENT .................................................. 79
CERTIFICATION OF THE LEGAL REPRESENTATIVE OF BONDHOLDERS ........................................................................ 80
PART IV - ANNEXES....................................................................................................................................................................................... 81
A.
RATING OF THE PROGRAM
B.
FINANCIAL REPORTING FORMS
C.
INDIVIDUAL AND CONSOLIDATED FINANCIAL INFORMATION OF GRUPO ARGOS
D.
FINANCIAL STATEMENTS OF THE CORPORATIONS IN WHICH IT HAS INVESTED
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PROSPECTUS
GLOSSARY
For the exclusive purpose of interpreting this Prospectus, the terms included in this Glossary, or defined in other sections of this document and
capitalized in the text of the Prospectus, shall have the meaning specified below. Terms denoting singular include plural and vice versa, provided
that the context so requires. Terms that are not expressly defined shall be understood in the sense attributed to them by the corresponding
technical language or, failing that, in their natural and obvious sense according to the general use of them.
Shares: Mean Common and Preferred Shares issued by Grupo Argos. These are equity securities representing an interest on the Issuer's
capital stock and traded on stock exchanges.
Outstanding Shares: Means the number of shares issued by a company that can be freely traded in the market.
Common Share: Means common shares issued by Grupo Argos, which grant their holders the rights set out in the law and the bylaws.
Preferred Share: Means shares with preferred divided and no voting rights issued by Grupo Argos, which grant their holders the rights set out
in the law and the bylaws.
Shareholder: Means a person holding shares who is also duly registered in the Issuer's registry of shareholders.
Program Manager: Means the Depósito Centralizado de Valores de Colombia Deceval S.A., an entity domiciled in the city of Bogotá at
Avenida Calle 26 No. 59 - 51 Torre 3 Oficina 501, Ciudad Empresarial Sarmiento Angulo, chosen to the date of this Prospectus by the Issuer,
or the entity then designated, to carry out custody and administration of Securities and act as a payment agent for each Issuance of the
Program. The Program Manager is the entity in charge of carrying out all operational activities arising from the deposit of Issues, as well as
all the activities listed in this Prospectus in accordance with the standards applicable to centralized securities deposits in Colombia, and to
the terms and conditions agreed by the Issuer and the Program Manager in the deposit and administration agreement entered into for this
purpose.
Placement Agents: Mean Banca de Inversión Bancolombia S.A. Corporación Financiera as the Leading Placement Agent, Valores
Bancolombia S.A. Comisionista de Bolsa as the Placement Agent, and other brokerage firms that are appointed and approved by mutual
agreement between the Issuer and the Leading Placement Agent, and that are legally empowered for such purpose. These will be the entities
through which Securities promotion and placement activities will be carried out using the Best-Efforts Placement method.
Leading Placement Agent: Means Banca de Inversión Bancolombia S.A. Corporación Financiera, an entity that will also act in the capacity
of Structuring Agent.
Account Entry: Means the record of rights or balances of Securities in the deposit accounts of Securities Holders, which will be carried out
by the Program Manager.
Assembly of Shareholders: Means the Issuer's assembly of shareholders as described in Section B of Chapter 5 of this Prospectus.
General Assembly of Bondholders: Means the General Assembly of all Common Shares Holders, which may be convened by the Legal
Representative of Bondholders, when it deems appropriate, or at the request of the Issuer or a group of Bondholders representing no less than
ten percent (10%) of the outstanding amount of the loan. The General Assembly of Bondholders may also be convened by the SFC when it
considers that there are serious situations that should be known by the Bondholders.
General Assembly of Bondholders of an Issue: Means the General Assembly of Bondholders of one or more Issues, particularly when the
facts to be considered and the decisions to be adopted only affect the interests of the Bondholders of the relevant Issue.
Legal Advisor: Means Prieto & Carrizosa S.A.
Authorization for Use of Personal Data: Means the express, timely and suitable authorization for the collection and use of personal data
by the Placement Agents, the Leading Placement Agent, the Issuer, the BVC and the Program Manager, that is provided by each Investor to
the Placement Agent through which it submits its offer.
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PROSPECTUS
Public Offering Notice: Means the notice published in a widely-circulated national newspaper or in the Daily Newsletter of the Colombian
Stock Exchange in which the Securities of each Issuance will be offered to the offerees, including the features of Securities of the respective
Issuance pursuant to article 5.2.1.1.5 (c) of Decree 2555.
BOCEAS: Means bonds obligatorily convertible into Preferred Shares issued by Grupo Argos, as described in Section G, Chapter 7 of this
Prospectus.
Straight Bonds: Means the credit securities registered with the RNVE and the BVC as referred to in this Prospectus that are issued by the
Issuer and placed through public offerings in the terms of this Prospectus.
BVC: Means the Bolsa de Valores de Colombia S.A., a private infrastructure provider established for managing the stock, derivatives and
fixed income market of the Colombian stock exchange. This entity is responsible for the award and compliance of operations carried out
through brokerage firms.
Rating: Means a professional opinion issued by a securities rating company on the capacity of an issuer to pay the principal and interest of its
obligations in a timely manner. For this purpose, securities rating companies conduct their own studies, analyses and assessments of issuers.
Celsia: Means Celsia S.A. E.S.P., an affiliate of Grupo Argos incorporated in accordance with the laws of Colombia, with registered office in
the city of Medellin. Celsia is engaged in the energy business.
Cementos Argos: Means Cementos Argos S.A., an affiliate of Grupo Argos incorporated in accordance with the laws of Colombia, with
registered office in the city of Barranquilla. Cementos Argos is engaged in the cement business.
Best-Efforts Placement: Means the commitment of the Leading Placement Agent and the Placement Agents with the Issuer to make their
best efforts to place a portion or all of the relevant Issue.
Compas: Means Compañía de Puertos Asociados - Compas S.A., a company incorporated in accordance with the laws of Colombia, with
registered office in the city of Bogotá. Compas is engaged in the port business.
DANE: Means the Departamento Administrativo Nacional de Estadística [National Administrative Department of Statistics] or the
governmental entity acting as such.
Decree 2555: Means the Decree 2555 of July 15, 2010, issued by the Ministry of Finance and Public Credit of the Republic of Colombia, which
collects and reissues the standards on the financial, insurance and securities exchange sectors, among others, as amended, added or replaced
from time to time.
Direct Depositors: Mean each of the entities that, in accordance with the Operations Regulation, can directly access their services and have
entered into a securities deposit agreement, either on its own behalf and at its own expense and/or on behalf and at the expense of third
parties.
Business Day: Means any day of the year, other than Saturdays, Sundays and holidays in the Republic of Colombia.
DIAN: Means the Dirección de Impuestos y Aduanas Nacionales - DIAN [Colombian Tax and Customs Authority] or the governmental entity
acting as such.
Dividend: Means the amount of profits of a company that are divided among its shareholders at a given time. The payment can be in cash or
new shares, as agreed by the Assembly.
DTF: Means the weighted average collection effective interest rates to ninety (90) days of banks, financial corporations and finance
companies, as defined by Regulatory Resolution 017 of 1993 issued by the Banco de la República [Colombian Central Bank]. This rate is
calculated and published weekly by this institution expressed as a quarterly in advance nominal rate.
Dollar: Means the legal tender in the United States of America.
Issue: Means the set of securities of the same nature issued by the Issuer under the terms of this Prospectus in order to be put into circulation
in the Public Securities Exchange of the Republic of Colombia. It is each of the Issues that make part of this Program.
Dematerialized Issue: Means the Issuance which management has been entrusted to the Program Manager through electronic systems, who
issues deposit certificates, a document that legitimizes the depositor to exercise political or economic rights when applicable. This document is
issued by the Program Manager, at the request of the Direct Depositor in accordance with the account entry. Its nature is merely declarative
and not circulatory.
Issuer: Means Grupo Argos S.A. in its capacity as issuer of securities.
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PROSPECTUS
Structuring Agent: Means Banca de Inversión Bancolombia S.A. Corporación Financiera.
Date of Issue: For each of the Issues, it will be the Business Day following the date of publication of the first Public Offering Notice.
Date of Entry: Means the date on which record and Account Entry are made, either for the subscription of Securities or for their electronic
transfer, taking into account that all Issues will be dematerialized.
Date of Subscription of Straight Bonds: Means the date on which each Straight Bond is paid in full for the first time, which will be set in the
respective Public Offering Notice. This date may range between t + 0 and t + 3.
Date of Subscription of Commercial Papers: Means the date on which each Commercial Paper is placed and paid in full for the first time.
Maturity Date: Means the date on which the tenor of Securities is completed, counting from the Date of Issuance of Straight Bonds or counting
from the Date of Subscription of Commercial Papers.
Grupo Argos: Means Grupo Argos S.A.
Holding: A corporation whose main activity is the holding of income generating assets not derived from the direct performance of a financial,
industrial or commercial activity.
IBR: Means the banking indicator of reference consisting of the benchmark interest rate of the Colombian inter-bank market published by the
Banco de la República de Colombia. It is a short term interest rate for the Colombian peso, which reflects the price at which agents participating
in its composition scheme are willing to offer or to collect resources in the money market. For the purposes of this Prospectus, the RBI will be
expressed in monthly terms.
Index: Portfolio of assets representing a market or type of assets. Normally it is used to compare the performance of a particular portfolio.
Inflation: Means the measure of growth for the overall level of prices in the economy, calculated monthly by DANE based on the prices for a
basic basket of consumer goods and services for low- and middle-income families. Based on these, they calculate a so-called Consumer Price
Index.
Relevant Information: Means the information that all issuer of securities should disclose to the market in a truthful, clear, sufficient and timely
manner through the SFC, as established in article 5.2.4.1.5 of Decree 2555.
Investor: Means the person who, through Placement Agents, requires and is awarded the Securities in the offering and their primary placement.
IPC: Means the variation of the Consumer Price Index in Colombia certified by the DANE for the last twelve (12) months, expressed as an
annual effective rate.
Primary Market: Means the trading of securities registered with the RNVE as defined in Decree 2555.
Public Stock Exchange: Means the stock market where the issue, subscription, brokerage and trading of documents issued in serially or
massively take place, regarding which a Public Offering is made, granting their holders rights of credit, of equity, and of title to or representing
goods. The main activities of the public stock exchange are issuance and offering of securities; brokerage of securities; administration of
securities funds, investment funds, mutual security funds and collective investment funds; deposit and administration of securities;
administration of trading and registration systems for securities, futures, options and other derivatives; clearing and settlement of securities;
rating of risks; self-regulation as referred to in Law 964 of 2005; provision of information to the securities market, including collection and
processing thereof; and other activities provided for in Law 964 of 2005 or determined by the National Government, provided that they are
activities of management, utilization and investment of resources collected from the public by means of securities.
Secondary Market: Market where subsequent transactions of a financial asset take place. Each transaction involves a purchase/sale among
investors.
Issuance Amount: Means the number of Securities in each of the Issues to be offered in the market, multiplied by their nominal value.
Offering Amount: Means the number of Securities offered in the respective Public Offering Notice, multiplied by their nominal value. The
Offering Amount shall not exceed in any case the respective Issuance Amount.
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PROSPECTUS
Over-Awarding Amount: Means the number of Securities that the Issuer can award in excess of the Offering Amount in a given Public Offering,
multiplied by their nominal value. The Offering Amount plus the Over-Awarding Amount shall not exceed in any case the respective Issuance
Amount.
Public Offering: Means each of the offerings of Securities in each of the Issues targeting general Investors, as defined in the terms established
in article 6.1.1.1.1 of Decree 2555 and approved by the SFC.
Commercial Papers: Means the promissory notes offered in the Public Stock Exchange, issued massively or serially, registered in the National
Registry of Securities and Issuers and in the Colombian Stock Exchange, which will be issued by the Issuer and placed through Public Offer in
the terms of this Prospectus.
Colombian Pesos or "COP$": Means the legal tender in the Republic of Colombia.
Subscription Price: Means the price that Investors pay in consideration of the subscription of Securities as set forth in the Public Offering
Notice. The Subscription Price may be "at par" when it is equal to the nominal value of Securities, "above par" when it exceeds the nominal
value, or "below par" when it is lower than the nominal value.
Issuance and Placement Program or Program: Means the plan whereby the Issuer structures, by debit to an overall quota of up to a trillion
Colombian Pesos (COP$ 1,000,000,000,000), the performance of several Securities issues, through Public Offering, for a term defined.
Prospectus: Has the meaning set forth in article 5.2.1.1.4 of Decree 2555. It refers specifically to this Prospectus of the Program.
Profitability: Rate of return on an investment.
Fixed Income: A set of financial assets representing the debt that entities have with investors. Fixed income is composed of bonds, liabilities,
promissory notes, etc., which pay interest on the principal borrowed. Fixed income confers economic but not political rights, i.e., it does not
allow to intervene in the decisions of the company issuing the securities.
Variable Income: It is composed of stock or share titles representing the property of the company. Therefore, when an investor buys a share,
it becomes partner and owner of the company in proportion represented by its stock or share title. Generally, stock or share titles do not have
a default maturity date. Profitability of stock or share titles is not defined in advance, but it depends on the progress of the company (hence
the name of variable income).
Issuance and Placement Regulation: Means the document adopted by the Issuer that contains general conditions of Securities, the Program
and Issues under which this Prospectus is framed, as approved by the Issuer's Board of Directors on July 18, 2014 by Minutes number 2629.
Operations Regulation: Means the Operations Regulation approved by Resolution 086 of 2011 issued by the SFC, which regulates the
relations of the Program Manager, its Direct Depositors, indirect depositors, and other local or international centralized securities deposits with
trading or registration systems and other clearing and settlement systems, on the occasion of the agreements entered into in the development
of their corporate purpose linked to custody, management, clearing, and settlement services, and the functions of certification on the securities
recorded in accounts.
Return: Means the interest offered by the Issuer for each of the Securities and which can be different per series and per tenor. Such Return is
determined in case of placement (i) through auction, such as the Hurdle Rate, or (ii) through firm mechanism such as the Rate of Return Offered
in the respective Public Offering Notice.
Legal Representative of Bondholders: Means Alianza Fiduciaria S.A., an entity in charge of carrying out management and preservation
actions that are necessary to exercise the rights and defend the common interests of Straight Bond Holders, under the terms of article
6.4.1.1.9 of Decree 2555, or the entity designated subsequently.
RNVE: Means the national registry of securities and issuers of the SFC that records classes and types of securities, as well as the issuers
thereof and the issues they carry out, and certifies everything related to the registration of such issuers, classes and types of securities. The
purpose of this registry is to maintain an adequate system of information about outstanding financial assets and issuers as actors in the Public
Stock Exchange. The operation of the RNVE was assigned to the SFC, who is responsible for ensuring the organization, quality, sufficiency
and update of information comprising it.
Sator: Means Sator S.A.S., an affiliate of Grupo Argos incorporated in accordance with the laws of Colombia, with registered office in the city
of Medellin. Sator is engaged in the coal business.
SFC: Means the Superintendencia Financiera de Colombia [Colombian Financial Superintendency] or the governmental entity acting as such.
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PROSPECTUS
Situm: Means Situm S.A.S., an affiliate of Grupo Argos incorporated in accordance with the laws of Colombia, with registered office in the
city of Medellin. Situm is engaged in the real estate business.
Over-Awarding: Means the possibility of awarding a number of Securities greater than the amount offered in the respective Public Offering
Notice, in the event that such possibility has been specified in the mentioned Public Offering Notice and the total amount requested exceeds
the Offering Amount in the respective Public Offering Notice. One of the power of the Issuer will be to meet the unsatisfied demand up to the
Over-Awarding Amount to be determined in the respective Public Offering Notice, provided that the Offering Amount plus the Over-Awarding
Amount does not exceed the total authorized amount of the respective Issue.
Coupon Rate: Means the interest rate of the Securities that corresponds to the percentage recognized by the Issuer to the Securities Holder
(interest rate) for each subseries offered in each Issue. For the purpose of this Prospectus, the Coupon Rate is the Hurdle Rate when the
placement is made through the auction mechanism, and the Rate of Return Offered when the placement is made through the firm demand
mechanism.
Hurdle Rate: Means the single rate of return for each subseries of each Issuance at which Securities are awarded when placement is made
through the auction mechanism.
Rate of Return Offered: Means the single rate of return for each subseries of each Issuance at which Securities are awarded when placement
is made through the firm demand mechanism. This rate is determined in the corresponding Public Offering Notice.
Straight Bond Holders: Mean any and all: (i) Primary Market Investors who acquire and hold Straight Bonds, and (ii) Investors who, from time
to time, purchase Straight Bonds in the secondary market.
Commercial Paper Holders: Mean any and all: (i) Primary Market Investors who acquire and hold Commercial Papers, and (ii) Investors who,
from time to time, purchase Commercial Papers in the secondary market.
Securities Holders: Mean Straight Bond Holders and Commercial Paper Holders jointly.
Securities: Mean Straight Bonds and Commercial Papers jointly.
Commercial Value: Refers to the way of recording an investment; for companies listed on the stock exchange, valuation is made based on
the market price. For non-listed companies, valuation is made based on the intrinsic value.
Book Value: Book value of stock or share titles. It corresponds to the division of the company's equity by the number of stocks or share titles
in which capital stock is divided.
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PROSPECTUS
PART I - ABOUT SECURITIES
CHAPTER 1 - FEATURES OF SECURITIES, CONDITIONS AND RULES OF THE PROGRAM
This Prospectus includes the general features and the financial conditions of the Grupo Argos Securities Issuance and Placement Program in
the Public Stock Exchange of the Republic of Colombia by debit to an overall quota of up to one trillion Colombian Pesos (COP$
1,000,000,000,000).
The Program consists of one or more Issues with different Dates of Issuance and different placement terms.
A.
TYPE OF SECURITIES OFFERED, LAW ON CIRCULATION AND SECONDARY TRADING
1. Type of Securities offered
The Securities subject matter of this Prospectus are Straight Bonds and Commercial Papers, which are freely tradable credit securities, as
defined in Decree 2555, that will be offered by Public Offering(s) and whose Issue(s), Public Offering(s) and placement(s) were approved by
the Issuer's Board of Directors as recorded in Minutes number 2627 of June 16, 2014 and the Issuance and Placement Regulation approved
by the Issuer's Board of Directors recorded in Minutes number 2629 of July 18, 2014.
In accordance with article 6.3.1.1.4 of Decree 2555 of 2010, the term of authorization for the public offering of the securities that make part of
the Program may be renewed, comprising the same Securities or including others, upon obtaining the corresponding authorizations by the
Colombian Financial Superintendency ("SFC").
2. Law on circulation and secondary trading
Securities will be issued to order and their trading will be subject to the provisions of law and the regulations of the BVC. Transfer of ownership
shall be made by entries in deposit accounts or sub-accounts managed by the Program Manager according to Law 964 of 2005, the Operations
Regulation and other standards that regulate, modify or replace it.
Disposal and transfer of individual rights will be made through records and electronic data systems, following the procedure laid down in the
Operations Regulation, which will be understood as accepted by the Investor and the Securities Holders upon subscription and/or acquisition
of Securities, as appropriate.
Securities will have a Secondary Market through the BVC and may be traded directly by their legitimate holders. Instructions for the transfer of
Securities before the Program Manager should be delivered through the corresponding Direct Depositor, in accordance with the provisions of
the Operations Regulation. Securities may be traded in the Secondary Market once they have been subscribed and fully paid by the relevant
Securities Holder.
The Program Manager, when making records or entries in deposit accounts of Securities Holder, will credit the Securities subscribed by the
respective Securities Holder in the corresponding account.
B.
OVERALL QUOTA AMOUNT FOR THE PROGRAM, NUMBER OF SECURITIES OFFERED, DENOMINATION, NOMINAL VALUE,
MINIMUM AMOUNT TO BE REQUESTED, AND SUBSCRIPTION PRICE
1. Overall quota amount for the Program
The overall quota of the Program amount to one trillion Colombian pesos (COP$ 1,000,000,000,000). The overall quota for the Program may
be placed in one or several Issues composed of one or more lots within the term of authorization of the Program.
The overall quota for the Program shall be reduced by the amount of Securities offered by debiting it.
In accordance with the paragraph of article 6.3.1.1.4 of Decree 2555, the overall quota for the program can be expanded, upon obtaining the
appropriate authorizations from the SFC when it has been placed in full or when at least fifty per cent (50%) of the authorized overall quota has
been placed, provided that the term of the authorization of the Program is effective.
2. Number of Securities offered
The overall quota for the Program will be one million (1,000,000) of Securities, which nominal value is one million Colombian Pesos (COP$
1,000,000) each, equivalent to one trillion Colombian Pesos (COP$ 1,000,000,000,000).
The exact amount of Securities that will be issued should be determined at the time of each Issuance and the respective Public Offering Notice,
in any case without exceeding the indicated overall quota.
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PROSPECTUS
3. Denomination of Straight Bonds:
Straight Bonds shall be denominated in Colombian Pesos.
Commercial Papers:
Commercial papers shall be denominated in Colombian Pesos.
4. Nominal value of Straight Bonds:
The nominal value of each Straight Bond will be one million Colombian Pesos ($1,000,000).
Commercial Papers:
The nominal value of each Commercial Paper will be one million Colombian Pesos ($1,000,000).
5. Minimum investment in Straight Bonds:
The minimum investment will be equivalent to the nominal value of ten (10) Straight Bonds, that is, ten million Colombian Pesos (COP$
10,000,000). Therefore, operations in the Primary Market or the Secondary Market cannot be carried out for amounts less than ten million
Colombian Pesos (COP$ 10,000,000).
Investment in Straight Bonds shall be made for a whole number of Securities since they cannot be fractioned.
In the event of partial repayments of Straight Bonds of series G, H, I, J, K and L, the minimum investment will be equivalent to the residual value
of ten (10) Straight Bonds of the respective subseries, and amounts must be multiples of one Colombian Peso (COP$ 1). Therefore, operations
in the Primary Market or the Secondary Market cannot be carried out for amounts less than the equivalent to the residual value of ten (10)
Straight Bonds of the respective subseries.
In the event of partial prepayments of Straight Bonds of series M, N, O, P, Q and R, the minimum investment will be equivalent to the residual
value of ten (10) Straight Bonds of the respective subseries, and amounts must be multiples of one Colombian Peso (COP$ 1). Therefore,
operations in the Primary Market or the Secondary Market cannot be carried out for amounts less than the equivalent to the residual value of
ten (10) Straight Bonds of the respective subseries.
Commercial Papers:
The minimum investment will be equivalent to the nominal value of ten (10) Commercial Papers, that is, ten million Colombian Pesos (COP$
10,000,000). Therefore, operations in the Primary Market or the Secondary Market cannot be carried out for amounts less than ten million
Colombian Pesos (COP$ 10,000,000).
Investment in Commercial Papers shall be made for a whole number of Securities since they cannot be fractioned.
6. Subscription Price of Straight Bonds:
The Subscription Price of Straight Bonds may be "at par" when it is equal to its nominal value, "above par" when it exceeds its nominal value,
or "below par" when it is lower than its nominal value.
When the subscription is made on a date later than the Date of Issue, the Subscription Price of Straight Bonds will be the sum of its nominal
value plus the interest accrued. The interest accrued will be calculated on the nominal value of Straight Bonds at the rate of the subseries to be
subscribed. For this calculation, the lesser of the following periods will be taken: a) the period between the Date of Issuance and the Date of
Subscription of Straight Bonds or b) the period between the date of the last payment of interest and the Date of Subscription of Straight Bonds.
The interest accrued will be calculated using the following formula:
Interest accrued = [( 1 + rate ) ^ (n/basis) ] - 1
Where:
rate: is the annual effective rate of the Straight Bond.
n: days elapsed from the Date of Issuance until the Date of Subscription of Straight Bonds when they are subscribed before the first payment
of interest, or days elapsed from the date of the last interest payment until the Date of Subscription of Straight Bonds in other cases, in
accordance with the convention corresponding to the placed subseries.
basis: means 365 or 360 days depending on the convention corresponding to the placed subseries.
The Subscription Price of Straight Bonds will be defined in the corresponding Public Offering Notice. The amount of each Straight Bond must
be paid fully at the time of subscription.
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PROSPECTUS
In the event that, after the Date of Issue, the Issuer provides new lots of Straight Bonds of the same Issue, in subseries that were not offered
initially, the Issuer will publish in the Public Offering Notice the maximum rate of return offered (auction mechanism) or the Rate of Return
Offered (firm mechanism) to be offered for such subseries. In the event that, after the Date of Issue, the Issuer provides new lots of Straight
bonds of the same Issue, in already offered subseries, the Public Offering will be made for the Subscription Price of the respective Straight
Bonds or for the discount rate used to calculate it, respecting the previously defined Coupon Rate.
The formulas to be used, as the case may be, for the calculation of the Subscription Price of Straight Bonds are:
Straight Bonds offered at par:
Subscription Price = Nominal value * {1 + Interest accrued}
In case of discount (below par):
Subscription Price = { [ Nominal value x (1 - discount) ] + [ Nominal value * Interest accrued ] }
In case of premium (above par):
Subscription Price = { [ Nominal value x (1 + premium) ] + [ Nominal value * Interest accrued ] }
Commercial Papers:
The Subscription Price of Commercial Papers may be "at par" when it is equal to the nominal value of the Commercial Paper, "above par" when
it exceeds the nominal value, or "below par" when it is lower than the nominal value.
The formulas to be used, as the case may be, for the calculation of the Subscription Price of Commercial Papers are:
Commercial Papers offered at par:
Subscription Price = Nominal Value
In case of discount (below par):
Subscription Price = Nominal value x (1 - discount)
In case of premium (above par):
Subscription Price = Nominal value x (1 + premium)
Since the term for the Maturity Date is counted from the Date of Subscription of Commercial Papers, Commercial Papers will be subscribed by
Investors always for hundred per cent (100%) of their nominal value, plus a premium or minus a discount, in the event that any of these options
is offered in the respective Public Offering Notice. Commercial Papers will generate interest from the Date of Subscription of Commercial
Papers.
The Subscription Price of Commercial Papers will be defined in the corresponding Public Offering Notice. The amount of each Commercial
Paper must be paid fully on the Date of Subscription of Commercial Papers.
C.
OFFEREES
Securities are intended for Investors in general, including pension fund and severance pay administering companies and funds managed by
them.
D.
RULES RELATING TO THE REPLACEMENT, FRACTIONING AND AGGREGATION OF SECURITIES.
For Securities, there will not be replacement, fractioning or aggregation since these are dematerialized Securities.
Investment by Securities Holders may be fractioned as long as they maintain the minimums and multiples established and are subject to both
the Issuance and Placement Regulation and this Prospectus.
E.
DEFINITION OF DATES OF SUBSCRIPTION, ENTRY, ISSUE, AND MATURITY
1. Date of Subscription
Date of Subscription of Straight Bonds is the date on which each Straight Bond is paid in full for the first time, which will be set in the
respective Public Offering Notice. This date may range between t + 0 and t + 3.
Date of Subscription of Commercial Papers is the date on which each Commercial Paper is placed and paid in full for the first time.
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PROSPECTUS
2. Date of Entry
It is the date on which record and Account Entry are made, either for the subscription of Securities or for their electronic transfer, taking into
account that all Issues will be dematerialized.
3. Date of Issue
For each of the Issues, it will be the Business Day following the date of publication of the first Public Offering Notice in which the respective
Issuance is offered.
4. Date of Maturity
It is the date on which the tenor of Securities of each Issuance is completed, counting from the Date of Issuance of Straight Bonds or counting
from the Date of Subscription of Commercial Papers.
F.
COMMISSIONS AND EXPENSES
Investors will not have to pay commissions or expenses related to the subscription of Securities, provided that Such securities are acquired in
the primary offering.
G.
STOCK EXCHANGE WHERE SECURITIES WILL BE REGISTERED
Securities will be registered with the BVC.
H.
ECONOMIC AND FINANCIAL OBJECTIVES OF THE PROGRAM
Funds coming from the placement of Securities of the Program will be allocated hundred per cent (100%) to finance the Issuer's growth plan,
leverage its expansion plan, finance its short-term needs, or replace its financial liabilities. The specific fund allocation of each Issuance shall
be determined in percentage terms in the respective Public Offering Notice.
In some cases and temporarily, the proceeds from the placement of Issues may be invested, while its application is materialized, in Fixed
Income financial instruments whose rating is not less than double A plus (AA+) and/or in high liquidity collective investment funds managed by
entities supervised by the SFC.
In compliance with provisions of article 5 (6.1) (H) of Resolution 2375 of 2006 issued by the SFC, it is reported that no more than ten per cent
(10%) of the proceeds from placement will be used for the payment of liabilities with the Issuer's related companies or partners.
Allocation of proceeds from the placements of Commercial Papers will not violate the provisions in article 6.6.1.1.1 (2) of Decree 2555, according
to which: "funds obtained through the placement of commercial papers may not be used for carrying out activities inherent to credit institutions
or for acquiring shares or bonds convertible into shares".
I.
MEDIA THROUGH WHICH INFORMATION OF INTEREST FOR INVESTORS WILL BE RELEASED
In accordance with article 5.2.4.1.5 of Decree 2555, the Issuer must disclose to the market in a truthful, clear, sufficient and timely manner
through the CFS, every situation associated with it or the Issues that would have been taken into account by a prudent and diligent expert when
buying, selling, or keeping the Securities of the Issuer or when exercising the rights attaching to such Securities. This information can be
consulted through the website www.superfinaciera.gov.co following the "Información Relevante" hyperlink.
Additionally, the Issuer, when it deems appropriate, may disclose information of interest for Securities Holders by posting it on its website.
J.
TAXATION SYSTEM APPLICABLE TO SECURITIES
Financial returns of Securities shall be subject to a withholding tax, in accordance with current tax regulations. If applicable, the beneficiary may
certify that payments in its favor are not subject to a withholding tax. When Securities are issued to the name of two (2) or more beneficiaries,
they shall indicate their individual share in the rights arising from them. The payment of the withholding tax to the DIAN and the issuance of the
corresponding certificates shall be the responsibility of the Issuer.
17
PROSPECTUS
For the purpose of the tax on financial transactions, it should be noted that, in accordance with paragraph 7 of Article 879 of the Tax Statute,
this tax is not applicable to the clearing and settlement carried out via clearing and settlement systems managed by entities authorized for this
purpose with respect to operations carried out in the stock, derivatives, and currencies exchange or in agricultural products or other commodities
exchange, including collaterals provided by participants and payments corresponding to securities management in centralized securities
deposits.
In the event that after the placement of Securities new taxes affecting their holding and/or payments derived therefrom arise, such taxes shall
be borne by the Securities Holders.
K.
PROGRAM MANAGING ENTITY
The Program Manager will carry out the custody and management of Securities. The custody and management of Securities must be done in
accordance with the standards applicable to centralized securities deposits in Colombia, to the Operations Regulation and to the terms and
conditions agreed by the Issuer and the Program Manager in the deposit and management agreement executed in connection with the Program.
The Issuer will make a payment corresponding to principal and interest to the Securities Holders through the Program Manager, provided that
the Securities Holders are Direct Depositors with securities management services, or are represented by one of them, in accordance with the
parameters described below.
Similarly, the Program Manager shall carry out all operational activities resulting from the deposit of Issues, which include the following
obligations and responsibilities for the Program Manager:

Register the global bond representing each of the Issues, which includes accounting record of the Issue, custody, management and
control of the global bond, including control over the outstanding balance of each Issue, amount issued, placed,
outstanding, paid, to be placed and canceled of Straight Bonds or Commercial Papers. The global bond thus registered will support the
amount actually placed on a daily basis.

Register and enter into accounts information on:
o Individual placement of the rights of each Issue.
o Disposals and transfers of the rights entered in deposit accounts or sub-accounts.
o Annulment of the rights of Securities according to the orders given by the Issuer under the terms laid down in the Operations
Regulation.
o Issuance orders of the rights entered in deposit accounts or sub-accounts.
o Pledges and liens including precautionary measures on the rights entered in deposit accounts or sub-accounts, in
accordance with Law 27 of 1990, Law 964 of 2005, and Decree 2555, for which the holder(s) of rights will follow the
procedure laid down in the Operations Regulation.
o Outstanding balance under the account-entry mechanism.

Charge to the Issuer the economic rights that are represented by the account entries in favor of the respective beneficiaries, when they
are direct depositors with securities management services or are represented by one of them.

For this purpose, the Program Manager shall present two settlements, preliminary and final. The pre-settlement of amounts that should
be transferred by the Issuer will be submitted within a period of five (5) business days prior to the date in which such transfer must be
made. Such settlement shall be supported by indicating the balance of the respective Issuance circulating in dematerialized form and the
periodicity of interest payment.

The Issuer will verify the pre-settlement prepared by the Program Manager and mutually agree upon its adjustments, in case of
discrepancies. To make adjustments, both the Program Manager and the Company will refer to the features of the respective Issuance
as laid down in the Issuance and Placement Regulation, the Prospectus, and the respective Public Offering Notice.

Subsequently, the Program Manager shall submit to the Issuer, within two (2) business days prior to the payment, a final settlement on
the deposited Straight Bonds or Commercial Papers issued under the respective Issuance and managed by it.

The Issuer will deposit in the account of the Program Manager the economic rights corresponding to each of the holders linked to other
Direct Depositors or which are Direct Depositors with securities management service. For the effect, it will send to the Program Manager
a copy of the final settlement of payments made to the respective beneficiaries, after discounting the amounts corresponding to withholding
tax and any other tax as applicable, and deposit by electronic funds transfer the settlement amount in the account designated by the
Program Manager according to the rules laid down in the Issuance and Placement Regulation and in the respective Public Offering Notice
for the payment of interest and principal. Payments must be made on the due date no later than 12:00 P.M.

Inform Direct Depositors and control bodies, on the business day following the due date of the payment of economic rights, of the nonpayment of the respective rights whenever the Issuer does not provide the funds, so that they take the necessary actions.
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PROSPECTUS

Update the amount of the global bond representing each Issue, as commissioned by the Company, based on the operations of issuance,
payment at maturity, cancellation and withdrawal of securities from the securities deposit, for which the Program Manager will have broad
powers.

Create and send the certificate for the tax return of Shareholders of the Issuer, upon express request of the latter.

The Program Manager shall send to the Issuer the following information:
o A monthly report within five (5) business days following the month-end closing containing daily and consolidated details on
the status of the Issuance amount, which shall specify:

Issued balance

Paid balance

Canceled balance

Outstanding balance
This information can be consulted at any time by the Issuer if it has access to the information system provided by the Program Manager.
In case of registered securities, a daily report on the movements of outstanding Straight Bonds and Commercial Papers registered the day
before, unless the Issuer has access to the information system provided by the Program Manager, as in this case information will be sent
through this system.
L.
TOTAL DEMATERIALIZATION OF ISSUES
Each of the Issues will be performed in dematerialized form, therefore, acquirers of Securities renounce the possibility of materializing the
Securities issued.
All the Securities Holders must be linked to the Issuance Manager, either as Direct Depositors or as customers through a Direct Depositor, for
the payment of the rights conferred upon them by Securities.
Custody and management of Issues will be performed by the Program Manager under the terms of the Program's deposit and dematerialized
management agreement signed between the Program Manager and the Issuer.
Since this is a Dematerialized Issue, the Program Manager will deliver to the relevant Direct Depositor a deposit certificate of the Securities
representing Straight Bonds and Commercial Papers to the name of the subscriber.
M.
COLLATERALS AND PRECEDENCE
Securities are not backed up by any security interest and, therefore, they are unsecured obligations of the Issuer that will not have any legal
privilege or precedence.
N.
RIGHTS ENTAILED BY SECURITIES
Securities Holders shall have the right to receive interest and reimbursement of their principal, pursuant to the terms set forth in this
Prospectus and the respective Public Offering Notice.
O.
RIGHTS OF SECURITIES HOLDERS
In addition to the rights to which they are entitled as creditors of the Issuer, Securities Holders have the following rights:

Receive the interests established herein and the reimbursement of principal, pursuant to this Prospectus and the respective Public
Offering Notice.

For Straight Bond Holders, participate in the General Assembly of Bondholders. A group of Straight Bond Holders representing at least
ten per cent (10%) of the outstanding amount of the loan may require the Legal Representative of Bondholders to convene the
Assembly General of Bondholders and, if it fails to do so, the Straight Bond Holders may request the SFC to make the call for meeting.

Trade Securities according to their law on circulation and the legal provisions governing the matter;

Other rights derived from this Prospectus or the law.
Securities Holders may exercise their rights jointly or individually.
If for any legal or conventional reason Securities belong to several people, they must conform to the definitions in the second paragraph of the
section below to exercise their rights.
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PROSPECTUS
P.
OBLIGATIONS OF SECURITIES HOLDERS
Securities Holders shall have the obligations provided by law and the following in particular:

For all legal purposes, send and take responsibility for the contents of the information supplied to the Issuer, the Placement Agents
and/or the Program Manager, for Securities management;

Be a Direct Depositor with securities management service or be represented by a Direct Depositor with such service;

Fully pay the Subscription Price at the Date of Subscription of Straight Bonds or at the Date of Subscription of Commercial Papers, in the
case of Investors, in accordance with subsection 6, Section B, Chapter 1 of this Prospectus.

Promptly report to the Program Manager any disposal, lien or ownership limitation that may affect the acquired Securities.

Pay taxes, fees, contributions and other existing or future taxes levied on the principal or interests of Securities.

Other rights derived from this Prospectus or the Colombian law.
Securities are indivisible; therefore, if for any legal or conventional reason Securities belong to several people, they should appoint a single
representative that exercises the rights corresponding to its capacity as legitimate Securities holder. For all purposes, if such appointment is
not carried out or informed to the Program Manager, it may accept any of the Securities holder that shows the relevant certificate as the
representative.
Q.
OBLIGATIONS OF THE ISSUER
Some of the obligations of the Issuer are the following:

Inform the SFC and the Legal Representative of Bondholders of any situation or circumstance that is considered as Relevant
Information under the terms of Decree 2555;

Comply with the obligations referred to in this Prospectus and those derived from Decree 2555 and complimentary regulations, in
relation to the Program.

Comply with all reporting duties and other obligations derived from the registration in the RNVE.

Paying interest and principal to Securities Holders in accordance with the provisions of this Prospectus and the respective Public
Offering Notice.

Provide the Legal Representative of Bondholders with information required for the performance of his duties and allow him to inspect
books, documents and other property as necessary for the same purpose. Similarly, the Issuer immediately orders its statutory auditor to
provide the Legal Representative of Bondholders with all the information required for the performance of his functions.

Provide the Legal Representative of Bondholders with the resources necessary to perform all management and preservation actions
needed for the exercise of rights and the defense of common interests of Straight Bond Holders, including the professional fees amount
to be paid to the lawyer he requires tohire for intervening, in defense of the rights of the Straight Bond Holders, in proceedings that seek
to ignore such rights. In this case, the Legal Representative of Bondholders, before agreeing upon the aforementioned fees, must obtain
written authorization from the Issuer regarding fees amount and payment method. In the event that no authorization is given within five
(5) Business Days of the request by the Legal Representative of Bondholders, he will be free to do the hiring under the fees proposal
submitted.

Cover the costs incurred in the call for meeting and operation of the General Assembly of Straight Bond Holders.

Comply with all obligations contained in this Prospectus, in the legal representation of Bondholders agreement, in the Program's deposit
and management agreement, and in any other agreement entered into during
the process, as well as other obligations established by law.
R.
LEGAL REPRESENTATIVE OF BONDHOLDERS, ITS DUTIES, RIGHTS AND OBLIGATIONS
Alianza Fiduciaria S.A., domiciled in the city of Bogota at Avenida 15 No. 100 – 43 Pisos 3 y 4, will act as the Legal Representative of
Bondholders. The main objective of the Legal Representative of Bondholders is to provide the maximum protection possible to its customers;
therefore, it must guarantee their rights at all times and take all actions necessary for the defense of their interests.
The Legal Representative of the Bondholders, under the agreement, shall take all actions necessary for exercising the rights and safeguarding
the common interests of Bondholders, including but not limited to the following duties and functions:

Represent Bondholders in all matters relating to their common or collective interests.
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PROSPECTUS


















Take all management and preservation actions necessary for exercising the rights and safeguarding the common interests of Bondholders,
which implies a strict monitoring of the Issuer's financial performance and compliance with the obligations arising from Straight Bonds of
each issue.
Keep the minutes book of the General Assembly of Straight Bond Holders.
Make all necessary arrangements to safeguard the common interests of Bondholders before the Issuer, the judicial or administrative
authorities, and other third parties as applicable, including the judicial representation of Bondholders
Acting on behalf of Bondholders in court proceedings in which they are involved and bankruptcy proceedings in which the creditors of the
Issuer concur, as well as in those brought as a result of the takeover of properties and assets or the administrative intervention to which
the Issuer is subject.
Request and receive from the Issuer relevant information in relation to each of the issues of Straight Bonds under the Program and which
is of importance to the Holders.
Ensure timely compliance with all terms and formalities of each Issuance of Straight Bonds under the Program, taking into account the
conditions stated in the Issuance Regulation, in the Prospectus and in the respective Public Offering Notice, by carrying out, among others,
the following activities:
o Request the Issuer, directly or if deemed necessary through the SFC, the reports needed for the performance of its functions
and the necessary reviews of accounting records and other documents supporting the Issuer's financial position.
o Check the payment of obligations borne by the Issuer under the Straight Bonds, particularly the payment of interest and
principal of Straight Bonds; and
o Verify that Straight Bonds redeemed are canceled under the terms laid down in the Deceval Operations Regulation and in the
securities deposit and management agreement signed by the Issuer and Deceval for purposes of the Program.
Submit to the SFC, upon request of the Bondholders, reports addressed to the latter showing compliance with the terms and conditions
agreed upon for the respective issue.
Verify compliance by the Issuer of its obligations of disclosing and disseminating information relating to Bondholders in accordance with
current regulations.
Report as soon as possible and by appropriate means any breach of the Issuer's obligations to Bondholders, the rating company and the
SFC.
Develop a biannual report addressed to themselves and the General Assembly of Straight Bond Holders, when applicable, about the
situation of the Issuer, the behavior and development of Straight Bonds issues under the Program, the procedures carried for the
representation and defense of the Bondholders' interests, and other relevant facts for Bondholders in connection with the corresponding
issue. Such report shall be made available to the Holders through the website of the Legal Representative of Bondholders.
Provide, upon request of the Bondholders, the Issuer or the SFC when applicable, additional reports required for keeping Bondholders
properly informed of the behavior and development of the corresponding Straight Bond issuance and any other fact that may affect their
rights as Bondholders, including without limitation the existence of any circumstances giving rise to the reasonable fear that the Issuer
fails to fulfill its obligations under the Straight Bonds, as well as any fact that affects or may significantly affect the financial or legal situation
of the Issuer.
Participate with the right to speak but not to vote in all meetings of the assembly of shareholders of the Issuer.
Convene and chair the General Assembly of Bondholders in those cases where it is necessary to hold it due to certain situations that are
considered relevant for the analysis, consideration and decision of Holders, relating to compliance with the conditions of the relevant issue,
as well as in cases where, according to applicable regulations, such call for meeting is required or requested.
Convene the General Assembly of Straight Bond Holders when prompted by the Issuer or a plural number of Holders representing at least
ten percent (10%) of outstanding Straight Bonds for each issue. If the Representative refuses to make that call, Holders may request the
SFC to make the call for meeting.
Convene the General Assembly of Straight Bond Holders immediately to decide on its replacement when, during an issue, it becomes
involved in a situation that disqualifies it from acting as legal representative of Holders. Such call for meeting shall be made within five (5)
business days of the occurrence or awareness of that situation.
Perform acts of disposition as empowered by the General Assemblies of Bondholders under the terms of Decree 2555.
Request the Issuer to issue physical securities representing Straight Bonds to the order of Bondholders in the event that the Program's
deposit and management agreement executed between the Issuer and Deceval is terminated early according to the terms set forth therein,
and the Issuer fails to appoint a new entity to act as depositary before the next date of payment under the Straight Bonds, as set forth in
the Prospectus.
Participate in the review and verification process of the conditions laid down for conducting the Program or any issuance pertaining thereto,
upon request of the Issuer or the Structuring Agent.
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PROSPECTUS


Other obligations and functions assigned by the General Assembly of Bondholders of the corresponding issuance of Straight Bonds, within
the limits of Decree 2555.
Other functions assigned by the applicable regulations.
For the performance of its functions, the Legal Representative of Bondholders shall adopt the following rules of conduct and others that are
applicable in accordance with existing regulations:

Adjust its actions to the rules set forth in Decree 2555 and other provisions in effect, disclosing properly and timely to the SFC and
Bondholders all relevant information about the Issuer and/or itself.

Refrain from conducting operations in which there is an interest involved that actually or potentially goes against the interests of
Bondholders, or that lead to the non-recognition of common and collective interests thereof or to the performance
of acts of management and preservation to the detriment of their rights and interests, favoring particular interests with its behavior.

Immediately notify the SFC of any situation or event that could involve a conflict of interest in its actions towards Bondholders. In
accordance with the provisions of article 7.6.1.1.2 of Decree 2555, the term conflict of interest is understood as the situation under which
a person due to his/her activity faces various conduct alternatives with respect to conflicting interests, none of which he/she can favor in
response to legal or contractual obligations. It is considered that, among other conducts, there would be a conflict of interest when the
situation involves a choice between:
(i)
Own benefit and that of the Bondholders being represented.
(ii) The benefit of the parent or controlling company and the benefit of Bondholders.
(iii) The benefit of another subordinate entity of the parent or controlling company and the profit or benefit of Bondholders.
(iv) The benefit of third parties related to the Representative and the profit or benefit of such Bondholders.
(v) The benefit of another client or group of clients of the Representative and the profit or benefit of Bondholders.

Refrain from giving any preferential treatment to a Bondholder or group of Bondholders over the rest of them.

Avoid any conduct that, in accordance with legal regulations or the opinion of the SFC, undermines the proper performance of its functions
as Legal Representative of Bondholders.
S.
GENERAL ASSEMBLY OF STRAIGHT BOND HOLDERS
The holding of General Assemblies of Bondholders shall be governed by the rules established for this purpose, in particular by articles 6.4.1.1.17
to 6.4.1.1.24 of Decree 2555, paragraph 3 of Regulation Letter 012 of 1998 issued by the SFC, other provisions that supplement, modify or
subrogate it, the agreement between the Issuer and the Legal Representative of Bondholders, and other instructions given by the SFC.
The General Assembly of Bondholders will meet in the city of Medellin, department of Antioquia, in the place specified in the relevant notice of
meeting.
1. Call for meeting
There will not be regular meetings of the General Assembly of Bondholders. The holding of General Assemblies of Straight Bond Holders shall
be governed by the legal provisions established for this purpose, the instructions given by the SFC, and the following provisions:

Bondholders of one or more issues of the Program will meet in a general assembly under the call for meeting of the Legal Representative
of Bondholders, when it deems appropriate.

The Issuer or a group of Bondholders representing at least ten percent (10%) of the outstanding amount of the loan of the relevant
Issuance or Program, may require the Legal Representative of Bondholders to convene the General Assembly of Bondholders of the
relevant Issuance or Program, as applicable, and if it fails to do so, they may request the SFC to make the call for meeting.
Similarly, the SFC may convene the General Assembly of Bondholders or instruct the Legal Representative of Bondholders to do so when there
are serious events that should be known by the Holders and that may determine whether to give instructions to the Legal Representative of
Bondholders or revoke its appointment.
Call for General Assemblies of Straight Bond Holders shall be made by notices prominently published in widely-circulated national newspapers,
or by any other suitable media as determined by the SFC, ensuring the widest dissemination of the notice eight (8) business days prior to the
meeting.
The notice shall include place, date, time and agenda of the General Assembly of Bondholders and any other information or warning applicable
in accordance with the provisions of Decree 2555. The counting of this term shall not take into consideration the Business Day of notice
publication and the Business Day on which the General Assembly of Bondholders takes place.
The notice of meeting shall inform, at least, the following:
1. Name of the entity or entities making the call for meeting.
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PROSPECTUS
2.
3.
4.
5.
6.
7.
8.
Name of the Issuer.
Issuer or Issues whose holders are being convened to the Assembly, as well as the outstanding amount of the loan.
If it is a meeting of first, second or third call.
Place, date and time of meeting.
Agenda of the General Assembly of Bondholders, which must explicitly indicate whether it is a briefing or if any decision is to be submitted
for consideration of the Straight Bond Holders, thus clarifying the nature of the meeting.
Documentation to be submitted by Bondholders or their attorneys to certify such capacity as stated in paragraph 3.7 of Circular Letter
012 of 1998 issued by the SFC.
Any other information or warning admissible in accordance with applicable regulations.
According to Article 6.4.1.1.42 of Decree 2555, during the term of the respective Issue, the Issuer may not change its corporate purpose, split,
merge, be transformed, or reduce its capital with effective refund of contributions, unless this is authorized by the General Assembly of
Bondholders with the majority needed to approve the amendment of loan conditions. Notwithstanding the foregoing, the Issuer may make the
changes mentioned without obtaining the approval of Bondholders when it has previously offered one of the options described in such article
to Bondholders.
Depending on the matters to be dealt with, there will be two types of General Assemblies of Bondholders, namely: (i) the General Assemblies
of Bondholders of one or more specific issuances of Straight Bonds of the Program when the matters to be addressed and the decisions to be
made only affect those issues (the "Assemblies of Issuances"); and (ii) the General Assemblies of Bondholders of all current issuances of the
Program, when the matters to be addressed and the decisions to be made affect or are of interest to all Bondholders of the Program (the
"Assemblies of the Program").
If the decisions to be made by an Assembly of Issuance somehow affect Bondholders of other existing issuances of Straight Bonds of the
Program who were not invited to the respective meeting of the General Assembly of Straight Bond Holders, the meeting shall be suspended
and the Representative shall convene another General Meeting of Straight Bond Holders, including all the Bondholders affected by the decision
to be adopted.
2. Report
Whenever Bondholders are convened to a meeting in order to decide on mergers, splits, integrations, transfer of assets, liabilities and contracts,
acquisitions, any amendments intended to be made on the loan, and other issues requiring a special majority pursuant to the provisions of
Article 6.4.1.1.22 of Decree 2555 and paragraph 1 of this Section, the Issuer shall prepare a report for the purpose of illustrating the General
Assembly of Bondholders in a broad and sufficient manner on the matters submitted for its consideration and the effect thereof on their interests,
including all financial, administrative, legal and other types of information required for this purpose. This report shall be supplemented with the
opinion of the Legal Representative of Bondholders.
The report must be approved by the SFC and made available to the Bondholders at the offices of the Issuer, the Legal Representative of
Bondholders, the Program Manager, the BVC, and the SFC, from the date of the call for the General Assembly of Bondholders until the date
on which the meeting takes place. This report will be submitted to the General Assembly of Bondholders by a senior management officer of the
Issuer who is duly qualified with respect to the subject matter.
3. Quorum
The General Assembly of Bondholders may validly deliberate with the presence of any plural number of Bondholders representing at least fiftyone percent (51%) of the outstanding amount of the loan of (i) the relevant issuance for Assemblies of Issuance; or (ii) the Program for
Assemblies of the Program. The decisions of the General Assemblies of Straight Bond Holders will be made by the absolute majority of present
votes, unless this Prospectus stipulates a greater deciding majority.
If there is no quorum to deliberate and decide in the first call meeting, a new meeting may be convened under the provisions of paragraph 1 of
this section. Such meeting shall only require any plural number of Bondholders to deliberate and decide validly, situation which shall be clearly
specified in the notice of meeting. For this second call, the draft notice and specification of the media to be used for its disclosure shall be
submitted for consideration of the SFC under the rules provided in Regulation Letter 012 of 1998, regarding the expected date of publication or
completion of the notice of meeting. The foregoing does not affect the events where, as stated in this Prospectus and the current regulations, a
greater deciding quorum is required.
4. Special deciding majorities
The General Assembly of Bondholders may make general decisions aiming at the common and collective protection of the Bondholders of each
Issuance, in case of insolvency of the Issuer.
The General Assembly of Bondholders, by the affirmative vote of a plural number representing the numerical majority of present Bondholders
and eighty percent (80%) of the outstanding loan of the corresponding Issuances, may allow
23
PROSPECTUS
modifications to conditions of the respective Issuance and, in particular, authorize the Legal Representative of Bondholders to enter into a
settlement agreement for and on its behalf or to vote favorably on an arrangement or bankruptcy-type scheme.
If there is no quorum to deliberate and decide in the first call meeting on the topics mentioned in the previous paragraph, a second meeting may
be convened where they may decide validly with the affirmative vote of a plural number representing the numerical majority of present
Bondholders and forty percent (40%) of the outstanding loan of the corresponding Issuance. This situation should be clearly specified in the
notice of meeting. If there is no quorum to deliberate and decide in the second call meeting, a new meeting may be convened and shall only
require any plural number of Bondholders of the relevant Issuance to deliberate and decide validly, situation which shall be clearly specified in
the notice of meeting.
Regarding third call meetings, provisions for calls and notices to the SFC of second call meetings shall apply.
Modifications to the terms of the loan shall also be authorized by the Issuer's Board of Directors.
Decisions adopted by the General Assembly of Bondholders and subject to the law shall be binding for those absent or dissenting.
No provision of the General Assembly of Bondholders may discriminate between Straight Bond Holders of the same Issuance, impose new
obligations, or order the mandatory conversion of Straight Bonds into shares.
The decisions referred to in Article 6.4.1.1.22 of Decree 2555 shall also be approved by the SFC.
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PROSPECTUS
CHAPTER 2 - FINANCIAL CONDITIONS OF SECURITIES
A.
SERIES IN WHICH ISSUANCE IS DIVIDED
Straight Bonds:
Issuances of Straight Bonds may consist of up to eighteen (18) series with the following features:
Series A: Straight Bonds will be issued in Colombian Pesos, shall accrue interest based on an annual effective fixed rate, and their principal
shall be fully paid at maturity thereof.
Series B: Straight Bonds will be issued in Colombian Pesos, shall accrue interest based on a floating rate indexed to the interest rate of
ninety (90) day term deposits certified by the Banco de la República (the "DTF "), and their principal shall be fully paid at maturity thereof.
Series C: Straight Bonds will be issued in Colombian Pesos, shall accrue interest based on a floating rate indexed to the variation of the
Consumer Price Index (the "IPC") certified by the DANE at the beginning of the respective interest accrual period, and their principal shall be
fully paid at maturity thereof.
Series D: Straight Bonds will be issued in Colombian Pesos, shall accrue interest based on a floating rate indexed to the IPC certified by the
DANE at the end of the respective interest accrual period, and their principal shall be fully paid at maturity thereof.
Series E: Straight Bonds will be issued in Colombian Pesos, shall accrue interest based on a floating rate indexed to the Reference Banking
Indicator (the "IBR") certified by the Banco de la República at the beginning of the respective interest accrual period, and their principal shall be
fully paid at maturity thereof.
Series F: Straight Bonds will be issued in Colombian Pesos, shall accrue interest based on a floating rate indexed to the IBR certified by the
Banco de la República at the end of the respective interest accrual period, and their principal shall be fully paid at maturity thereof.
Series G: Straight Bonds will be issued in Colombian Pesos, shall accrue interest based on an annual effective fixed rate, and their principal
may be partially repaid after a period of one (1) year, counting from the Date of Issuance until the Date of Maturity.
Series H: Straight Bonds will be issued in Colombian Pesos, shall accrue interest based on a floating rate indexed to the DTF, and their
principal may be partially repaid after a period of one (1) year, counting from the Date of Issuance until the Date of Maturity.
Series I: Straight Bonds will be issued in Colombian Pesos, shall accrue interest based on a floating rate indexed to the IPC certified by the
DANE at the beginning of the respective interest accrual period, and their principal may be partially repaid after a period of one (1) year, counting
from the Date of Issuance until the Date of Maturity.
Series J: Straight Bonds will be issued in Colombian Pesos, shall accrue interest based on a floating rate indexed to the IPC certified by the
DANE at the end of the respective interest accrual period, and their principal may be partially repaid after a period of one (1) year, counting
Series K: Straight Bonds will be issued in Colombian Pesos, shall accrue interest based on a floating rate indexed to the IBR certified by the
Banco de la República at the beginning of the respective interest accrual period, and their principal may be partially repaid after one (1) year,
counting from the Date of Issuance until the Date of Maturity.
Series L: Straight Bonds will be issued in Colombian Pesos, shall accrue interest based on a floating rate indexed to the IBR certified by the
Banco de la República at the end of the respective interest accrual period, and their principal may be partially repaid after one (1) year, counting
Series M: Straight Bonds will be issued in Colombian Pesos, shall accrue interest based on an annual effective fixed rate, and their principal
shall be fully paid at maturity thereof. However, Straight Bonds may be fully or partially prepaid at the Issuer's discretion, in accordance with the
conditions set out in Section E, Chapter 2 of this Prospectus.
Series N: Straight Bonds will be issued in Colombian Pesos, shall accrue interest based on a floating rate indexed to the DTF, and their
principal shall be fully paid at maturity thereof. However, Straight Bonds may be fully or partially prepaid at the Issuer's discretion, in
accordance with the conditions set out in Section E, Chapter 2 of this Prospectus.
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PROSPECTUS
Series O: Straight Bonds will be issued in Colombian Pesos, shall accrue interest based on a floating rate indexed to the IPC certified by the
DANE at the beginning of the respective interest accrual period, and their principal shall be fully paid at maturity thereof. However, Straight
Bonds may be fully or partially prepaid at the Issuer's discretion, in accordance with the conditions set out in Section E, Chapter 2 of this
Prospectus.
Series P: Straight Bonds will be issued in Colombian Pesos, shall accrue interest based on a floating rate indexed to the IPC certified by the
DANE at the end of the respective interest accrual period, and their principal shall be fully paid at maturity thereof. However, Straight Bonds
may be fully or partially prepaid at the Issuer's discretion, in accordance with the conditions set out in Section E, Chapter 2 of this Prospectus.
Series Q: Straight Bonds will be issued in Colombian Pesos, shall accrue interest based on a floating rate indexed to the IBR certified by the
Banco de la República at the beginning of the respective interest accrual period, and their principal shall be fully paid at maturity thereof.
However, Straight Bonds may be fully or partially prepaid at the Issuer's discretion, in accordance with the conditions set out in Section E,
Chapter 2 of this Prospectus.
Series R: Straight Bonds will be issued in Colombian Pesos, shall accrue interest based on a floating rate indexed to the IBR certified by the
Banco de la República at the end of the respective interest accrual period, and their principal shall be fully paid at maturity thereof. However,
Straight Bonds may be fully or partially prepaid at the Issuer's discretion, in accordance with the conditions set out in Section E, Chapter 2 of
this Prospectus.
Commercial Papers:
Issuances of Commercial Papers may consist of up to four (4) series with the following features:
Series A: Commercial Papers will be issued in Colombian Pesos, shall accrue interest based on an annual effective fixed rate, and their
principal shall be fully paid at maturity thereof.
Series B: Commercial Papers will be issued in Colombian Pesos, shall accrue interest based on a floating rate indexed to the DTF, and their
principal shall be fully paid at maturity thereof.
Series C: Commercial Papers will be issued in Colombian Pesos, shall accrue interest based on a floating rate indexed to the IBR certified by
the Banco de la República at the beginning of the respective interest accrual period, and their principal shall be fully paid at maturity thereof.
Series D: Commercial Papers will be issued in Colombian Pesos, shall accrue interest based on a floating rate indexed to the IBR certified by
the Banco de la República at the end of the respective interest accrual period, and their principal shall be fully paid at maturity thereof.
B.
TENORS OF SECURITIES
Straight Bonds:
All the series of Straight Bonds shall have principal maturity terms between one (1) and fifteen (15) years counting from the relevant Date of
Issuance, as indicated in the respective Public Offering Notice. Each series is divided into subseries according to maturity term, so that the letter
corresponding to a particular series shall be accompanied by the corresponding maturity term in number of years.
Commercial Papers:
All the series of Commercial Papers shall have principal maturity terms of more than (15) days and less than one (1) year counting from the
Date of Subscription of Commercial Papers, as indicated in Article 6.6.1.1.1 (2) of Decree 2555 and in the respective Public Offering Notice.
Each series is divided into subseries according to maturity term, so that the letter corresponding to a particular series shall be accompanied by
the corresponding maturity term in number of days.
C.
RETURNS OF SECURITIES
The maximum Return of Securities for each subseries will be determined by any of the legal representatives of the Issuer and published in the
respective Public Offering Notice of each Issuance and shall reflect the market conditions in effect at the date of such offerings, complying with
the guidelines set out in the Issuance and Placement Regulation.
In addition to interest, the Issuer may grant a discount or require a premium over the nominal value regarding the Securities of all Series. Both
interest and premium / discount shall be determined by the Issuer at the time of the corresponding Public
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PROSPECTUS
Offering and shall be published in the Public Offering Notice in accordance with the general parameters for the Issuance and placement of each
Issuance as set out in the Issuance and Placement Regulation.
Upon the Date of Maturity or the date on which full payment is accrued, the corresponding Securities shall be deemed matured and will stop
accruing remuneratory interest.
In the event that the Issuer fails to make payments of interest and principal at the time indicated, the Securities shall accrue default interest at
the maximum rate allowed, in accordance with Article 884 of the Commercial Code, or the provisions that amend, supplement or replace it. In
accordance with the Operations Regulations, the obligations of the Issuer shall be deemed unfulfilled when the payment of principal and/or
interest is not made in the terms set forth in the respective Public Offering Notice. In such case, the Program Manager shall communicate this
situation to Direct Depositors and competent authorities no later than the next Business Day.
Straight Bonds:
Series A, G and M
The Return of Straight Bonds of series A, G and M will be determined by a fixed rate in annual effective terms.
For the calculation of interest, the effective annual rate shall be converted to an equivalent nominal rate according to the interest payment period
established by the Issuer at the time of the respective Public Offering. The rate thus obtained is applied to the current principal amount for the
period represented by the corresponding Straight Bonds.
Series B, H and N
The Return of Straight Bonds of series B, H and N will be determined based on a floating rate. For Issuance purposes, the DTF will be used as
the reference rate, adding a few percentage points, and expressed as a quarterly in advance rate.
For the calculation of interest, the current quarterly in advance DTF will be taken for the week in which the relevant interest accrual period
begins. This value will be added the points determined at the time of the Public Offering and that will be the quarterly in advance basis nominal
rate. Then this rate will be calculated its equivalent rate in annual effective terms. Such rate shall be converted to an equivalent nominal rate
according to the interest payment period established by the Issuer at the time of the respective Public Offering, periodicity which shall be
published in the relevant Public Offering Notice. The rate thus obtained will be applied to the principal amount due under the Straight Bonds for
the respective period.
If the DTF used on accrual date for settlement of interest is modified, recalculation of interest will not be made.
Series C, I and O
The Return of Straight Bonds of series C, I and O will be determined based on a floating rate. For Issuance purposes, the IPC will be used as
the reference rate, adding a few percentage points, and expressed as an annual effective rate.
For the calculation of interest, we will take the annualized IPC of the last twelve (12) months known at the beginning of the relevant interest
accrual period, based on the last official data provided by the DANE. This value will be added the points (margin)determined at the time of the
Public Offering.
For the calculation of the interest rate, the following formula will be used:
A.E. Rate of return (%) = (1 + IPC% A.E.) * (1 + Margin% A.E.) – 1
Such rate shall be converted to an equivalent nominal rate according to the interest payment periodicity established by the Issuer at the time of
the respective Public Offering, periodicity which shall be published in the relevant Public Offering Notice. The rate thus obtained will be applied
to the principal amount due under the Straight Bonds for the respective period.
If the IPC used on accrual date for settlement of interest is modified, recalculation of interest will not be made.
Series D, J and P
The Return of Straight Bonds of series D, J and P will be determined based on a floating rate. For Issuance purposes, the IPC will be used as
the reference rate, adding a few percentage points, and expressed as an annual effective rate.
For the calculation of interest, we will take the annualized IPC of the last twelve (12) months known at the end of the relevant interest accrual
period, based on the last official data provided by the DANE. This value will be added the points (margin)determined at the time of the Public
Offering.
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PROSPECTUS
For the calculation of the interest rate, the following formula will be used:
A.E. Rate of return (%) = (1 + IPC% A.E.) * (1 + Margin% A.E.) – 1
Such rate shall be converted to an equivalent nominal rate according to the interest payment periodicity established by the Issuer at the time of
the respective Public Offering, periodicity which shall be published in the relevant Public Offering Notice. The rate thus obtained will be applied
to the principal amount due under the Straight Bonds for the respective period.
If the IPC used on accrual date for settlement of interest is modified, recalculation of interest will not be made.
Series E, K and Q
The Return of Straight Bonds of series E, K and Q will be determined based on a floating rate. For Issuances purpose, we will use the IBR for
a one-month period as the reference rate, adding some percentage points, and expressed as a monthly in arrears nominal rate (N.M.V). The
IBR is quoted on a three hundred sixty (360) day basis and its rate is expressed in nominal terms.
For the calculation of interest, we will take the IBR for a one-month period (N.M.V.) in effect on the date on which the relevant interest accrual
period begins, as stated in the Reference Banking Indicator Regulation. This value will be added the points (margin) determined at the time of
the Public Offering and that will be the monthly in arrears nominal rate. Then, such rate shall be converted to an equivalent nominal rate
published in the relevant Public Offering Notice. The rate thus obtained is applied to the principal amount due under the Straight Bonds for the
respective period.
If the IBR used on accrual date for settlement of interest is modified, recalculation of interest will not be made.
Series F, L and R
The Return of Straight Bonds of series F, L and R will be determined based on a floating rate. For Issuances purpose, we will use the IBR for a
one-month period as the reference rate, adding some percentage points, and expressed as a monthly in arrears nominal rate (N.M.V). The IBR
is quoted on a three hundred sixty (360) day basis and its rate is expressed in nominal terms.
For the calculation of interest, we will take the IBR for a one-month period (N.M.V.) in effect on the date on which the relevant interest accrual
period ends, as stated in the Reference Banking Indicator Regulation. This value will be added the points (margin) determined at the time of
the Public Offering and that will be the monthly in arrears nominal rate. Then, such rate shall be converted to an equivalent nominal rate
published in the relevant Public Offering Notice. The rate thus obtained will be applied to the principal amount due under the Straight Bonds for
the respective period.
If the IBR used on accrual date for settlement of interest is modified, recalculation of interest will not be made.
Trade Papers:
Series A
El Return on the Trade Papers of series A shall be determined by a fixed rate in an effective annual term.
In order to figure out the interests, the effective annual rate shall turn into an equivalent nominal rate according to the interest payment period
established by the Issuer at the time of submitting the Public Offer. The rate thus obtained shall apply to the standing capital amount for the
period the corresponding Trade Papers represent.
Series B
The Return on the Trade Papers of the series B shall be determined based on a variable rate. For the purposes of the Issues, the FTD rates
shall be used as reference, complemented in some percentage points and expressed as an advanced quarter rate.
In order to figure out the interests, the standing advanced quarter FTD for the week that starts the respective period causing the interest shall
be used. To this amount, the points determined at the time of the Public Offer shall be added, and that shall be the advanced quarter basic
nominal rate. Then the equivalent rate in an annual effective term shall be figured out for this rate. Such rate shall be turned into an equivalent
nominal rate according to the interest payment period established by the Issuer at the time of submitting the Public Offer; such period shall be
published in the corresponding Public Offer Notice. The rate thus obtained shall be applied to the capital amount in debt under the Trade
Papers in the respective period.
In the event the FTD used on the causing date for the settlement of the interests be modified in some manner, a resettlement of the interests
shall not be performed.
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PROSPECTUS
Series C
The Return on the Trade Papers of series C shall be determined based on a variable rate. For the purpose of the Issues, the RBI shall be used
as a reference rate – with a month term, complemented in some percentage points and expressed as a monthly nominal rate (N.M.A). The RBI
is quoted based on three hundred sixty (360) days and its rate is expressed in nominal terms.
In order to figure out the interests, the RBI shall be used – a month term with standing N.M.A. on the date that initiates the interest causing
respective period, as stipulated in the Regulations of the Reference Bank Indicator. To this amount, the points (marginal) determined at the time
of the Public Offer shall be added, and that shall be nominal monthly rate. Then such rate shall be turned into an equivalent nominal rate
according to the interest payment period established by the Issuer at the time of submitting the Public Offer; such period shall be published in
the corresponding Public Offer Notice. The rate thus obtained shall be applied to the capital amount in debt under the Trade Papers in the
respective period.
In the event the RBI used on the causing date for the settlement of the interests be modified in some manner, a resettlement of the interests
Series D
The Return on the Trade Papers of series C shall be determined based on a variable rate. For the purpose of the Issues, the RBI shall be used
as a reference rate – with a month term, complemented in some percentage points and expressed as a monthly nominal rate (N.M.A). The RBI
is quoted based on three hundred sixty (360) days and its rate is expressed in nominal terms.
In order to figure out the interests, the RBI shall be used – a month term with standing N.M.A. on the date that ends the interest causing
respective period, as stipulated in the Regulations of the Reference Bank Indicator. To this amount, the points (marginal) determined at the time
of the Public Offer shall be added, and that shall be nominal monthly rate. Then such rate shall be turned into an equivalent nominal rate
according to the interest payment period established by the Issuer at the time of submitting the Public Offer; such period shall be published in
the corresponding Public Offer Notice. The rate thus obtained shall be applied to the capital amount in debt under the Trade Papers in the
respective period.
In the event the RBI used on the causing date for the settlement of the interests be modified in some manner, a resettlement of the interests
D. INTEREST PAYMENT MANNER AND PERIOD
The payment of the Securities’ interest shall be done at the end of the term.
Straight Bonds:
The interest payment period for Straight Bonds shall be chosen, by the investor, from the periods the Issuer makes available at the time of the
respective Public Offer. Such periods can be: monthly (M), quarterly (Q), per semester (S), or annually (A); the Issuer reserves the right to offer
such periods for each subseries. Once the period has been determined, it will be fixed as long as the respective Straight Bond is effective.
For the purposes of Return payments, a month is understood, initially, as the period between the Straight Bond Issue Date and the same date
one (1) month later and so on; a quarter is understood, initially, as the period between the Straight Bond Issue Date and the same date three
(3) months later and so on; a semester is understood, initially, as the period between the Straight Bond Issue Date and the same date six (6)
months later and so on; a year is understood, initially, as the period between the Straight Bond Issue Date and the same date one (1) year later
and so on.
Trade Papers:
The interest payment period for Trade Papers shall be chosen, by the investor, from the periods the Issuers makes available at the time of the
respective Public Offer. Such periods can be: monthly (M), quarterly (Q), per semester (S), or annually (A); the Issuer reserves the right to offer
such periods for each subseries. Once the period has been determined, it will be fixed as long as the respective Trade Paper is effective.
For the purposes of Return payments, a month is understood, initially, as the period between the Execution Date of the Trade Papers and the
same date one (1) month later and so on; a quarter is understood, initially, as the period between the Execution Date of the Trade Papers and
the same date three (3) months later and so on; a semester is understood, initially, as the period between the Execution Date of the Trade
Papers and the same date six (6) months later and so on; and a period is understood, as the period between the Execution Date of the Trade
Papers and the Maturity Date of the respective Trade Papers.
Straight Bonds and Trade Papers:
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PROSPECTUS
The amount corresponding to the accrued and payable interest on the Securities shall be rounded to a whole figure so that the fractions in cents
shall be rounded up or down to the closest whole figure expresses in Pesos, and in the case of 50 cents of the Peso, the figure shall be rounded
up to the next whole figure expressed in Pesos.
Pursuant to the stipulations in section 6.1.1.1.5 of Decree 2555:

Interests shall only be paid at the end date of the payment period.

Interests shall be figured out according the 365/365 day convention; that is, 365 day years of twelve (12) months, with the calendar
monthly duration corresponding to each month, except for February that shall correspond to twenty-eight (28) days. For the series
indexed in RBI, the interest shall be figured out according the 360/360 day convention; that is, years of 360 days and twelve (12)
months, each month during thirty (30) calendar days. Nevertheless, such convention for the series indexed in RBI can be modified if
the rules issued by a competent authority in the topic so allows it; in such a case, this shall be informed through the respective Public
Offer Notice.

The Coupon Rate shall be expressed with two (2) percentage decimals in the following manner (0.00%).

The factor used in the calculation and settlement of the interests shall have six (6) decimals rounded up or down, according to the
rounding method, either as a decimal fraction (0.000000) or as a percentage (0.0000%).
Without prejudice to the stipulations in the last subparagraph of paragraph 1 of section 6.1.1.1.5 of Decree 2555, in the event the interest
payment date does not correspond to a business day, excepting the Maturity Date, the payment of interests shall be done on the following
business day and the interests shall not be adjusted.
If the Maturity Date corresponds to a non-business day, the Issuer shall recognize interests up to the next business day, when the respective
payment is to be performed.
There shall not be payment of interests for delay in collection of interest or capital.
In the event the Issuer does not make the corresponding interest and capital payments at the indicated time, the Securities shall earn default
interest at the maximum rate allowed, pursuant to section 884 of the Trade Code, or any norm modifying, adding to or substituting it.
For the purpose of calculating the Securities’ terms, it shall be understood, pursuant to section 829 of the Trade Code (Decree 410 of 1971),
that: “When the term is months or years, its maturity date shall be the same day of the corresponding month or year; if it does not have such a
date, it shall mature on the last day of the respective month or year. Any term maturing on a holiday shall be moved to the next Business Day.”
The maturity day shall be a business day within banking hours. Saturday shall be considered a non-business day.
A.
AMORTIZATION OF CAPITAL
Straight Bonds:
The capital of the Straight Bonds shall be totally paid at their maturity time.
Nevertheless, the capital of the Straight Bonds of series G, H, I, J, K, and L can be partially paid once the first (1) year is completed from
the Date of Issue until de Maturity Date. The minimum value of the partial amortizations, expressed in percentages of the nominal value of
each Straight Bond shall be zero percent (0.00%). Partial amortizations shall add to a total of a hundred per cent (100.00%) of the nominal
value of each Straight Bond, expressed with two decimals.
Also, the capital of the Straight Bonds of series M, N, O, P, Q, and R can be paid totally or partially at the Issuer’s discretion. The pre-payment
option can be used after one (1) year has passed from the corresponding Date of Issue. Prepayments shall be made on a pro rata basis in relation
to each subseries of each Issue, thus decreasing the standing capital amount of each one of the Straight Bonds proportionally among the
Holders of Straight Bonds of the respective subseries and paying each one of them the same percentage on the nominal value, expresses
with two decimals.
Prepayment of Straight Bonds shall be made by using an exercise price. Exercise price is understood as the price the Issuer shall pay for each
Straight Bond in case the prepayment option is used and shall be expressed as a percentage (at face value, with bounty, or with discount) of
their nominal value. Such bounty or discount shall be determined and published by the Issuer in the respective Public Offer Notice of each
Issue.
A list of the different conditions that shall apply to any prepayment of Straight Bonds follows:

Protection Period: Term when the Issuer shall not be able to make prepayments and that shall start on the Date of Issue.

Table of Exercise Prices: Any Straight Bond that can be prepaid totally or partially shall be associated to a table of exercise prices
containing the prepayment prices applicable during the life of the Straight Bond. Such prepayment prices shall be paid by the Issuer to
the investor at the time of redeeming in advance the Straight Bond totally or partially. The prepayment price shall be expressed as a
percentage of the Straight Bond’s nominal price plus the interest accrued as of the prepayment date.
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

Minimum Prepayment Amount: Minimum multiples where the Issuer shall be able make prepayments expressed as a percentage of
the nominal value of the Straight Bonds of each Issue’s subseries.
Outstanding Capital’s Minimum Amount: Minimum percentage of the outstanding capital that the Issuer must keep in circulation in
relation to each subseries of each Issue.
Prepayment specific conditions for each Issue shall be established in the respective Public Offer Notice.
The Issuer shall inform the Holders of Straight Bonds about the use of their prepayment rights through a prepayment notice published in the
Daily Bulletin of the Security Market of Colombia – BVC (in Spanish). The prepayment notice shall be published at least thirty (30) calendar
days prior to the actual prepayment and shall include the actual payment date and the amount of the prepayment in terms of a percentage of
the nominal value. Once the Issuer publishes the prepayment notice, such payment shall be obligatory for the Holders of Straight Bonds of the
respective subseries.
Pursuant to paragraph 5 of Section 6.4.1.1.3 of Decree 2555 of 2010, it shall not be possible to issue bonds with maturity terms of less
than one (1) year.
After one (1) year from the Date of Issue of the respective Issue, the Issuer shall be able to acquire the Straight Bonds of any of the series
offered under the respective Issue, provided such transaction is done through the Security Market of Colombia – BVC according to
standing law. The fact that the Issuer has the possibility of acquiring its own Straight Bonds does not force the Holders of Straight Bonds
to sell. Such acquisition implies extraordinary amortization of the Straight Bonds, which shall be delivered for cancellation and shall not be
issued or sold again. The above shall be feasible taking into account that, in such an event, the Issuer’s obligations derived from the Straight
Bonds shall be extinguished by confusion, in the terms established in the Civil Code and in accordance with the provision in the second
paragraph of section 2 of Act 964 of 2005.
Trade Papers:
The Trade Papers capital shall be paid through a single payment at maturity.
The Issuer shall be able to acquire the Trade Papers of any of the series offered under the respective Issue provided such transaction is
performed through the Security Market of Colombia – BVC according to standing law. The fact that the Issuer has the possibility of
acquiring its own Trade Papers does not force the Holders of Trade Papers to sell. Such acquisition implies extraordinary amortization of the
Trade Papers, which shall be delivered for cancellation and shall not be issued or sold again. The above shall be feasible taking into account
that, in such an event, the Issuer’s obligations derived from the Trade Papers shall be extinguished by confusion, in the terms established in
the Civil Code and in accordance with the provision in the second paragraph of section 2 of Act 964 of 2005.
F. CAPITAL AND INTEREST PAYMENT PLACE
The capital and the interests of the Securities shall be paid by the Issuer through the Program Manager using the latter’s payment network.
The above means that the resources delivered by the Issuer to the Program Manager shall be paid to the Direct Depositor managing the
Portfolio of the respective Security Holder. Security Holders must be qualified as Direct Depositors with Security Administration services or be
represented by a Direct Depositor with the said services.
Pursuant to section 6.4.1.1.39 of Decree 2555, actions performed to collect Straight Bonds interest and capital shall prescribe in four (4) years
from their liquidity date.
Pursuant to section 789 of the Trade Code, exchange actions performed to collect Trade Papers interest and capital shall prescribe in three
(3) years from the Maturity Date.
G. RATING GIVEN TO THE PROGRAM AND TO THE ISSUES
Pursuant to the provisions in paragraph 2 of section 2.22.1.1.4 of Decree 2555, prior to the publication of the Offer Notice of the respective
Issue, the Issuer shall certify the Rating of the values object of the Issue before the Financing Superintendence of Colombia- SFC (in Spanish).
On July 10, 2014, BRC Investor Services S.A., a Security Rating Company, gave an AAA rating to the Straight Bonds (long term debt) and
BRC 1+ to Trade Papers (short term debt) which are part of the Security Issue and Placement Program up to a trillion Colombian Pesos
(COP 1,000,000,000,000).
The reasons for the Program Rating can be consulted in Annex A of the Fourth Part of the present Information Prospectus.
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CHAPTER 3 – PUBLIC OFFER AND PLACEMENT CONDITIONS
A.
LIFE OF THE PROGRAM AUTHORIZATION, PLACEMENT TERM, AND LIFE OF THE OFFER
1. Life of the Program Authorization
Pursuant to section 6.3.1.1.3 of Decree 2555, Issues can be offer publicly, individually or simultaneously, over a three (3) year term from the
implementation of the act ordaining the record of the Program in the National Registry of Securities and Issuers. Nevertheless, the Issuer
shall be able to request in writing the renewal of the term, for equal periods, before the maturity of the same.
2. Life of the Offer
The life of the offer of each of the Straight Bond Issues shall be established in the respective Public Offer Notice.
The life of the offer of each of the Trade Paper Issues shall a Business Day corresponding to the business day following the day of the publication
of the respective Public Offer Notice.
3. Placement Term
The placement term for each of the Issues shall be established in the respective Public Offer Notice.
B.
MANNER OF ADVANCING THE OFFER
Placement of Securities shall be performed through Public
Offer.
Public Offer for each of the Issues can be offered in one or several lots at the Issuer’s discretion.
Public Offer of Trade Papers shall be subject to the pertinent dispositions contained in section 6.6.1.1.2 Decree 2555 and other norms
complementing it or modifying it under the single issue mode. Each of the Issues shall be performed without the possibility of extension of
the Trade Papers’ term. The Issuer shall indicate, in the respective Public Offer Notice that the pertinent Issue of Trade Papers is without the
possibility of rotation or extension at the maturity of the securities.
C.
MEDIA USED TO ADVANCE THE OFFER
Publication of the first Public Offer Notice for the first Issue shall be done in a newspaper with ample national circulation. For the purposes of
the present Information Prospectus, the newspapers that can be used to publish such notice are: La República, El Tiempo, El Colombiano,
and/or Portafolio.
Publication of the Public Offer Notice for Straight Bonds and Trade Papers subsequent to the first and the notices for redeeming Trade Papers
shall be performed through the BVC Daily Bulletin.
D.
GENERAL RULES FOR PLACEMENT AND NEGOTIATION
1. Mechanisms to prevent and control money laundering and terrorism financing
In order to fulfill the stipulation in Circular Letter 060 of 2008 issued by the Financial Superintendence of Colombia - SFC, the Placement
Agents shall be in charge of applying the instructions related to money laundering and terrorism financing risks according to the
stipulations in Chapter Eleven of Title I of Circular Letter 007 of 1996. For that purpose, the Issuer previously establishes criteria for choosing
Placement Agents guaranteeing that such entities fulfill the objectives established in the said stipulation. Likewise, the Issuer delegates the
obligation of consolidating Investors’ information to the Leading Placement Agent. In any case, each of the Placement Agents must fulfill
the instructions related to the administration of money laundering and terrorism financing risk according to the stipulations in Chapter
Eleven of Title I of Circular Letter 007 of 1996, and to develop individually the reports discussed in the said Chapter.
In order to fulfill the stipulations contained in the norms on prevention and control of money laundering and terrorism financing, Investors
interested in acquiring Securities, to participate in the respective placement process of the same, must be affiliated as clients or deliver the
affiliation form duly filled out with its respective annexes including the Authorization of Personal Data Use that will be requested by the Placement
Agents used to acquire Securities according to internal policies of each of them.
The affiliation form and its annexes, including the Authorization of Personal Data Use must be delivered by the Investors in advanced as
requested by each Placement Agent according to their policy for client affiliation. If the placement is performed through an auction mechanism,
the mentioned documents must be delivered before the time fixed for the initiation of request reception at the latest.
Any prospective Investor who has not delivered, in a timely manner, the affiliation form duly filled out and the totality of the annexes required,
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including the Authorization for Personal Data Use, shall not be able to participate in the Security allocation process.
1. Placement Rules
The subscription of Securities shall be implemented through the Leading Placement Agent and the other Placement Agents indicated in the
Public Offer Notice. Also, the Leading Placement Agent, fulfilling the orders from the Issuer, shall be able to appoint other exchange broker
companies registered in BVC and/or financial corporations to form a placement group through delegation or assignment. This with prior consent
of the Issuer and taking into account, if necessary, its recommendations or objections.
Placement shall be advanced using the Placement to the Best Effort system. The fees for placement charged to the Issuer and in favor of the
Placement Agents shall be determined by the amount of the resources actually placed.
The investment value shall be paid in total at the timed determined in the corresponding public offer notice; the investment can be placed at
nominal value or with the bounty or discount determined the Issuer and published in the respective Public Offer Notice.
When the placement of Straight Bonds is done through the allocation electronic system of the BVC, they can be registered with a compensation
term of up to three (3) Business Days from the day following the date of the transaction. In this sense, the Date of Straight Bond Subscription
can differ from the Date of Issue; both shall be indicated in the respective Public Offer Notice.
The Security allocation mechanism can be auction or real demand, according to the determination in the respective Public Office Notice.
Each Public Offer Notice shall include the name of the Placement Agents, whom the Investor shall approach to submit requests, the fax number,
the telephone number or place receiving the purchase requests, the time of initiation of request reception, and the latest time to end the reception
of requests.
Investors’ requests for Securities shall be done through Placement Agents, and the latter shall submit the Investors’ requests, which shall be
binding, during the reception hours indicated in the respective Public Offer Notice. The requests performed directly by the Placement Agents or
by the Electronic Market of Colombia – MEC (in Spanish) affiliates shall be taking into account for allocation. The Issuer shall not be responsible
if the Placement Agents do not submit the requests within the hours established for that purpose. In such a case, the Placement Agent shall be
responsible to the Investor according to the pertinent norms established for the Security Public Market and, particularly, those related to the
enforceable duties of security intermediaries.
The requests can also be submitted directly by other agents affiliated to the Electronic Market of Colombia - MEC, provided this has been
established in the respective Public Order Notice and in the operational instruction prospectus issued by the BVC for the Issue.
The BVC shall be in charge of the allocation according to the terms and conditions of the present Information Prospectus, the respective Public
Order Notice, and the respective operation instruction prospectus issued by BVC, as well as the criteria to be taken into account for the
submission, rejection, or allocation of requests.
Investors must submit their requests within the hours indicated in the respective Public Offer Notice and under the indicated conditions.
Once the Security allocation process is over, the BVC shall inform the Placement Agents and MEC affiliates about the transactions that were
allocated to them or rejected through the mechanism determined in the Operation Instruction Prospectus so that they can inform the Investors
also.
In the event the Issuer offers more than one subseries, the allocation criteria shall be established in the respective Public Offer Notice in case
there is an excessive demand.
Any of the Issuer’s legal representatives, in accordance with the power granted by the Board of Directors, shall determine the financial conditions
the Securities shall have according to the subseries offered in the respective Public Offer Notice. The Return Rate offered shall be determined
in the in the respective Public Offer Notice when the allocation is performed through the firm demand mechanism, or the maximum return rate
offered shall be determined in the respective Public Offer Notice when the allocation is performed through the auction mechanism.
Once the Coupon Rate has been established for each subseries offered, it shall not be modified during the whole term of the respective
Securities of the respective Issue, unless the Issuer falls into insolvency regime. Therefore, if the Issuer offers new lots, on subseries that have
already been offered, the offer shall be performed for the Security Subscription Price or for the discount rate used for figuring out the same,
respecting the Coupon Rate previously offered.
In the event that there be balances without placement within a single Issue of Straight Bonds, these can be offered in a subsequent lot through
a new Public Offer Notice. Subsequent lots can be formed by subseries previously offered, only under the same conditions they were offered
initially, and /or by different subseries.
1. Placement Mechanisms
Issues can be placed under the following mechanisms:
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PROSPECTUS
Auction Mechanism:
Auctioning for the allocation of Securities shall be performed using the electronic allocation system under the auction mechanism developed by
the BVC, with whom the corresponding terms are to be agreed on.
The auction operational procedure shall be explained in the respective Public Offer Notice and in the operational instruction prospectus issued
by the BVC for each auction and shall be available in the web page www.bvc.com.co. Allocation shall be performed at the end of the hours
established for submitting requests into the electronic allocation system, as indicated in the respective Public Offer Notice and respecting the
conditions there contained.
In the event the total amount requested were higher that the amount offered in the respective Public Offer Notice, on its own accord the Issuer
shall be able to respond to the unmet demand up to the additional amount established in the said notice (Over-allocation Amount) without
exceeding the total amount of the respective Issue, provided this has been discussed in the respective Public Offer Notice. Allocation of the
unmet demand shall be performed according to rate and term favorability criteria for the Issuer and subject to the criteria established for that
purpose in the respective Public Offer Notice.
When the demand is equal or higher than one hundred per cent (100%) of the Offer Amount, the Issuer shall be able to decide not to allocate
amounts to some of the offered subseries and shall be able to assign partial amounts by subseries, according to favorability criteria for the
Issuer in terms of rate and term. In any case, the Issuer must take into account that it shall not be able to allocate amounts lower than the
Offer Amount indicated in the respective Public Offer Notice, unless the requests submitted to the auction were lower than the Offer Amount.
Real Demand Mechanism:
Real demand for Security allocation demand shall be performed using the electronic allocation system under the real demand mechanism
developed by the BVC, with whom the corresponding terms shall be agreed on.
The offer recipients shall submit their purchase requests before the Placement Agents on the business days indicated in the respective Public
Offer Notice; the latter shall submit such requests to the BVC. The amount allocated must be established taking into account the Offer
Amount according to the offer the Issuer has made in the respective Public Offer Notice.
Allocation of the Securities to the Offer Recipients can be performed first come first served or pro rata depending on the stipulation in the
respective Public Offer Notice.
In the event the Securities allocation to the Investors is performed pro rata, the requests shall be received by the BVC into the allocation
electronic system according to the stipulations in the operational instruction prospectus that the BVC issues for each placement.
Securities allocation to Investors can be performed first come first served according to the requests’ date and time of reception by the BVC into
the electronic allocation system. If the demand is higher than the Amount of the Offer, the request filling up the offered amount shall be
fractioned, fulfilling the investment multiples and minimums established, and the excess shall be rejected. If the demand is higher than the
Mount of the Offer and two or more requests fill up the offered amount, and if these were submitted into the system simultaneously (same date
and time), the one having the higher offered amount shall prevail; if the amounts are equal, allocation shall be performed in descending
alphabetical order according to the indications in the operational instruction prospectus issued by BVC for placement.
During the placement process, the date and time of reception of requests shall be recorded, and the fiscal auditor of the Leading Placement
Agent must be present during the reception of the requests and during the allocation process in order to certify the fulfillment of the parameters
established in the respective Public Offer Notice. The certification issued by the fiscal auditor must be presented to the SFC on the placement
day by using the Relevant Information mechanism.
E.
SECONDARY MARKET AND APPRAISAL
Securities shall enjoy free negotiation In the BVC, and the Security Holders shall be able to negotiate with them directly in the Secondary Market
or through the BVC taking into account and meeting applicable norms.
Classification, appraisal, and accounting of Securities for Security Holders who are entities subject to the inspection and supervision of the SFC
shall be performed according to stipulation in Chapter 1 of the Basic Accounting and Financial Circular Letter (External Circular Letter 100 of
1995 of the SFC).
Classification, appraisal, and accounting of Securities for Security Holders who are companies of the real sector shall be performed according
to stipulation in Decree 2649 of 1993 (accounting norms applicable to the real sector) and Decree 2650 of 1993 (Single Plan of Accounts).
From 2015 on, classification, appraisal, and accounting of Securities shall be performed according to determinations from the IFRS,
accepted through Act 1314 of 2009 or the norms that modify or substitute them.
Other Security Holders must perform the appraisal according to their own standing norms.
The appraisal mentioned in the present section does not imply any responsibility whatsoever for the SFC nor any responsibility related to quality,
price, or negotiability of the Securities.
PART II - ISSUER INFORMATION
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PROSPECTUS
CHAPTER 4 – GENERAL INFORMATION
A.
REGISTERED NAME, LEGAL STANDING, DURATION, AND CAUSES FOR
DISSOLUTION
1. Registered Name
Grupo Argos S.A. is a standing business corporation domiciled in the city of Medellín, incorporated through public deed number 472 of
February 27, 1934, from Notary 2 of Medellín Circuit. The articles of incorporation have been modified several times; the last
modification was legalized through public deed No. 2295 from Notary 29 of Medellín on May 20, 2013.
The Bylaws of the corporation can be consulted in the Issuer’s web page www.grupoargos.com
2. Legal Standing and Duration of Issuer
Grupo Argos has not been dissolved, and according to its Bylaws, its duration term shall last until February 27, 2033 .
3. Causes for Dissolution
The Issuer can be dissolved in advance by decision of a plenary Shareholders Meeting, or by occurrence of any of the events included in
section 457 of the Trade Code, or any norm that modifies or abrogates it.
The Issuer shall
dissolve:
a. Due to the completion of the term indicated as the duration term if the latter has not been legally extended before.
b. Due to the impossibility to develop the corporation because the same has been ended or because the thing or things whose exploitation
constitutes the purpose of the corporation have been extinguished.
c. Due to the reduction of the number of associates to less than the number required by law for its
operation.
d. Due to obligatory settlement according to the law.
e. Because a Shareholders Meeting has so resolved counting on the votes required for statutory
modifications.
f.
By decision of a competent authority in cases specifically determined by law.
g. When there are losses reducing the net worth below 50% of the subscribed capital.
h. When 95% or more of the subscribed shares remain in possession of a single Shareholder.
i.
For any other reason specifically determined by law.
B.
SUPERVISION ON THE ISSUER
Grupo Argos is a business corporation, of Colombian nationality, with headquarters in the city of Medellín, department of Antioquia,
Republic of Colombia.
As a security issuer, Grupo Argos is subject to control by the SFC. The issuer is not subject to
any special supervision by the Government due to the purpose of the corporation.
C.
HEADQUAARTERS DOMICILE AND MAIN ADDRESS
Grupo Argos’ headquarters are in the city of Medellín; the address is Carrera 43A No. 1A Sur -143, Medellín, Colombia.
D.
MAIN PURPOSE OF THE
CORPORATION
Pursuant to section three of Grupo Argos Bylaws, the operation of the corporation shall endeavor in the following activities:
“Investment in all types of movable and immovable goods, and specially in shares, quotas or parts, or any other participating bond, in
companies, entities, organizations, funds, or any other legal concept allowing the investment of resources. Likewise, it shall be able to invest
in papers or documents with fixed or variable interest, whether they are registered in the public security market or not. In any case, the issuers
and/or investment recipients may have public, private or mixed nature, and be national or foreign.
The corporation shall be able to form civil or commercial companies of any type or join as partner in companies that have already been
incorporated. The partnership allowed by this clause covers companies whose activity is different from its own, provided it is beneficial for its
interest, at the discretion of a body empowered to approve such transactions by the Bylaws.
In the same manner, it shall endeavor in the exploitation of the Cement Industry and the production of Concrete Mix or of any other materials or
goods with a cement, lime, or clay base; the acquisition and disposal of minerals or mineral deposits useful in the cement
industry and similar and of rights to explore and exploit the indicated minerals either by franchise, privilege, rent, or any other title; undertake the
exploitation of precious minerals such as gold, silver, and platinum, acquisition and disposal of other mineral deposits and of rights to
explore and exploit minerals different from the ones indicated above either by franchise, privilege, rent, or any other title; the
performance of exploration and exploitation of hydrocarbons and the other activities inherent to the sector; establishment of
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PROSPECTUS
factories, stores, and agencies for manufacture, storage, distribution, and sale of its products and the acquisition, exploita tion, and
disposal of raw materials, machinery, and utensils necessary for the implementation of its corporate purpose or that are conducive
to its development.
Use of substances that are useless in other processes to substitute raw materials or fuel in the manufacture of cement.
The corporation shall be able to build and operate necessary industrial settings and installations such as factories, electric plants, docks,
workshops, buildings, warehouses, stores, or agencies; establish distribution and sales systems that it considers adequate; endeavor in the
acquisition , transportation, disposal, and all kind of contracting related to the products of the cement industry and the corporate purposes
resulting from the application of the same, and likewise the acquisition, exploitation, and disposal of raw materials necessary for the
implementation of its corporate purpose. In the same manner, the corporation shall be able develop and exploit all kinds of commercial activities
in its port installations as well as to enter contracts with private parties for the use of the same, invest in construction, maintenance, and
management of ports; render services related to loading and unloading of storage goods in ports and other services directly related to port
activity. It can also act as promoter, investor, and developer of real estate projects of all kinds, and while so doing it shall be abl e to
acquire chattel and real estate that are necessary for the development of corporate businesses that can have a fixed or mobil e asset
nature according to the destination of the same.
In order to fulfill entirely its corporate purpose, the Corporation shall be able to acquire possession or any kind of right over movable or immovable
goods, corporeal or incorporeal, whose acquisition might be necessary or beneficial at the discretion of the Board of Directors in order to reach
such purpose; construct buildings and other works necessary or beneficial for the development of its business; obtain media and
franchises for the use of water, exploitation of minerals and other natural resources related to its corporate purpose ; acquire, keep,
use, and dispose of patents, registration rights, permissions, privileges, industrial procedures, registered brands and names related to the
establishment and all the production, process, operation, and activities of the corporation, entering all kinds of businesses related to the above;
dispose of all those that for any reason cease to be needed or are not beneficial anymore; invest available reserve, precaution, or other
funds in the acquisition of goods and rights of all kinds, movable or immovable, corporeal or incorporeal, with the possibility to keep, exploit,
and dispose of them later on, according to the needs of the Corporation; form, organize, or finance companies, partnerships, or enterprises
with the same or similar corporate purposes as its own or whose corporate purpose is to carry out or enter businesses resulting in opening
new markets for the goods the Corporation produces or to obtain new clientele or improve it or facilitate in any way the transactions that
constitute its main corporate purpose or join them in all kinds of agreements or contracts and underwrite or become interested in the said
companies, partnerships, or enterprises; integrate the business of any of the companies, partnerships, or enterprises mentioned or merge
with them; enter checking account contracts with all kinds of persons; provide its chattel or real estate as guarantee; promote the organization
and incorporation of Companies, Partnerships, or Enterprises having the same or similar corporate purposes as its own or that could favor or
develop its activities or those of the Companies the Corporation is interested in or that tend to obtain clientele or improve it or to facilitate in any
way its business; participate in biddings, dispose of, draw, accept, endorse, insure, and collect any titles, securities, bonds, and investment
papers; participate in construction projects or the implementation of any civil works, take or provide any money on interest, issue bonds
according to the law; draw, endorse, acquire, accept, collect, protest, cancel, or pay bills of exchange, checks, money orders or any other trade
tools or accept them as payment; and in general, to perform, in any place, on its own behalf or through third parties or in participation with them,
all kinds of civil, commercial, industrial, or financial operations, on movable or immovable property, that might be necessary or beneficial for
obtaining objectives it pursues or that might favor or develop its activates or those of the enterprises it is interested in.”
E. HISTORICAL REVIEW
Grupo Argos was born in Medellín (Colombia) on February 27, 1934 as a corporation known as Compañía de Cemento Argos S.A., an
enterprise that produced Portland cement. In October of 1936, the factory initiated operation. From that year on, it yielded benefits, which
made it possible to declare its first dividends in 1938. After that date, Grupo Argos has paid dividends every year without exception.
After its partnership with Cementos del Nare S.A., it initiated a fruitful endeavor acquiring and creating enterprises in different regions of
Colombia, thus generating: Cementos del Valle S.A. in 1938, Cementos del Caribe S.A. in 1944, Cementos El Cairo S.A. in 1946, Cales y
Cementos de Toluviejo S. A. - Tolcemento in 1972, Compañía Colombiana de Clinker S. A. -Colclinker in 1974, and Cementos Rioclaro S.A.
in 1982; finally in the 90’s, it acquired shareholding participation in Cementos Paz del Río S.A.
In the 80’s, as part of a strategy by the entrepreneur from Antioquia to defend ownership of his/her main companies, it performed a shareholding
exchange with Compañía Nacional de Chocolates S.A. and Compañía Suramericana de Seguros S.A., thus becoming, since then, one of the
three heads of the Grupo Empresarial Antioqueño. In 1998, it ceased to produce cement and endeavored exclusively in holding activities. To
that date, its portfolio had been mainly invested in companies producing and trading with cement and concrete.
In 2005, it changes its registered name for Inversiones Argos S.A. and promoted the merging of companies producing cement
where it had a controlling shareholder status under the name Cementos Argos, thus officially taking on the Holding role. In 2008,
looking for diversification of its portfolio in order to have participation in other important sectors of the economy, it decided to invest in the
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PROSPECTUS
energy sector as it acquired 16% of Celsia, which produced energy as one of its investment focuses. In 2010 it consolidated its
investment becoming the shareholder with 50.05% of the total of outstanding shares of Celsia; this percentage is up to 52.35% at present.
Carrying on the portfolio diversification strategy, the extraordinary Shareholders Meeting of November 24, 2011 approved the split by
acquisition project; due to such project Inversiones Argos S.A. acquired its subsidiary Cementos Argos (split company), part of its Net
worth was formed by assets not related to cement but to real estate, port, coal, and portfolio investment activities, as well as some
liabilities and some net worth accounts associated to the split assets, and in consideration for the tran saction, it delivered to the
Shareholders of Cementos Argos, other than itself, 137,805,554 Preferred Shares at a rate of 0.31 Preferred Shares of Inversiones Argos
S.A. for each share of Cementos Argos. Later on, in March of 2012, the corporation changed its registered name again for Grupo Argos S.A.
At the completion of the said Split, performed on May 30 of 2012, Grupo Argos became the holder of 100% of the shares of the companies that
nowadays are called:
Sator, where thanks to the destination of the coal related assets of Grupo Argos, the coal business went from being a costs center to
being an autonomous Company looking for profitable business alternatives.
Situm, a Company dedicated to the real estate activity, that has the structure to advance the strategy required to continue the traditional
business of land urban development and to undertake the model of property for rent.
In December of 2012, Grupo Argos contributed with the port assets received from Cementos Argos to the creation of a new Company
called Compas which owns 50% of the total Outstanding Shares and whose objective is to provide immediate and timely response to the
requirements of port infrastructure.
E.
SHARE COMPOSITION AND INFORMATION ABOUT THE MAIN SHAREHOLDERS
Grupo Argos is a registered corporation whose Shares are transacted through the BVC, and consequently, its share composition is
under permanent change. Information that corresponds to the holders of the Outstanding Shares of the Corporation as of March 31 of
2014 follows:
Shareholder Name
No. Common Shares
Participation %
Grupo de Inversiones Suramericana S.A.
Grupo Nutresa S.A.
Fondo de Pensiones Obligatorias Porvenir Moderado
Fondo de Pensiones Obligatorias Protección Moderado
Amalfi S.A.
Fondo Bursátil IShares Colcap
Fondo de Pensiones Obligatorias Colfondos Moderado
Inversiones el Yarumo S.A.
Fundación para el Beneficio
Holders with a participation lower than two per cent (2%)
Total Outstanding Common Shares
229,780,293
79,804,628
36,790,144
32,725,944
24,171,236
14,299,948
14,183,790
14,003,382
13,598,775
186,041,860
645,400,000
35.60%
12.37%
5.70%
5.07%
3.75%
2.22%
2.20%
2.17%
2.11%
28.83%
100.00%
Reacquired Common Shares
Total subscribed Common Shares
5,702,432
651,102,432
-
Shareholder Name
Fondo de Pensiones Obligatorias Protección Moderado
Fondo de Pensiones Obligatorias Porvenir Moderado
Amalfi S.A.
Fondo de Pensiones Obligatorias Colfondos Moderado
Fondo de Pensiones Obligatorias Skandia Moderado
Norges Bank
Fondo de Pensiones Protección - Renta Fija Corto Plazo
Vanguard Emerging Markets Stock Index Fund
Azurita S.A.
Shareholder Name
No. Preferred Shares
35,631,712
22,390,736
14,226,871
8,039,956
2,799,219
2,121,803
2,050,389
1,950,826
1,761,926
No. Preferred Shares
Participation %
24.47%
15.38%
9.77%
5.52%
1.92%
1.46%
1.41%
1.34%
1.21%
Participation %
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PROSPECTUS
Conscar & Cía. S.C.A.
Holders with a participation lower than two per cent (2%)
Total Outstanding Preferred Shares
F.
1,678,481
52,934,549
145,586,468
1.15%
36.36%
100.00%
CORPORATE GOVERNANCE PRACTICES
The Issuer has a Code of Good Governance, which is available to all the Investors in the Issuer’s web page www.grupoargos.com where
you click on “Corporate Governance” and then on “Good Practices”, and on the SFC web page www.superfinanciera.gov.co.
External Circular Letter 028 of 2007 of the SFC, modified by External Circular Letter 056 of 2007 and External Circular Letter 007 of 2011 of
the same entity, which adopts the Code of Corporate Best Practices of Colombia (Country Code) for the registered entities or who have
registered securities in the Securities and Issuers National Registry - RNVE (in Spanish), indicates the parameters for corporate
governance voluntarily adopted for those entities, and imposes the processing of an annual survey on fulfillment. The Issuer transfers to
the SFC, on line through its web www.superfinanciera.gov.co, the results of the annual survey on Corporate Governance (Country Code)
so that this entity proceed with the publication of such survey. Also, the said survey can be consulted on the Issuer’s web page
www.grupoargos.com.
CHAPTER 5 – ORGANIZATIONAL STRUCTURE OF THE ISSUER
A.
STRUCTURE OF ISSUER
Grupo Argos has the following direction and management bodies, without prejudice of others that a Shareholders Meeting or the Board of
Directors might establish:
1. Shareholders Meeting
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PROSPECTUS
2.
Board of
Directors
3. President
Each one of these bodies performs the functions and duties determined in the Issuer’s Bylaws, in accordance with the special dispositions
there contained and with legal norms.
B.
SHAREHOLDERS GENERAL MEETING
The Shareholders Meeting is formed by the Shareholders or their management together with the quorum and other formalities stipulated in the
Bylaws. Each Shareholder shall have as many votes as Common Shares it has, with the restrictions the law establishes in an imperative and
unavoidable manner.
Shareholders Meetings shall be ordinary of extraordinary. The former shall take place during the first three months of the calendar year in order
to examine the Issuer’s situation, appoint the managers and other officials at their discretion, determine the Issuer’s economic guidelines,
consider the general financial statements of the last exercise, individual and consolidated, resolve the distribution of profit, and make the other
decisions they are responsible for.
If a Shareholders Meeting is not convened, it shall meet of its own right on the first business day of April at ten a. m. at the headquarters’ main
office. In this case, the presence of just one or several shareholders shall be enough to carry out the meeting and make valid decisions,
regardless of the number of shares represented.
Extraordinary meetings shall take place when required by the Issuer’s needs, at the decision of the Board of Directors, the President, or the
Fiscal Auditor, or when ordered by government bodies with authority to call the meeting.
Shareholders Meetings shall be convened by notice in any newspaper of the registered domicile, or by a written medium addressed to all the
Shareholders. When the meeting is extraordinary, the notice shall include the agenda for the meeting. Meetings with the purpose of approving
the general financial statements, individual and consolidated, corresponding to the end of an exercise, shall be convened at least fifteen days
in advance. In the other cases, a five regular days in advance notice shall suffice. Nevertheless, from January 1 of 2015, the call shall be
performed at least twenty business days in advance when the objective is to approve the general financial statements, individual and
consolidated, corresponding to the end of the exercise, and ten calendar days in advance in the other cases.
The Shareholders Meeting shall take place with a plural number of Shareholders representing, at least, half plus one of the subscribed
Shares. Decisions shall be made by majority of the present votes, with the following exceptions:
a. In order not to distribute the minimum percentage of the profit required by law; a majority of 78% of the shares represented in the meeting.
b. In order to place the shares without subjection to preference rights; a majority of seventy per cent (70%) of the shares present in the
meeting.
c. In order to pay the dividends for the shares paid-up by the Issuer; a majority of 80% of the shares represented in the meeting.
Grupo Argos Shareholders Meeting has the following functions:
a. Elect and remove the members of the Board of Directors at its discretion as well as fix their fees.
b. Appoint and remove the Fiscal Auditor and his/her deputy at its discretion and fix the remuneration for the
Fiscal Auditor.
c. Authorize the corporation’s new contracts where Grupo Argos participates as a partner or as a shareholder, provided the objective is to
provide the totality of the assets to the fund of the partnerships or companies that Grupo Argos incorporates or joins, as well as to decree
the assignment, disposal of, or rent of the totality of the social enterprise or the totality of the Issuer’s assets , or the assignment, disposal
of, or rent of a fundamental part of the Issuer’s exploitations and other goods, which includes all transactions whose value reaches fifty
per cent (50%) or more of Grupo Argos’ liquid assets.
d. Order that a determined issue of Common Shares takes place without subjection to rights of preference.
e. Examine, approve, disapprove, modify, and cancel the general financial statements, individual and consolidated, pursuant to the law,
and in the same manner consider the reports from managers and the Fiscal Auditor.
f. Decree the distribution of profit, fix the amount for dividends and the form and term of the payment, decide what reserves must be
done besides the legal one, and destine a part of them for charity, civil causes, or education.
g. Reform the Bylaws according to legal dispositions.
h. Create and place shares with preferred dividends and without the right to vote, taking into account they cannot represent more than
50% of the subscribed capital.
Make the decision to undertake responsibility legal action against the managers.
i.
Make decisions related to the segregation of Grupo Argos. For this purpose, segregation is understood as an operation to submit a
company called the “segregating company” to destine one or several parts of its net worth to the formation of one or several companies
or to increase the capital of existing companies, called “beneficiaries.” For consideration, the segregating company receives shares,
quotas, or interest parts in the beneficiary company.
The Shareholders Meeting can delegate functions, in specific cases, on the Board of Directors or on the president of Grupo Argos.
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PROSPECTUS
C.
BOARD OF
DIRECTORS
1. Members of the Board of Directors
The Issuer’s Board of Directors is currently formed by seven (7) directors elected for a two (2) year period and are eligible indefinitely.
Nevertheless, through a statutory reform approved in the Shareholders Meeting of March 20 of 2013, the statutory period for the members of
the Board of Directors was increased to three (3) years; this modification shall be effective for the members to be elected in the ordinary meeting
of 2015. All the directors are principal, there are no deputy directors.
As of March 31 of 2014, the members of the Board of Directors were:
Jorge Esteban Giraldo Arango (president)
David Bojanini García
Carlos Ignacio Gallego Palacio
Mario Scarpetta Gnecco
Rosario Córdoba Garcés
Guillermo Heins Finkensteadt
Ana Cristina Arango Uribe
The members of the Board of Directors were appointed by the Shareholders Meeting of March 20 of 2013 for a two year period. Nevertheless,
due to the resignation of Carlos Enrique Piedrahíta Arocha from the Board of Directors, the Shareholders Meeting of March 26 of 2014
appointed Carlos Ignacio Gallego Palacio to replace him for the rest of the current period ending in 2015.
Jorge Esteban Giraldo Arango, Rosario Córdoba Garcés, Guillermo Heins Finkensteadt, Mario Scarpetta Gnecco, and Ana Cristina
Arango Uribe have certified the qualification required to be considered independent members, thus fulfilling the stipulations of paragraph 2 of
section 44 of Act 964 of 2005, as well as the stipulations in the Code of Good Governance, that establish that at least 50% of the Members must
certify qualifications in order to be considered independent members.
The president of the Board of Directors, by specific disposition of the Code of Good Governance, must be an independent member and shall
be elected among the members for a two (2) year period.
The Board of Directors shall meet ordinarily at least once every two (2) months, and shall meet in an extraordinary manner when the Board
itself determines so or when it is convened by the Issuer President, by the Fiscal Auditor, or by three (3) of its members. Non-face to face
meetings shall be valid under the terms authorized by law.
The call-up for the Board of Directors meetings shall be performed by any medium; there is not a special call-up term.
The Board of Directors will carry out the meeting validly in any place it chooses with the attendance of the majority of its members and shall
decide by the majority of the present members.
2. Mechanisms to Appoint Members
The members of the Board of Directors shall be elected by applying the electoral quotient system, thus fulfilling the dispositions in section 44 of
Act 964 of 2005.
The members of the Board of Directors are removable at any time by a Shareholders Meeting, without the need to express the reason, and
without the consent of the pertinent member.
The members of the Board of Directors can be Shareholders or outsiders. The president can be or not be a member of the Board of Directors;
if the person is not a member of the Board, he/she shall have only voice in the discussions. In no case the Issuer President shall earn special
remuneration for attending Board of Directors meetings.
3. Functions and Power of the Board of Directors
The power and functions of the Board of Directors according to the standing Bylaws are:
Appoint and remove the President of Grupo Argos and the other legal representatives
a.
b.
c.
Fix the remuneration for the President of the Issuer.
Make decisions related to resignations and licenses for the Issuer’s employees whose appointment is their responsibility.
Call-up the Shareholders Meeting to extraordinary sessions, provided it considers it beneficial, or when a number of Shareholders
representing, at least, the fifth part of the subscribed Shares request it. In the latter case, the call-up shall be done within the three (3) days
40
PROSPECTUS
d.
e.
f.
g.
h.
i.
j.
k.
l.
m.
n.
o.
p.
q.
r.
s.
following the day the meeting was requested in writing.
Grant the President an advisory vote when this one requests it.
Submit to the Shareholders Meeting an annual management report, including pertaining reasoning, which shall include a true
presentation on the business’ development and on the juridical, economic, and administrative situation of Grupo Argos. Likewise it
shall include indications on the importance occurrences after the exercise, the foreseeable development of Grupo Argos and the
transactions carried out with partners and administrators. The report must be approved by the majority of the Board of Directors votes,
and the explanations or exceptions from those that do not share it shall be annexed. This report, along with the other legal documents,
shall be submitted in association with the President of Grupo Argos.
Decree and regulate the issue and placement of shares, bonds, and trade papers.
Authorize partnership contracts or acquisition of shares of partners when the Issuer acquires the controlling partner status; make
decisions related to assignments, disposal of, or partial rent of the exploitations and factories belonging to the Issuer provided that
the transaction in case refers to a part whose value be higher than ten percent but lower than fifty percent (50%) of the Issuer’s fixed
assets.
Examine, at its own discretion, by itself or through a commission, the accounting books, documents, and the cash balance of the Issuer.
Establish subsidiaries, branches, or agencies in other cities of the country or abroad.
Watch over the strict fulfillment of the Bylaws, the decisions of the Shareholders Meetings, its own agreements.
Authorize acts or contracts whose value exceeds an amount equivalent to ten thousand (10,000) legal monthly minimum wages in
legal Colombian currency.
Guarantee the effective fulfillment of the requirements established by law in relation to the Issuer’s good governance.
Adopt the Issuer’s Code of Good Governance, where both policies and principles to guarantee the fulfillment of Shareholders’ rights
shall be defined; this refers to mechanisms allowing appropriate disclosure and transparency in relation to the Issuer’s transactions
and the acts of its managers, and guarantee such rights’ effective fulfillment. In the Code of Good Governance, the competencies for
the response to interest conflicts of managers and other Issuer’s officials shall be established; they shall be considered delegated
by virtue of the Bylaws.
Direct the general operation of the Corporation businesses.
Authorize the managers, at their request and with prior presentation of the pertinent information, to participate themselves or through
an intermediary for personal interest or third parties’ interest in activities implying competition for Grupo Argos or in acts involving
conflict of interest, provided the acts do not harm Grupo Argos’ interests.
Decide about conflict of interest that, according to the stipulations of the Code of Good governance, are under its jurisdiction.
Consider and respond in writing and with due motivation the proposals submitted a plural number of Shareholders representing at
least five per cent (5%) of the subscribed shares.
Decide in relation to the appraisal of contributions in kind performed after the incorporation of Grupo Argos.
Other functions that are not ascribed to the Shareholders Meeting or to the President of Grupo Argos.
4.
Mechanisms Adopted to Guarantee Independence
A mechanism adopted to guarantee Independence for the members of the Board of Directors requires that, at least, 50% of the proposed
members must submit credentials for the requirements for being considered independent members under the terms established in paragraph
2 of section 44 of Act 964 of 2005, or an Act substituting, complementing, or modifying it and under the Code of Good Governance.
Additionally, pursuant to the subparagraph in paragraph 3 of Chapter III of the Code of Good Governance, independent members shall
lose their condition as such when they have had this condition during three subsequent periods.
D.
RELATIONSHIP OF THE MEMBERS OF THE BOARD OF DIRECTORS WITH THE CORPORATION OR ITS COMPANIES
None of the members of the Board of Directors is an employee of Grupo Argos.
Following is a list of the members of the Board of Directors who are managers or members of the Board of Directors of companies with
significant participation in the Issuer, or companies where the Issuer has important participation:
Name
David Bojanini García
Carlos Ignacio Gallego Palacio
A.
Position
President of Grupo de Inversiones Suramericana S.A.
President of Grupo Nutresa S.A.
MANAGEMENT PERSONNEL
Grupo Argos’ management personnel qualified to manage business and with knowledge in divers areas and broad experience in their
respective functions. The management personnel is formed by the following members:
Name
José Alberto Vélez Cadavid
Position
President
41
PROSPECTUS
Ricardo Andrés Sierra Fernández
Camilo José Abello Vives
Sergio Andrés Osorio Hurtado
B.
Vice-President of Corporate Finance
Vice-President of Corporate Affairs
Administrative Vice-President
PERSONS THAT PERFORM FISCAL AUDITING
The firm appointed to be the fiscal auditor is Deloitte & Touche Limitada. The persons appointed by that entity to perform fiscal auditing on the
Issuer are:
Main Fiscal Auditor
Name:
Position:
Professional Card:
Seniority:
Work Experience:
Academic Background:
Entities where she performs fiscal
auditing:
Entities where she has performed
fiscal auditing:
Deputy Fiscal Auditor
Name:
Position:
Professional Card:
Seniority:
Work Experience:
Academic Background:
Entities where he performs fiscal
auditing:
Entities where he has performed
fiscal auditing:
Olga Liliana Cabrales Pinto
Main Fiscal Auditor
92.873-T
October 24, 2012
Currently, Auditing Manager for Deloitte & Touche Ltda.
Eleven years of experience in auditing
Public Accountant - Universidad Central - Bogotá
Specialization in Financial Management and Organizational Development - Universidad Central
Bogotá.
International Accounting Standards – IFRS
ACCA certification for IFRS standards
Cementos Argos
Celsia
Celsia ZF S.A. E.S.P.
Zona Franca Argos S.A.S.
Holasa S.A., Almagran Cargo S.A., Fundación Bancolombia S.A., Multienlace S.A., Productora
Distrihogar S.A., and others
Juan David López Montoya
Deputy Fiscal Auditor
139197-T
October 24, 2012
Currently, Auditing Manager for Deloitte & Touche Ltda.
7 years of experience in auditing
Public Accountant
Specialization in Senior Management - Universidad de
Medellín International Accounting Standards – IFRS
(ICAEW)
Cementos Argos
Sator
Fundación Mundial
Celsia S.A. E.S.P. Inversiones el Duero S.A.S.
According to the Bylaws, the fiscal auditor is elected by the Shareholders Meeting with the vote of the absolute majority for two (2) year
periods, eligible indefinitely. From 2015 on, the fiscal auditor’s period shall be three (3) years, as determined in the Bylaws.
E.
SHARE PARTICIPATION OF MEMBERS OF THE BOARD OF DIRECTORS AND MANAGERS IN THE ISSUER
As of March 31, 2014, the participation of the members of the Board of Directors and the officials belonging to the management level of the
Issuer does not exceed 0.45% of the Issuer’s Outstanding Shares.
42
PROSPECTUS
Presently, the members of the Board of Directors and officials that belong to the management level of the Issuer do not have a right to Share
purchase options.
F.
AGREEMENTS OR PROGRAMS TO GRANT EMPLOYEES PARTICIPATION IN THE CAPITAL OF THE ISSUER
Grupo Argos does not have any agreement or program to grant its employees direct participation in the Issuer’s capital. Nevertheless, it is
pertinent to explain that, as of March 31 of 2014, Grupo Argos has a long term variable remuneration system for its managers as described
below:
Once the results of the Corporation’s global goals and the individual goals of each manager have been audited, the value of the Long Term
Individual Bond is figured out for each participant for the measurement period; the payment mode for it is a deposit for such amount in a fund
that invests in Grupo Argos’ common shares. The fund is administered by a Pension Fund Administration Company supervised by the SFC
and is subject to the internal regulations of the mentioned administration company.
The participant only has rights to representative units of the said fund but has no right to receive shares. The employees’ rights cannot be
assigned and are consolidated in favor of the participant only after 3 years from the moment the contribution to the fund is performed. Once
the consolidation requirement has been verified, the participant obtains the right to request settlement of the consolidated percentage and to
collect the value of the respective units in the currency of the country where such participant is located. The participant shall be responsible
for any cost or tax generated by holding or settling the fund’s units.
G.
SUBORDINATION SITUATION
The Issuer is not subject to direct or indirect control from another company or individual as per sections 260 and 261 of the Trade Code.
H.
SUBORDINATE COMPANIES
Information on the companies that, as of March 31 of 2014, are affiliates or subsidiaries of the Issuer follows:
Type of
subordinati
on
Subsidiary
Subsidiary
Subsidiary
Registered Name
Agentes Marítimos
del Caribe
Internacional Ltda.
In Liquidation
Alianza Progenética
S.A.S.
American Cement
Terminals LLC
Subsidiary
Argos Cement LLC
Subsidiary
Argos (Dominica)
Ltd.
Subsidiary
Argos Dominicana
S.A.
Subsidiary
Argos Honduras
S.A. de C.V.
Subsidiary
Argos Panamá S.A.
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Type of
subordinati
on
Argos Panamá
Comercializadora
S.A.
Argos Ready Mix
LLC
Argos Ready Mix
(South Central)
Corp.
Domicile
Cartagena,
Colombia
Medellín,
Colombia
Delaware,
EEUU
Delaware,
EEUU
Roseau,
Dominica
Santo
Domingo,
Dominican
Republic
Tegucigalp
a,
Honduras
Panama City,
Panama
Panama City,
Panama
Subsidiary
0.00%
Investment
0.00%
Cement production, distribution, and trade
0.00%
Maritime terminal and cement and related products trade
0.00%
Cement manufacture and sale
0.00%
Exploitation of all kinds of cement
Cement production
Cement, concrete, ready-mix, and aggregates
100.00
%
100.00
%
100.00
%
100.00
%
-
-
-
-
-
-
-
-
2,214,81
7
-
-12,095
-
-
38
-
680
-
-
80.00%
9,360
752
1,916
-
-
0.00%
53.28%
37,041
4,070
5,954
-
-
0.00%
98.40%
265,278
-1,038
84,081
-
-
0.00%
100.00
%
971
-
-
-
-
545,309
-
-7,622
-
-
700,060
-
-24,224
-
-
0.00%
100.00
%
0.00%
Investment
0.00%
Supply of temporary personnel for eventual or accidental work
6,000
-653
Services related to strategic planning, commercial and business development, personnel
management and/or training, operations and/or logistics
Barranquilla,
Colombia
Dividend
Book
Value
(millions)
-502
100.00
%
Dividends to
Be Received
2014
(2013
profit)
(millions)
-
0.00%
EEUU
St. Thomas,
USVI
Last
Exercise
Result
Dec.
2013
(millions
)
-
0.00%
Main Activity
Reserve
s
(million
s)
1,293
Concrete production and sale
Domicile
Capital
Amount
(millios)
22,225
Cement production, distribution, and trade
Saint
Maarten
Delaware,
Asesorías y
Servicios Ltda.
Asoservicios En
Liquidación
All kinds of veterinary services
100.00
%
Delaware,
EEUU
Argos Saint
Maarten N.V.
Argos USA Corp.
Argos USVI Corp.
0.00%
100.00
%
Argos SEM S.A.
Subsidiary
Procure and/or represent, before Colombian authorities, sea ships for
international and coastal traffic without tonnage or service limitation
Indirect
Part. %
Delaware,
EEUU
Panama City,
Panama
Registered Name
Main Activity
Direct
Part. %
Direct
Part. %
0.00%
0.00%
-
-
-
-
-
100.00
%
100.00
13
-
160
-
-
2,289,65
-
-151,847
-
-
Indirect
Part. %
Capital
Amount
(millios)
%
100.00
%
100.00
%
Reserve
s
(million
s)
2
Last
Exercise
Result
Dec.
2013
(millions
)
Dividends to
Be Received
2014
(2013
profit)
(millions)
Divide
nd
Book
Value
(millio
ns)
2
-
-962
-
-
633
-
-
-
-
43
PROSPECTUS
Subsidiary
C.I. Del Mar Caribe
(BVI), Inc.
Subsidiary
Caltek S.A.S.
Subsidiary
Subsidiary
Canteras de
Colombia S.A.S.
Caricement Antigua
Limited
Road Town,
Tortola,
British Virgin
Isles
Medellin,
Colombia
Medellin,
Colombia
Antigua
Subsidiary
Celsia Panamá S.A.
Curaçao,
Netherland
s Antilles
Medellin,
Colombia
Panama City,
Panama
Subsidiary
Cement and Mining
Engineering Inc.
Panama City,
Panama
Affiliate
Cementos Argos
S.A.
Subsidiary
Affiliate
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Affiliate
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Affiliate
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Affiliate
Type of
subordinati
on
Subsidiary
Caricement Antilles
N.V.
Celsia S.A. E.S.P.
Cementos del Sur
S.A.
Cementos Uno de
Honduras S.A.
Central Agregates,
LLC
Cimenterie
Nationale S.E.M. –
CINA
Ciments Guyanais
S.A.S.
Colcaribe Holdings
S.A.
Colener S.A.S.
Comercial Arvenco
C.A.
Compagnie de
Distribution de
Ciment S.A. CDCIM
Compañía de
Electricidad de
Tuluá S.A. E.S.P.
Compañía de
Puertos Asociados
S.A. COMPAS S.A.
Concretos Argos
S.A.
Concretos Argos
Dominicanos S.R.L.
Concreto S.A.
Consort Livestock
Inc.
Corporaciones e
Inversiones del Mar
Caribe S.A.S.
Distribuidora
Colombiana de
Cementos Ltda. En
Liquidación
Empresa de
Energía del Pacífico
Panamá S.A.
Empresa de
Energía del Pacífico
S.A. E.S.P.
EPSA Inversiones
S.A.S.
Fundiciones
Colombia S.A. FUCOL S.A.
Ganadería Rio
Grande S.A.S.
Grava S.A.
Gulf Coast Cement
LLC
Haití Cement
Holding S.A.
Industrias
Metalúrgicas Apolo
Registered Name
S.A.
Inmobiliaria e
Inversiones
Tocumen S.A.
Barranquilla,
Colombia
Tegucigalp
a,
Honduras
Tegucigalp
a,
Honduras
Delaware,
EEUU
Fond
Mombin,
Haiti
French
Guiana,
France
Panama City,
Panama
Medellin,
Colombia
Barquisimet
o,
Venezuela
Fond
Mombin,
Haiti
0.00%
100.00
%
All kinds of activities related to lime
0.00%
50.00%
Stony minerals exploration, exploitation, transformation, transportation, processing, comprehensive use,
trade, and sale
0.00%
0.00%
Investment
0.00%
Cement, clinker, and lime trade
Generation and trade of power utilities
Any legal civil or commercial undertaking
Construction, technical assistance, equipment installation and setting, chattel and real estate buying-selling
and management, investment, financing and participation in companies, purchase or acquisition of
patents, trademarks, copyrights, licenses and formulae
Exploitation of cement industry and production of concrete and any other materials mix, or goods
de autor,
y fórmulas.
based
on licencias
cement, lime,
or clay
100.00
%
100.00
%
100.00
%
54
-
11,922
-
-
-
-
-139
-
-
464
-
617
-
-
76
-
370
-
-
12
-
1,201
-
-
373,645
42,191
52.35%
0.00%
180
2,381,67
0
0.00%
100.00
%
-
-
-
-
-
0.00%
100.00
%
23
-
1,163
-
-
67,653
60.68%
0.00%
8,547
1,032,91
8
183,710
116,002
Cement, concrete, and related products manufacture
0.00%
50.00%
18.8
-
(2)
-
-
Cement trade, wholesale and retail, including general distribution, import and export, and any other
legal trade activity allowed by Honduras law
0.00%
99.60%
0.5
0.1
-
-
-
Aggregates production and trade
0.00%
100.00
%
22,094
-
-68
-
-
Cement production and trade
0.00%
65.00%
26,092
12,796
8,024
-
-
Cement, concrete and related products manufacture
0.00%
100.00
-
-
-
-
-
0.00%
100.00
%
20,357
-
11,416
-
-
Negotiate or dispose of securities, bonds, participation in other companies and rights of
any kind, on tis own or through third parties
0.00%
100.00
%
78,410
51,258
120,524
-
-
Exploitation of business and activities related to import, export, transportation, purchase, and sale of all
kinds of goods and products, metallic and non-metallic minerals, cement, clinker, and coal
0.00%
100.00
%
190
-
-
-
-
Activities related to the cement industry
0.00%
65.00%
-
-
-
-
-
Tulua,
Colombia
Power generation, transmission, distribution, and trade
0.00%
87.20%
3
27,277
12,608
10,086
-
Bogota,
Colombia
Exploitation of port business and port operation
45.04%
4.96%
30,056
34,094
-7,035
-
-
Bogota,
Colombia
Exploration, exploitation, transportation, processing, comprehensive use, trade and sale of stony
minerals such as ready-mix concrete, sand, cement and gravel, and of any other material or good
based on sand, concrete, cement, or gravel
0.00%
100.00
%
9,249
45,448
18,299
-
-
Concrete manufacture and trade
0.00%
100.00
%
-
-
-
-
-
Ready-mix concrete production
0.00%
100.00
%
9,990
-
-
-
-
Concrete production
0.00%
100.00
%
-
-
-
-
-
12,835
390
-3,139
-
-
Santo
Domingo,
Dominican
Republic
Panama City,
Panama
Irving,
EEUU
Performance and/or implementation of any trade activity allowed by the Republic of Colombia’s law
116,002
Medellin,
Colombia
Performance of any legal economic activity both in Colombia and abroad
0.00%
100.00
%
Barranquilla,
Colombia
Cement purchase, sale, distribution, and transportation
0.00%
100.00
%
20
-
-
-
-
Performance of any legal civil or commercial undertaking
0.00%
100.00
%
-
-
-
-
-
Panama City,
Panama
Yumbo,
Colombia
11.86%
50.01%
1,128,16
6
458,530
279,518
214,608
-
Yumbo,
Colombia
0.00%
36.90%
1
-
-
-
-
51.54%
1.54%
1,248
1.709
(88)
-
-
0.00%
100.00
%
5,350
-
(4,789)
-
-
Aggregates production
0.00%
100.00
%
3,135
-
-
-
-
Investment
0.00%
100.00
%
-
-
-
-
-
0.00%
100.00
%
31,430
-
4,178
-
-
76.68%
0.00%
234
2,101
(56)
-
-
Indirect
Part. %
Capital
Amount
(millios)
Medellin,
Colombia
Medellin,
Colombia
Panama City,
Panama
Houston,
EEUU
Panama City,
Panama
Medellin,
Colombia
Domicile
Panama City,
Panama
Manufacture of iron castings and all kinds of goods derived from the transformation of iron ore
Exploitation of agricultural industries
Acquire, purchase, invest in securities, bonds, shares, participation in other companies, as well
as any legal business allowed by the law of the Republic of Panama
Manufacture of agricultural fixtures and tools in general
Main Activity
Purchase, sell, mortgage, rent, acquire, encumber and assign real estate
Direct
Part. %
0.00%
100.00
%
548
Reserve
s
(million
s)
-
Last
Exercise
Result
Dec.
2013
(millions
)
-
Dividends to
Be Received
2014
(2013
profit)
(millions)
Divide
nd
Book
Value
(millio
ns)
-
-
44
PROSPECTUS
Affiliate
Subsidiary
Affiliate
Affiliate
Affiliate
Subsidiary
Subsidiary
Subsidiary
Affiliate
Internacional
Ejecutiva de
Aviación S.A.S. INTEREJECUTIVA
International
Cement Company
S.A.
Inversiones El
Duero S.A.S.
Inversiones
Fortcorp S.A.S.
Inversiones
Roundcorp S.A.S.
Logística de
Transporte S.A.
Logic Service
Dominicana
(LOSEDOM SAS)
S.A.S.
Marítima de
Graneles S.A.
Merger Link Corp.
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Metro Products and
Construction Inc.
Nuevos Cementos
S.A.S.
Palmetto Leasing
LLC
Piazza Acquisition
Corp.
Piazza Property
LLC
Port Royal Cement
Company LLC
Profesionales a su
Servicio Ltda.
Proservi En
Liquidación
RMCC Group Inc.
Affiliate
Sator S.A.S.
Subsidiary
Savannah Cement
Company LLC
Affiliate
Situm S.A.S.
Subsidiary
Somerset Shipping
Co. Ltd.
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
South Central
Cement Ltd.
Southern
Equipment
Company Inc.
Southern Star
Leasing LLC
Surcol
Houdstermaatscha
ppij N.V.
Tekia S.A.S.
Terminal Granelera
Bahía Las Minas
S.A.
Tras Atlantic
Shipmanagement
Ltd.
Transmarítima del
Caribe Ltda. En
Liquidación
Transatlantic
Cement Carriers
Inc.
Transportes Elman
Ltda. En
Liquidación
Subsidiary
Valle Cement
Investments Ltd.
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Venezuela Ports
Company S.A.
Vensur N.V.
Winterset Shipping
Co. Ltd.
Zona Franca Argos
S.A.S.
Zona Franca Celsia
S.A. E.S.P.
Public commercial air transportation services, not usual passenger flights, mail and freight,
including charter flights in national and international routes according to standing regulation and
international agreements on civil aviation
100.00
%
0.00%
3,600
20
(1,422)
-
-
Acquire, own, administer, encumber, rent, dispose of and decide in any manner about all kinds of
goods, on its own or through third parties
0.00%
100.00
%
13
-
-17,847
-
-
0.00%
2,108
34,967
2,904
-
-
0.00%
340
-
(589)
-
-
0.00%
824
-
(346)
-
-
0.00%
100.00
%
142
9,342
1,333
-
-
Transportation of all kinds of goods
0.00%
100.00
%
-
-
-
-
-
Maritime transportation, particularly for cement and clinker, and purchase and sale of the same
products, affreightment of ships and provisioning of the same
0.00%
100.00
%
114
2,315
(3,996)
-
-
Investments of any type
100.00
%
0.00%
13,682
-
(1,079)
-
-
Activities related to the concrete industry
0.00%
Performance of any legal commercial or civil activity permitted in the Republic of Colombia
0.00%
Any legal activity permitted under the laws of North Carolina, USA.
0.00%
Investments
0.00%
Investment in all kinds of goods
0.00%
Cement and related products trade
0.00%
Barranquilla,
Colombia
Supply of temporary personnel for the development of eventual or accidental work
0.00%
Delaware,
EEUU
Investments
0.00%
Medellin,
Colombia
Perform prospection, exploration, exploitation, production, use, transformation,
acquisition, disposal of, trade and transportation of coal and any other mineral substance
associated with coal
Medellin,
Colombia
Panama City,
Panama
Medellin,
Colombia
Bogota,
Colombia
Medellin,
Colombia
Medellin,
Colombia
Santo
Domingo,
Dominican
Republic
Panama City,
Panama
Road Town,
Tortola,
British
Virgin Isles
Raleigh,
EEUU
Bogota,
Colombia
Raleigh,
EEUU
Irving,
EEUU
Irving,
EEUU
Delaware,
EEUU
Georgia,
EEUU
Medellin,
Colombia
British Virgin
Isles
Texas,
EEUU
North
Carolina,
EEUU
Delaware,
EEUU
Paramaribo,
Suriname
Medellin,
Colombia
Panama City,
Panama
British Virgin
Isles
Transportation of persons and all types of freight in and out of the country in any manner
100.00
%
100.00
%
100.00
%
100.00
%
100.00
%
100.00
%
100.00
%
100.00
%
100.00
%
-
-
-
-
-
229,181
-
3,173
-
-
-
-
-
-
-
636,101
-
(35,380)
-
-
-
-
-
-
-
11,866
-
(653)
-
-
100.00
%
390
-
-
-
-
100.00
%
506,114
-
(36,503)
-
-
96.76%
3.24%
8,910
-
(3,045)
-
-
Maritime terminal
0.00%
100.00
%
8,802
-
(1,760)
-
-
100.00
%
0.00%
56
6,428
-8,216
-
International maritime transportation
0.00%
50.00%
23
-
1,927
-
-
Maritime terminal
0.00%
100.00
%
60,618
-
-2,669
-
-
Concrete production and sale
0.00%
100.00
%
535,498
-
-36,503
-
-
Services
0.00%
100.00
%
-
-
-
-
-
Investments
0.00%
50.00%
1
12,469
-1,368
-
-
Implement, operate, and manage forestall and agro-forestall projects
0.00%
100.00
%
1,338
5,935
-4,090
-
-
Maritime services and navigation logistics
0.00%
100.00
194
-
-
-
-
0.00%
50.00%
26,015
-
1,917
-
-
Services related to logistics consulting and other corporate, administrative, and technical services
connected to maritime activity of motorboats, vessels, docks, and other port activities
0.00%
100.00
%
50
-
-
-
-
Panama City,
Panama
Maritime transportation of cement and clinker in particular
0.00%
100.00
%
6,133
-
-11,671
-
-
Barranquilla,
Colombia
Exploitation of land, river, and maritime transportation businesses in own, affiliated, or any kind of
negotiated vehicles
0.00%
100.00
%
800,000
-
-
-
-
Investment of all kinds
8.19%
91.81%
13,798
-
-9,381
-
-
Invest in companies, enterprises, or projects, and negotiation, exploitation, or participation in
industrial, mining, commercial, real estate, maritime, or any kind of company
0.00%
100.00
%
4,966
-
-999
-
-
Cement manufacture and trade
0.00%
42.12%
2
11,193
1,013
-
-
0.00%
50.00%
23
-
1,220
-
-
Barranquilla,
Colombia
Road Town,
Tortola,
British Virgin
Isles
Panama City,
Panama
Paramaribo,
Suriname
British Virgin
Isles
Cartagena,
Colombia
Barranquilla,
Colombia
Exploitation of the cement industry; production of concrete mix and of other materials or goods based on
cement, lime, or clay
0.00%
Power generation and trade
0.00%
100.00
%
100.00
%
64,550
-
13,528
-
-
66,095
263,630
127,472
-
-
Grupo Argos does not own investments for less than 50% of the capital of companies that are not subordinated whose participation
in the consolidated net result of the Issuer is higher than 20%. The Issuer is the parent company of its corporate group.
Grupo Argos is the corporation that dominates the group; for that reason, subparagraph K of Paragraph 8.2 of Resolution No. 2375 of 2006
does not apply to it.
I.
WORK RELATIONSHIPS
45
PROSPECTUS
Grupo Argos has harmonious work relationships; their pivotal point is respect for work fundamental principles and rights, including
values such as respect, tolerance, and honesty.
In terms of number of employees and type of work relationship, as of March 31of 2014 Grupo Argos individually had:
Direct Employees and Workpersons
Type
March 2014 March 2013
Employees on a long-term contract
82
44
Employees on a fixed-term contract
4
-
Type
Temporal employees
Training contract
Outsiders
March 2014
3
2
March 2013
2
There are multiple schedules; the most common are:
Monday through Friday work day:
7:30 a.m. to 12:30 p.m. and 1:30 p.m. to 5:30 p.m.
8:00 a.m. to 12:30 p.m. and 1:30 p.m. to 6:00 p.m.
Due to its Holding nature, Grupo Argos does not have a direct labor union. During the last three years, there have been no activity
interruptions due to problems in work relationships.
CHAPTER 6 – ASPECTS RELATED TO THE ACTIVITY OF THE ISSUER
A.
DESCRIPTION OF THE ISSUER’S MAIN PRODUCTIVE AND SALES ACTIVITIES
The main activity of Grupo Argos is investment in all kinds of movable and immovable goods, specially shares, quotas or parts, or any other
participation title in companies, entities, organizations, funds or any other legal figure allowing resource investment. Also, it shall be able to invest
in fixed or variable profit papers or documents, whether they are registered or not in the Public Security Market. In any case, the issuers and/or
recipients of the investment can be of public, private or mix nature, national or foreign.
46
PROSPECTUS
1.
Products
and
Services
Grupo Argos does not have a product and services portfolio taking into account that its main activities are restricted to holding activities.
2. Description of the Business Segments
Grupo Argos’ strategic investments are represented by majority and controlling participation (60.68% y 52.35%) in Cementos Argos (cement
and concrete business) and Celsia; both companies are listed in the Security Market of Colombia. It also has 100% participation in Situm
(urban development and real estate business) and Sator (coal mining business), as well as a 50% participation in Compas (port business).
Portfolio investments cover relevant share participation in Grupo Sura and Grupo Nutresa mainly; these contribute to secure the net worth
structure of Grupo Argos.
In the cement business, Cementos Argos is a leader in Colombia1, the fifth biggest producer in Latin America and the second biggest in the
Southeast of the United States2. It has nine plants in Colombia, three in the United States, and one in Honduras, ten clinker mills and twentythree ports and reception and packing terminals. Its total installed capacity is 21 million tons of cement per year. In the concrete business,
Argos is leader in Colombia and third biggest producer in the United States, with a total installed capacity of 18 million cubic meters
of concrete per year.
Its affiliate Celsia participates directly and indirectly in the Colombian power business. In a direct manner it does it as power generator- marketer.
In an indirect manner it does it through its Related Companies, it participates in markets related to power generation, transmission, distribution,
and trade. Additionally, it participates in the natural gas market as a marketer.
B.
DEPENDENCE FROM THE MAIN SUPPLIERS
Grupo Argos does not have any type of dependence from its suppliers.
C.
DEPENDENCE FROM THE MAIN CLIENTS
Grupo Argos does not have any type of dependence from its
clients.
1
2
Source: DANE, Cementos Argos calculation
Source: Cementos Argos
CHAPTER 7 – FINANCIAL INFORMATION
A.
ISSUER’S AUTHORIZED, SUBSCRIBED, AND PAID CAPITAL, NUMBER OF OUTSTANDING AND RESERVE SHARES
As of March 31 of 2014, Grupo Argos had the following capital structure:
47
PROSPECTUS
Amount
Authorized Capital
$75,000,000,000
Reserve Shares
$25,206,943,750
Subscribed and Paid Capital
$49,793,056,251
Reacquired Own Shares
$356,402,000
1 This number of Common Shares includes reacquired own shares.
B.
Number of Common
Shares
Ordinarias
651,102,4321
5,702,432
Number of Preferred
Shares
Preferenciales
1,200,000,000
403,311,100
145,586,468
0
Nominal Value
$62,50
$62,50
$62,50
$62,50
PUBLIC OFFER FOR ACQUISITION OF ISSSUER’S SHARES CARRIED OUT DURING THE LAST YEAR
No public offer for acquisition of Grupo Argos Shares was carried out during the last year.
C.
PROVISIONS AND RESERVES FOR SHARE REACQUISITION
The reserve to reacquire Shares, on reacquired own Shares, can only be distributed among the Shareholders when the reacquired Shares
have been sold again, according to the Code of Trade dispositions. While the Shares belong to the Issuer, the rights inherent to them will
remain in suspense.
March 2014
($ millions)
December 2013
($ millions)
Reserve for share reacquisition
Minus- Reacquired own shares
Net Reserves
D.
INFORMATION
DIVIDENDS
5,988
356
5,632
5,988
356
5,632
ABOUT
1. Dividend Policy
The Issuer’s Shareholders Meeting takes place during the first three months of the year to determine the dividend to be delivered by the
Issuer.
Dividends shall be paid from the liquid profit established by the Financial Statements approved by the Shareholders Meeting. Fixing
dividends shall only be done after the deduction for legal reserve, if necessary, and after creating or increasing the reserves determined by
the same Shareholders Meeting.
2. Decreed Profit and Dividends
The decreed dividend and the manner of payment corresponding to the last thee (3) years follow:
Fiscal Exercise
Decreed
fiscal Dividends
Manner of payment
2013
2012
2011
A dividend of $248 Pesos per year per
Common Share and Preferred Share,
decreed by the Shareholders Meeting,
shall be paid in cash in four quarter
installments at the rate of $62 Pesos per
Share.
The payment dates shall be the following:
the dividend that corresponds to April of
2014, between April 21 and 29; the
dividends that correspond to July
and October of 2014, between the 7
and 15 of those months; the dividend
that corresponds to January of 2015,
between the 9 and the 20 of that month.
installments at the rate of $57.50 Pesos
per Share.
installments at the rate of $53 Pesos per
Share.
3. Information about the Issuer’s Shares
Information about Grupo Argos’ Shares and dividends for the last three (3) years follows:
Common
Shares
Net profit of the exercise (consolidated, Pesos)
Profit per Share (Pesos)
Dividend per Share (Pesos)
Dividend manner of payment
2013
Preferred Shares
294,949,851,602
375.34
248
Paid in cash in 4 quarter installments
Common
Shares
2012
Preferred Shares
343,937,641,298
439.12
230
2011
Common Shares
153,657,000,000
238.08
212
Paid in cash
in 4 quarter
installments
48
PROSPECTUS
% of distributed profit*
Share Net worth Value (Pesos)
Net worth Value / profit per Share
Net worth Value / dividend per Share
Average price in security market (Pesos)
Price in security market at year-end (Pesos)
Price in security market / profit per Share (Pesos)
Price in security market / dividend per Share
Price in security market / Net worth Value
66.50%
17,457.75
46.5
70.4
21,312.92
19,500
52.0
78.6
1.1
21,409.18
19,440
51.8
78.4
1.1
17,854.92
21,000
47.8
91.3
1.2
52.51%
17,951.62
40.9
78.1
18,619.55
21,320
48.6
92.7
1.2
89.05%
14,821.44
62.3
69.9
18,206
16,820
70.6
79.3
1.1
Source: BVC
*Calculation of the percentage of the distributed profit as dividend was performed by dividing the dividends decreed in a year by the net
profit of the prior year’s exercise.
The historical information of the dividends for the companies where the main investment of the Issuer is represented is as follows:
Cementos Argos
2013
Common Shares
Net profit of the exercise (consolidated)
Profit per Share
Dividend per Share
2011
Common Shares
183,710,058,655
117,56
387,619,128,600
336,6
369,974,000,000
321,25
231
$ 154
$ 140
166
Paid in cash in 4 quarter
installments
% of distributed profit*
Share Net worth Value
Average price in security market
Price in security market at year-end
Price in security market / profit per Share
Price in security market / dividend per Share
Price in security market / Net worth Value
2012
Common Shares
Preferred Shares
130.37%
5,323.33
45.28
32.07 23.04
9.163 9.020
9.800 9.750
83.36 82.94
59.04 42.21
1.84 1.83
installments
45.76%
4,962.60
14.74
$ 32.22
9.435
10.100
30.01
65.58
2.04
43.58%
7,598.42
23.65
$ 54.27
10.893
10.860
33.81
77.57
1.43
Source: BVC
Celsia
2013
Common Shares
Outstanding Shares
Decreed dividend
Net worth value
Net profit of the exercise (consolidated)
Profit per Share
Dividend per Share
% of distributed profit *
Share Net worth Value
Average price in security market
Price in security market at year-end
Average price in security market / profit per Share
2012
Common Shares
2011
Common Shares
719,584,500
719,584,500
719,584,500
80,593,464,000
71,958,450,000
58,718,095,200
3,288,325
2,905,411
2,650,542
373,645
230,760
152,891
519.25
320.68
212.47
112
100
90
installments
installments
installments
34.93%
47.07%
42.36%
4,569.76
4,037.62
3,683.43
8.80
12.59
17.34
40.80
40.38
40.93
5,624
4,708
4,799
5,680
5,340
3,825
10.94
16.65
18.00
2013
Common Shares
2012
Common Shares
50,71
1,2
Average price in security market / dividend per Share
Average price in security market / Net worth Value
2011
Common Shares
53,40
1,3
42,50
1,0
Source: BVC
2013
2012
2011
49
PROSPECTUS
Common
Shares
Net profit of the exercise (millions of
Pesos)
Preferred Shares
Common
Shares
Preferred Shares
781.794
339
1.359
975
Quarerly
308
Common
Shares
Preferred Shares
546.100
332.735
949
1.056*
Quarerly
696
290
Quarerly
% of prior year’s profit distributed as
48,1%
77,2%
19,5%
dividend
Share Net worth Value (pesos)
35.260
36.136
32.787
25,94
38,07
47,09
90,41
36,16
117,33
37,06
113,06
Annual av. price in security market (Pesos)
37.253
38.236
31.864
33.816
35.342
32.733
Security market price at year-end (Pesos)
33.700
34.980
38.000
39.000
31.100
33.000
Security market price / profit per Share
24,80
25,74
40,04
41,10
44,67
47,40
Security market price / dividend per Share
86,41
35,88
123,38
36,93
107,24
Security market price / Net worth value
0,96
0,99
1,05
1,08
0,95
1,01
*In two thousand twelve (2012) the paid dividend was a thousand fifty-six Pesos ($ 1,056) per year per share explained as follows: (i) first payment in April two
thousand twelve (2012) for three hundred and twenty-five Pesos ($ 325) per share corresponding to December of two thousand eleven (2011) and to the
first quarter of two thousand twelve (2012), (ii) three (3) payments for two hundred forty-three Pesos ($ 243) each, in July and October of two thousand
twelve (2012) and January of two thousand thirteen (2013).
**Common share dividend: According to the approval from the Issuer’s Shareholders Meeting, this is paid quarterly.
Preferred share dividend: 975 Pesos per year per share are paid quarterly for 3 years from November 30, 2011 until November 30, 2014. Once the
term ends, the preferred share dividend shall be 0.5% of the subscription price per share, unless such amount is lower than the common share
dividend; in this case the latter shall be paid.
Source: Grupo Sura
Bancolombia S.A.
2013
Common
Shares
Preferred
Shares
Net profit of the exercise (millions of Pesos)
Pesos)
Profit
per Share (Pesos)
dividend
27.256,
8
23.820,
0
13,82
Common
Shar
es
2012
Preferred
Shares
Common
Shar
es
2011
Preferred
Shares
1.467.907
1.723
754
Quarterly
1.284.490
1.508
708
Quarterly
1.192.267
1.513
669
Quarterly
37,70%
36,20%
36,70%
14.591
8,47
19,35
13.502
8,95
19,07
11.162
7,38
16,68
27.922,9
27.382,0
27.970,7
28.093,7
29.362,7
23.440,0
30.000,0
29.820,0
28.480,0
27.620,0
13,60
31,59
1,63
19,89
19,78
42,37
2,22
18,82
18,25
42,57
2,55
These figures correspond to individual financial statements
Source: Bancolombia
Grupo Nutresa S.A.
2013
Common Shares
Net profit of the exercise (millions of
Pesos)
2012
Common Shares
380.235
345.507
253.511
826
396
Monthly
751
360
Monthly
551
342
Monthly
2013
Common Shares
dividend
2011
Common Shares
2012
Common Shares
2011
Common Shares
52.74%
65.34%
58.70%
16,106
19.49
40.67
16,131
21.48
44.81
14,075
25.54
41.15
50
PROSPECTUS
Source: Grupo Nutresa
26,047.8
26,440.0
32.00
66.77
1.64
21,941.9
25,420.0
33.85
70.61
1.58
22,867.1
21,300.0
38.66
62.28
1.51
Sator, Situm, and Compas businesses are in a stage of development; by the end of it, it is expected for them to start acting as relevant
players both in the internal Colombian market and in relation to income and generation of value for Grupo Argos.
Even though in 2013 the investment in these businesses did not have the expected dynamics, due to the participation analysis for the
purchase of Isagen, the decision of no participation in this process shall stimulate investment in these businesses. In fact, while the coal
business continues advancing in its reconfiguration plan, the real estate business has had important investments in the last months. The
latter will profit from the demographic dynamics in Colombia since the population will increase from 46 to 51 million people in 2020 and the
size of household will decrease to less than 3.5 personas, thus promoting the demand for buildings for industry, services, and housing.
Also, this business has significant land banks in strategic locations and more than 15 years of experience in development and urbanism.
For its part, the port business will benefit from the FTA’s already signed with important trade partners such as United States and the European
Union and from those that are under negotiation or study such South Korea, Japan, the Pacific Alliance, and others. According to IMF
projections, during the next five years the volume of imports will increase 5% per year, while exports will increase to rates of 6%;
thus carrying on the good dynamics of the last 10 years, when the exports by maritime means increased from 76 to 129
millions of tons, and the imports increased from 13 to 29 millions of tons. Grupo Argos is in a position that allows it to capitalized form
the good times the sector will go through thanks to having a growing platform, financial soundness, and implementation capacity.
Due to the merging with Muelles El Bosque, the Corporation consolidated a mature platform for operation, with business knowledge and
administration experience. It includes ports on both oceans, thus making it possible to take advantage of the demand from the emerging
countries of Asia as well as from the developed countries of Europe and North America.
E.
INFORMATION ON THE GENERATION OF EBITDA IN THE LAST THREE (3) YEARS
Grupo Argos has generated the following EBITDA in an individual and consolidated manner during the last three (3)
years: Individual ($ millions)
March 2014*
149,501
EBITDA
December 2013
359,703
December 2012
436,476
December 2011
201,899
Consolidated ($ millions)
March 2014*
EBITDA
575,293
*The EBITDA was cumulative until March 31, 2014.
December 2013
1,907,021
December 2012
1,615,543
December 2011
1,629,049
In 2013, Grupo Argos’ consolidated EBITDA reached $ 1.9 trillion with a growth of 18% in comparison to 2012.
The individual 2013 EBITDA reached $ 359.703 million and is not comparable to the 2012 EBITDA of $ 436.476 million due to t h e
following non-recurrent effects directly affecting the participation method:

Extraordinary profit in Cementos Argos for $ 277 billion; mainly a product from disinvestments in 2012.

In Celsia, during 2013, there was extraordinary profit registered for $115 billion for recovery of provision derived from the
conciliation of a juridical process with the DIAN (tax and customs national agency in Colombia).
Likewise, during 2012, there was non-recurrent extraordinary profit in Grupo Argos from the sale of Cementos Argos shares for $ 53 billion in
2012.
F.
EVOLUTION OF THE SHARE CAPITAL IN THE LAST THREE (3) YEARS
The evolution of the Issuer’s share capital during the last three (3) years is the following:
2013
$ 49,469,752,063
Evolution of Share Capital
2012
$ 49,308,777,062
2011
$ 40,693,902,000
51
PROSPECTUS
As of March 31 of 2012, Grupo Argos’ authorized capital was formed by 1,200,000,000 nominal value shares at $62.50 each. The subscribed
and paid capital was formed by 651.102.432 Common Shares. There were 5,702,432 reacquired own Shares, therefore there were
645,400,000 Outstanding Shares.
In the extraordinary Shareholders Meeting of November 24 of 2011, the attendants approved the Split by acquisition project; thus Grupo Argos
acquired from Cementos Argos (splitting company) part of its net worth formed by assets unrelated to cement but related to real estate,
port, coal, and portfolio investment activities, as well as certain liabilities and net worth accounts associated to the split assets. In
consideration, it delivered to Cementos Argos Shareholders, different from itself, 137,805,554 Preferred Shares at a rate of 0.31 Grupo
Argos Preferred Shares for each Cementos Argos Share.
On May 30 of 2012, when the Split Project was concluded, there were 783,205,554 outstanding shares, 645,400,000 Common Shares
and 137.805.554 Preferred Shares. From the issue of Bonds Convertible into Shares (BOCEAS-in Spanish) in November of 2012, the
outstanding preferred shares, which resulted from redeeming the same, have been increasing. As of March 31 of 2014, there are 790,986,468
Outstanding Shares, out of them 645,400,000 are Common Shares and 145,586,468 are Preferred Shares.
G.
CONVERTIBLE LOANS OR OBLIGATIONS, EXCHANGEABLE BONDS OR BONDS CONVERTIBLE INTO
SHARES
As of March 31 of 2014, Grupo Argos has obligations convertible into Shares. The Issuer issued 750,000 BOCEAS in November of 2012
for $ 750,000 million. Each BOCEA entitles the holder to receive 47 Issuer’s Preferred Shares in the following cases:




When the holders tell, in writing, the administrator of the BOCEAS issue, before the maturity date, their intention of converting
them into Preferred Shares.
At maturity of the BOCEAS.
In case of non-payment of interests for any outstanding subseries of BOCEAS, not being remedied by the Issuer during the five
(5) Business Days following the date set for payment of interest of the respective unmet BOCEAS subseries.
The Business Day following the day when the Shareholders Meeting decrees the dissolution of the Issuer, due to causes that legally
require being decreed by that body, or the Business Day following the occurrence of the following causes for dissolution: (i) end of
the term set for the duration of the Issuer, provided it has not been extended in a valid manner before the deadline, (ii) judicial
statement in a liquidation process, and (iii) decision by a competent authority in the cases specifically stipulated by the law.
BOCEAS mature in November of 2015. As of March 31 of 2014, the standing balance was $ 584,387 million equivalent to
584,387
BOCEAS.
H.
ISSUER’S MAIN ASSETS
The Issuer’s main assets are formed by the portfolio investments and by the real estate assets. As of March 31 of 2014, such assets were
discriminated as follows:
Main Assets
($ millions)
Cementos Argos
Celsia
Grupo de Inversiones Suramericana S.A. Preferencial
Empresa de Energía del Pacifico S.A., E.S.P. – EPSA
Grupo Nutresa S.A.
Bancolombia S.A.
Property, plant, and equipment
No. of Shares
Participation
Owned
%
poseídas
698,806,652 participación
60.68%
376,704,138
52.35%
137,998,942
29.42%
7,828,636
7.36%
41,134,405
11.86%
45,243,781
9.83%
12,701,958
2.49%
N/A
100.00%
Adjusted Cost
($ millions)
3,730,736
1,718,017
5,028,973
281,485
401,210
1,044,374
340,862
2,344,558
Assets %
activo
23.02%
10.60%
31.03%
1.74%
2.48%
6.44%
2.10%
14.46%
The adjusted cost of the investment in Cementos Argos, Celsia, and Empresa de Energía del Pacífico S.A. E.S.P – EPSA corresponds to
its intrinsic value. The other portfolio investments are valued at market price.
These assets represent 91.86% of the value of total assets in the individual financial statements which, at March 2014 closure,
corresponded to $16,2 trillion.
Assets’ Handling Policies
52
PROSPECTUS
Long-term Negotiable Investments
The SFC – (Superintendencia Financiera de Colombia, “Colombian Financial Superintendence”) dispositions
require that investments be classified and recorded as follows:
a) Long-term Investments are those over which there is a firm intention of keeping them until the payback period or redemption, whenever
the case, or keeping them indefinitely when they would no be subject to a term. In this last case, in order to classify an investment as
long-term, it must be kept by the Company at least for three (3) calendar years, counted from the date of acquisition, without prejudice
of classifying it as such from that same date. These investments are recorded and appraised in a prospective way, as follows:

Investments in debt or carrying rights to debt (non-equity securities) of fixed or variable rate are initially recorded at acquisition
cost and are also monthly revalued based on the internal rate of return of each security, calculated at the purchase date; the
resulting adjustment is recorded on the profit and loss account.

Investments in Shares or capital participation (participative securities) of variable interest in companies where there is no control
are recorded at the adjusted cost of inflation and are also monthly adjusted to their realizable value. The resulting adjustment,
whether positive or negative, is recorded on the revaluation account with credit or debit to the surplus as revaluation in the
Shareholder’s Equity account, as it may be the case. The revaluation value of securities qualified as high or medium marketability
by the SFC is determined based on the average price in the stock exchange, within the last 10 to 90 days according to certain
parameters established by that Entity. The revaluation value of securities of low or minimum marketability or that are not priced at
the Stock Exchange is determined by its intrinsical value, calculated based on the last financial statements, disclosed by the
security issuer.

Investments in subordinate companies in which Grupo Argos owns directly or indirectly more than 50% of the social capital are
recorded by the method of equity ownership, applied in a prospective way starting January 1994. By this method, the investments
are recorded at cost and are adjusted, with credit or charge to profit and loss, as it may be the case, in order to recognize the
participation in the profit or loss in the subordinate companies, in events that took place starting January 1994, after eliminating
profits that did not take place between Headquarters and Subordinate (profits that did not take place between Headquarters and
Subordinate are not written off or differed). For Subordinate Companies acquired during the year, the application of the method
of equity ownership in respect to increases or decreases of equity of the Subordinate Company originated within the results of the
term, concept N° 2010074197-001 of November 30th 2010 of SFC is applied, which establishes that the total amount of profits or
losses should be taken, generated during the accounting period.

The cash distribution of these companies’ profits received before December 31st 1993 are recorded as income and the later, as a
lesser amount of the investment. Additionally, the proportional equity variation participation in other accounts of the Subordinate
Companies is recorded as a higher amount of the investments, being this different from the fiscal year, with credit to the surplus
account by the equity participation method. Once the participation method is recorded, if the intrinsical investment amount is lower
than the amount on books, a debit provision is recorded changed to profit and loss.
.
b) Investments represented by bearer bonds over which Grupo Argos has a firm intention to cash in within a period not longer than three
years to a third party are classified as negotiable investments. These are initially registered at cost and are monthly adjusted to their cash
in value with charge or credit to profit and loss, whatever the case may be. The cash in value is determined in the same way as the
previous literal for each type of investment.
Provisions for doubtful debts debtors
Doubtful Debtors’ Debts provision is revised and updated by the administration at the end of each exercise, based on the analysis of due
balances’ ages and collection probability of each individual account. Uncollectible amounts are charged periodically to the provision.
Properties and Equipment
Properties and Equipment are recorded at cost, which on the pertinent cases include finance expenses and exchange rate differences on
foreign currency liabilities incurred for their purchase, until they are in usable condition.
Sales and removal of such assets are discharged respectively at net adjusted cost and the differences in sale price and net adjusted cost are
carried to profit and loss.
The depreciation is calculated by the straight-line method based on the probable useful life of the assets, under the following parameters: a
yearly rate of 5% for constructions and buildings, 10% for furniture and office equipment and 20% for transportation equipment, computing
and communication equipment.
Depreciable property and equipment whose acquisition cost is equal to or less than three minimum wages are depreciated in the same year
of purchase, without taking into consideration their useful life.
Repairs and maintenance of the assets are charged to profit and loss, while improvements and additions are added to their cost.
Deferred
They include prepaid expenses and deferred charges. Deferred expenses include subscriptions written off by straight-line in a period of 12
months. Deferred charges comprise mainly real estate trust rights and projects’ charges. The write off is performed by the straight-line
53
PROSPECTUS
method between 5 and 3 years.
Intangibles
Intangibles are recorded at acquisition cost and mainly represent the amount of the commercial credit acquired at the purchase of long-term
investments. The write off is method is performed by straight-line.
I.
INVESTMENTS THAT EXCEED 10% FROM THE TOTAL ISSUER’s ASSETS
The following investments represented more than 10% from the total assets on March 31st 2014:
Cementos Argos
Celsia
Grupo de Inversiones Suramericana S.A. (ordinary and preference shares)
March 2014
Type of valuation
($ millions)
3,730,736 Intrinsical Value
1,718,017 Intrinsical Value
5,310,458 Market Value
By being controlled entities, the participation owned by Cementos Argos and Celsia are valued through intrinsic value. On the other hand, the
participation at Grupo de Inversiones Suramericana S.A is valued from its market value.
J.
RESTRICTIONS FOR THE SALE OF ASSETS THAT FORM THE INVESTMENT PORTOFOLIO OF THE ISSUER
Grupo Argos has a restriction to sell its Compas shares to a non linked entity from the Issuer, in force until December 2014.
K.
MAJOR INVESTMENTS IN PROGRESS OF CARRYING OUT
The Issuer does not have investments in progress of carrying out.
Following there is a description of Celsia investment, in progress of being carried out:
Porvenir II hydroelectric plant is a hydroelectric power generation project located at 142 kilometers from Medellin (Department of Antioquia). It
will have an installed capacity of 352 MV and a budget investment of USD $733 million. Porvenir II Project was adjudged by OEF for 1.44
TWh for a period of 20 years counted from January 1st 2018, at auction GPSSS performed by CREG on January 26th 2012. This project
consists on the construction of a hydroelectric foot dam type. The shield height will be approximately 140 m in arch and constructed in roller
compacted concrete and will have two generating units. Also, it will have an estimated load factor of 66%.
In order to develop, operate, maintain and commercially exploit Porvenir II Project in the future, Celsia held with International Society A Dos
SAS a sales contract of shares issued by Produccion de Energia S.A.S. ESP society, which owns the register with the UPME of Project
Porvenir II.
The purchase of Produccion de Energias S.A.S. ESP’s shares will be carried out when the environmental license is obtained, associated with
the hydroelectrical project on or before July 14th 2014. At present the obtainment of the environmental license is in process. Such process is
expected to be completed in the first semester of 2014.
The project received the declaration of public utility in 2013. On the other hand, the designs are at ending stage and its holder is moving
towards social arrangements with the communities of the area of influence. Also, the process of land negotiation is being carried through for
the project’s development and it is expected that the environmental license will be soon granted by the ANLA.
For the potential financiation of this project, Celsia is analyzing the various alternatives at hand for structuring the project and therefore,
ensuring the adequate resource flow. Within these, it is studying structures that besides using the available cash, could involve reversing
investments on non-strategic assets. Regarding an external funding, it is exploring the possibility of using loans with the commercial banks,
finances granted by credit agencies for export loans, loans granted by the multilateral banks, emissions in the public market and structures of
direct funding by suppliers or a combination of these instruments.
The CapEx estimated for this project is $1.4 billion pesos.
54
PROSPECTUS
L.
COMITTMENTS ON A FIRM BASE TO AQUIRE FUTURE INVESTMENTS
Grupo Argos has no firm based commitment by its management for future acquisition of investments.
M.
DESCRIPTION OF FIXED ASSETS SEPARATED BY THE PROPRIETORS, LEASED, RENTED AND OTHER
The owned fixed assets of Grupo Argos are detailed as follows:
March 2014
($ millions)
Accumulated
depreciation
Adjusted Cost
Land
Constructions in progress
Constructions and Buildings
Furniture and Office, computing and
communications Equipment
Computing and Comunicativos Equmt.
TOTAL
Net Cost
1,400
80,441
9,176
3,036
9
1
143
92,806
29
1,430
Appraisal
80,441
9,176
1,637
2,251,571
2,517
2,325,925
3,605
-
-
2,254,088
2,329,530
7
114
91,375
Revaluation
Grupo Argos owns the following assets on leasing or rented:
Object of the
Contract
Grupo Argos
rented to
Promotora A 10
S.A.S. a fraction
of a Simesa Lot
Date of signed
contract
Contrato
15/10/2013
Starting date
Ending date
14/10/2014
15/10/2013
14/10/2014
conditional
$ 25,200,000,00
19/07/2013
01/06/2014
01/06/2012
01/06/2014
conditional
$ 5,642,167,029,00
Grupo Argos
Rented to
Cementos
Argos the
Cement Plant,
the Corporate
Offices and the
Offices of
Almagrán Tower
19/07/2013
01/06/2014
01/06/2012
01/06/2014
conditional
$14,361,964,258,00
Commercial rent
of land and
buildings
17/02/2005
17/02/2020
17/02/2005
17/02/2020
automatic
Starting date
Ending date
07/09/2017
07/09/2012
07/09/2017
No
31/05/2012
21 months
12 months
02/2014
Yes
$ 96,732,950
28/05/2012
3 years
3 years
28/05/2015
No
$ 4,200,000
Contracting party
Contractor
Grupo Argos S.A.
Promotora A 10
S.A.S.
Grupo Argos
S.A.
Concretos
Argos S.A.
Grupo Argos
rented to
Concretos Argos
the Offices at
Calle 98, the
North Plant and
Puerto Tejada
Plant
Grupo Argos
S.A.
Cementos
Argos S.A.
Grupo Argos
S.A.
Sodimac
Colombia S.A.
Contracting party
Contractor
Grupo Argos S.A.
Decoblock S.A.
Grupo Argos S.A.
Celsia
Rent of Offices
and parking lots
Grupo Argos S.A.
Compañía
Nacional de
Chocolates
S.A.S.
Rent of CAD
Offices
Grupo Argos
S.A.
Object of the
Contract
Commercial rent
of Property
Date of signed
contract
Contrato
07/09/2012
Duration
Duration
Time extensions**
Time extensions**
Amount
$ 60,970,000,00
Amount
$ 14,500,000.00
55
PROSPECTUS
Grupo Argos
S.A.
Airplane S.A.
Grupo Argos
S.A.
JIRO S.A.
Grupo Argos
S.A.
CONIX Y
WALTER
BRISGE
Grupo Argos
S.A.
Leasing
Bancolombia
S.A.
Rent of
spaces José
María
Córdova
Parking lot
Rent of
Offices SAP
Project
Renting of
technological
tools and
services,
maintenance
support
Renting of
Lenovo
computers
03/2013
29/07/2013
08/10/2013
11/06/2013
12 months
renewed
automatically
)
12 months
renewed
automatically
)
6 months
01/08/2013
NA
03/2014
29/07/2014
NA
48 months
11/06/2013
No
$ 13,418,000
It has been
extended by ‘otrosí’
No. 1, 3 more
months –( ‘otrosí’:
“furthermore” by
informal signature)
$ 7,570,000
06/2016
No
US$88,829.16
11/06/2017
NA
$ 1,951,952
Cementos Argos
March 2014
($ millions)
Land
Machinery and production equipment
Furniture and Office, computing and communications Equipment
Mines, quarries and alluvial deposits
Land transportation equipment
Fluvial Fleet
Communication routes
Agricultural plantations
Machinery and assembly equipment
Properties, Plant and transit equipment
Other Assets
Less provision for asset’s devaluation
TOTAL
Adjusted
Cost
622,083
122,911
1,128,397
4,606,870
92,049
568,884
564,709
107,485
194,122
16,224
368,447
1,217
16,286
8,409,684
Accumulated
Depreciation
425,411
2,431,776
67,692
90,096
353,306
47,579
17,974
1,564
8774
3,444,172
Adjusted
Cost
49,883
392,276
16,654
338,405
3,019,663
800,023
112,243
25,085
74,284
11,746
4,840,262
Accumulated
Net Cost
Depreciation
0
49,883
0
392,276
0
16,654
68,008
270,397
973,486
2,046,177
289,427
510,596
72,072
40,171
15,009
10,076
63,350
10,934
9,255
2,491
0
-5197
1,490,607
3,344,458
Net Cost
622,083
122,911
702,986
2,175,094
24,357
478,788
211,403
59,906
176,148
14,660
368,447
1,217
7,512
-17,549
4,947,963
Appraisal
1,301,667
122,911
889,865
3,220,358
31,764
670,967
236,999
60,264
179,091
15,517
368,447
1,217
8,013
-17,549
7,089,532
Revaluation
679,584
186,879
1,045,264
7,407
192,179
25,596
358
2,943
857
501
2,141,569
Celsia
March 2014
($ millions)
Land
Machinery and equipment been assembled
Plants, pipelines and tunnels
Networks, wires and cables
Machinery and equipment
Furniture and fixtures and Office Equipment
Computing and Communications Equipment
Land transportation equipment
Less provision for asset’s devaluation
TOTAL
Appraisal
179,662
130,577
366,456
14,513
360,988
3,601,263
626,586
40,932
10,496
11,572
4,146
5,216,614
Revaluation
130,577
89,792
1,536,612
110,234
49
15
8
1,274
1,868,561
Sator
March 2014
($ millions)
Land
Machinery and production equipment
Machinery and equipment
Furniture and fixtures
Computing and communications equipment
Medical and Scientific equipment
Adjusted Cost
12,353
1,446
13
2,249
20,647
399
124
6
Accumulated
Depreciation
1,285
10,539
126
101
1
Net Cost
Appraisal
12,353
1,446
13
964
10,108
273
23
5
23,299
0
0
3,725
5,638
115
88
0
Revaluation
10,946
0
0
2,746
2,574
53
62
0
56
PROSPECTUS
Fleet and Transportation equipment
Aqueducts, plants and network
Communication routes
Total
6
194
534
37,971
6
67
96
12,221
0
127
438
25,749
6
119
528
33,518
17
32
30
16,461
Situm
March 2014
($ millions)
Adjusted Cost
Land
Machinery and Equipment
Computing and communications equipment
Fleet and Fluvial Equipment
Total
160
52
6
91
355
664
Accumulated
Depreciation
Net Cost
Appraisal
38
1
71
50
160
160
15
5
21
305
505
Revaluation
1.630
13
4
81
0
1.728
409
6
1
36
0
452
Compas
March 2014
($ millions)
Land
Machinery in transit
Constructions and buildings
Machinery and Equipment
Computing and Communication
Medical and Scientific Equipment
Fleet and transportation equipment
Fleet and fluvial equipment
Aqueducts, plants and network
Paving ways
Totals
N.
Adjusted Cost
29,982
0
7,391
22,804
20,151
1,262
4,955
54
23,687
799
602
1,635
113,322
Accumulated
Depreciation
0
0
0
8,910
10,806
737
4,074
48
16,506
432
570
1,498
43,581
Net Cost
Appraisal
Revaluation
29,982
0
7,391
13,894
9,345
525
881
6
7,181
367
32
137
69,741
107,882
0
0
22,269
10,633
552
1,992
12
14,351
166
604
0
158,461
92,615
0
0
10,129
5,617
211
847
11
3,414
178
377
0
113,399
ISSUER’s PATENTS, TRADEMARKS AND OTHER PROPERTY THAT ARE BEING USED UNDER AGREEMENTS WITH THIRD
PARTIES, POINTING OUT EARNED AND PAID ROYALTIES
At present, there are no patents, trademarks and other property intellectual rights from the Issuer that are being used under agreements with
third parties.
O.
INFORMATION REGARDING ANY GOVERNMENT PROTECTION OR INVESTMENT PROMOTION THAT CAN AFFECT THE
ISSUER
The Issuer does not have any knowledge regarding government protection and investment promotion that can benefit or lessen its situation or
that of its subsidiaries.
P.
OPERATIONS WITH ASSOCIATED PARTIES PERFORMED DURING THE IMMEDIATE PREVIOUS YEAR
Following is the summary of assets and liabilities on December 31st 2013, and that of the Issuer’s income and expenses of transactions
carried out during the years ended on the below dates, with its main associated parties:
1.
The account balances of assets and liabilities at December 31st 2013 are as follows:
Figures in $ millions
Sator
Cementos Argos
Compas
Concretos Argos S.A.
Corporaciones e Inversiones de Mar Caribe S.A.S
Fundiciones Colombia - Fucol S.A.
Ganadería Rio Grande S.A.S
Industrias Metalúrgicas Apolo S.A.S
Internacional Ejecutiva de Aviación S.A.S.
Dec 2013
Accounts receivable
50,735
1,830
186
2,558
6,042
1,150
-
Accounts payable
6,215
269
396
-57
56
PROSPECTUS
The loans in Pesos are at the rate of 5.27% E.Y.
Currently, the Issuer is part of a commercial rental agreement subscribed with Celsia, whose object is the lease of offices and parking lots and
in which the Issuer is the lessee.
Additionally, the Issuer is part of a contract of promise of buying and selling of land and buildings subscribed with Sociedad Portuaria Golfo de
Morrosquillo S.A.
2.
Income generated during the period of January 31st and December 31st 2013:
Dec. 2013
Participation mode
Cementos Argos
Ganadería Río Grande S.A.S
Sator
Compas
Inversiones El Duero S.A.S.
Celsia
EPSA S.A. E.S.P.
Valle Cement Investments Limited
Internacional Ejecutiva de Aviación S.A.S
Tekia S.A.S
Situm
3.
Interest
95,175
2,904
187,477
33,163
-
142
1,445
364
59
28
629
Expenses generated during the period of January 31st and December 31st 2013:
Cementos Argos
Inversiones El Duero S.A.S.
Sator
Celsia
Internacional Ejecutiva de Aviación S.A.S
Dec. 2013
Interest
Fees
319
-
Lease
569
-
35
709
-
4.
During the year 2013 The Issuer paid fees to the Board of Directors the amount of $ 507 million. Grupo Argos has made transactions
with subordinate companies of some of its main shareholders, which relate to transactions made in the ordinary course of business of such
companies. These transactions have been made within similar market conditions from those in which Grupo Argos and such subordinate
companies of its main shareholders make transactions with third parties. Grupo Argos has not made transactions with its main shareholders
Within the remuneration framework of its senior officials , excluding the Board members, the Issuer and its subsidiaries entered into mutual
agreed contracts in 2013, to an accumulated amount of $ 640 million. The contracts were made under special conditions, in relation to
term, risk and rate.
Q. CREDITS OR CONTINGENCIES THAT REPRESENT FIVE PERCENT (5%) OR MORE OF THE TOTAL LIABILITIES OF THE
CONSOLIDATED FINANCIAL STATEMENTS OF THE LAST FISCAL YEAR
At December 31st 2014 the financial obligations of Grupo Argos in whole represented over 5% of the capital liability. However, none of these
obligations were over this percentage on individual basis.
58
PROSPECTUS
The liability account related to Outstanding Bonds of the subsidiaries Cementos Argos and Celsia and the BOCEAS of Grupo Argos is detailed
as follows, because separately, these represent over 5% of the total consolidated capital liability.
Consolidated Capital Liability at December 31st 2013: $8,2 billion
Company
Type of Obligation
BOCEAS
Grupo Argos
Company
Type of Obligation
Bonds
Bonds
Cementos Argos
Celsia
N7A
Individual Contingency Responsibility
Amount ($ millions)
N/A
N/A
N/A
Type of Obligation
Received Goods and Values
Other Contingency Responsibilities
Other
Tax Obligations. Balance of Taxes, Burden and Rates
Amount ($ millions)
88,454
Type of Obligation
Income tax
Capital Payment
and interest
Updated
Outstanding Bonds that represent more than 5% of the Total Liability
Amount
Capital Payment
% Part.
Payment priority
($ millions)
and interest
1,938,798
Updated
23.55% N/A
800,000
9.72% N/A
Updated
Other Accounts Payable that represent more than 5% of the Total Liability
Amount
% Part.
Payment priority
($ millions)
N/A
N/A
Type of Obligation
Accounts receivable
Convertible Bonds that represent more than 5% of the Total Liability
Amount
% Part.
Payment priority
($ millions)
694,448
8.43% N/A
Capital Payment and interest
N/A
% Part. In Capital Liability
N/A
N/A
N/A
% Part. In Capital Liability
1,07%
At December 31st, Grupo Argos is up to date in capital and interest payments.
R. ISSUER FINANCE OBLIGATIONS
At March 31st 2014 the finance liabilities comprised the following:
Concept
Long term Loan
Long term Loan
Treasury Loan
Treasury Loan
Treasury Loan
Working capital
Working capital
Working capital
Working capital
Working capital
Working capital
Working capital
Sales Operations
With repurchase agreement
Total
Capital
($ millions)
200,000
100,000
60,000
52,500
50,000
185,723
62,890
49,133
23,584
23,584
19,653
98,266
18,023.94
Starting date
Due date
27-jul-12
04-oct-13
24-sep-13
24-sep-13
24-sep-13
13-ene-14
28-feb-14
08-oct-13
13-mar-14
20-mar-14
21-mar-14
27-mar-14
16-sep-20
04-oct-18
24-sep-15
24-sep-15
24-sep-15
11-jul-14
27-ago-14
09-may-14
11-jun-14
18-jun-14
17-sep-14
23-sep-2014
Interest
Rate
IPC+5.80%
IBR+3.33%
DTF+1.70%
DTF+1.65%
DTF+1.85%
Libor+1.05%
Libor+1.20%
Libor+1.13%
Libor+1.20%
Libor+1.50%
Libor+1.50%
Libor+1.25%
Various
Various
Various
COP
COP
COP
COP
COP
USD
USD
USD
USD
USD
USD
USD
Exchange
Rate
N/A
N/A
N/A
N/A
N/A
1,965.32
1,965.32
1,965.32
1,965.32
1,965.32
1,965.32
1,965.32
COP
N/A
Currency
Amortization
At expiration
At expiration
At expiration
At expiration
At expiration
At expiration
At expiration
At expiration
At expiration
At expiration
At expiration
At expiration
At expiration
943,357
S. OUTSTANDING PROCESSES AGAINST THE ISSUER
On March 31st 2014, Grupo Argos had the following outstanding judicial proceedings:
Nature of
the
process
Labor
Filed
2010-
Claimants
Camilo
Defendants
Inversiones
Amount
Grounds for
the Claim
Pretentions
Occupational,
339.27
in SMLMV*
Property
affected
by the
process
N/A**
Status of the Process
On March 13th 2013
Probability
Remotely,
59
PROSPECTUS
1104
Antonio
Moncada
Taborda
Argos S.A. Damages and
(today,
Retirement
Grupo S.A.)
Argos
and Carbones
Nechi S.A.S.
Labor
2011- 459
Olga
Socorro
Betancur
García
del
Inversiones
Argos S.A.
(today,
Grupo Argos
S.A.) a nd
Carbones
Nechi S.A.S.
Accidentes de
trabajo,
perjuicios
y
pensiones
339.27
Labor
2008- 495
José
Pablo
Sora Daza
Cementos
Argos S.A.,
Agentes
Marítimos
del Caribe
Ltda under
dissolution,
Inversiones
Argos S.A.
(today,
Grupo Argos
S.A.)
Indemnity
for loss of
working
capacity,
Surgical
operaton.
140
the Seventh Labor
Court of the Circuit
Issued acquittal
at First Instance,
the plaintiffs appealed;
the process is in
abeyance of resolution
by the Superior
Court of Medellin.
In front of
Grupo Argos
S.A.
Eventual,
In front of
Carbones
Nechí S.A.S.
N/A**
On November 30th
2012 the Twentieth
Labor Court of Relief of
the Circuit of Medellin
issued acquittal, which
was appealed by the
Plaintiff. The case is at
the Superior Court of
Medellin, Labor Room.
The case is under
abeyance of appeal.
Eventual
N/A**
On May 31st 2011 an
acquittal
at
first
Instance. The process
was remitted to Relief
Magistrates.
Probable
* SMLMV: Monthly Legal Salaries In Force, corresponding to $ 616.000.
** Because of the nature of the process, there is no affected specific property of the Issuer. The plaintiffs demand
money indemization, in case the judge rules in their favor,
Probable Contingency: The issuer considers possibility of losing 100% of the pretentions.
T. SECURITIES REGISTERED AT REGISTRO NACIONAL DE VALORES Y EMISORES
On March 31st 2014 Grupo Argos had the following securities registered at RNVE (National Securities Registry and Issues):
Common Shares:
Resolution No. 154 of August 21st 1881
Preference Shares:
Resolution No. 673 of May 10th 2012
BOCEAS
Resolution No. 1835 of November 13th 2012
U. LIABILITY SECURITIES IN PROGRESS THAT HAVE BEN OFFERED TO THE PUBLIC AND THAT ARE UNREDEEMED
On March 31st 2014, the Issuer has BOCEAS that were offered to the public and that are unredeemed. The conditions of the BOCEAS are as
follows:
Security
Date of Issue
Amount issued
Amount in
Circulation
Return
Rating
Due date
60
PROSPECTUS
BOCEAS
27 de November de
2012
$ 750,000,000,000
$ 584,387,000,000
5,0% NATV
AA+(Col)
November 27th
2015
In the terms of numeral 8.4, Chapter IV, Literal U, of Resolution 2375, there are no provisions to modify the terms or conditions of the issue.
V.
REAL GUARANTEE GRANTED TO THIRD PARTIES
On March 31st 2014 the following investments are pledged to the entities below:
Guarantee
No.
Investment
No. of pledged shares
1
2
3
4
Grupo de Inversiones Suramericana
21,200,000
5,140,800
5,524,303
Nutresa
9,093,972
Total
40,959,075
* Revaluation = Number of shares x closing price of the share (March 31st 2014)
Beneficiariy of the
guarantee
Bancolombia
Helm Bank
Banco de Bogotá
Banco de Bogotá
Valuaton of the
guarantee
($ millions)*
773,800
187,639
201,637
248,083
1,411,160
Such guarantees were endorsing finance obligations that on March 31st 2014 amounted to $300.000 million.
1. Procedure to execute the guarantee
Pledge Guarantees. The guarantee becomes effective through the executive process with pledge guarantee, with seizure of the good, for
its later sale in public auction or adjudging the creditor.
2.
Subordination to claim
Pledge Guarantees. Credits secured by a pledge, that are part of the privileged credits of the second class (art. 2497 of the Civil Code),
are subordinate for their payment to the privileged credits of the first class (art. 2495 of the Civil Code), as long as there are no other
debtor’s goods for their payment (arts. 2496 and 2498 of the Civil Code). Whatever does not remain covered by the pledge will be treated
as credits of the fifth class, or quirographic credits (art. 2509 of the Civil Code), this is, without any preference or priviledge.
3. Creditor’s rights
Pledge Guarantees. They grant the bank the persecution rights, this is, that of restitution of the good in pledge in the hands of whoever
holds it, and the one of preference, this is, obtaining the payment of the obligation with the product of the sale of the good in public auction
or its adjudging, subordinated only to the rights of the firs class previously mentioned.
The following are the guaranteed credits:
Concept
Capital ($
millions)
Starting
Date
Due date
Interest
rate
Currency
Long Term Credit
200,000
27-jul-12
16-sep-20
IPC+5.80%
COP
Short Term credit
100,000
04-oct-13
04-oct-18
IBR+3.33%
COP
Exchange
rate
Amortization
At ón
ending
At ending
Guarantee
Nr,
W. CONSERVATIVE RATING OUTLOOK OF THE ISSUER’s PERSPECTIVES
As a Holding enterprise, Grupo Argos does not have a horizon of expansion projects and individual development for the next 3 to 5 years. Its
affiliates will indeed develop projects in that time frame, with the objective of growing in terms of income, profit and geographical presence. To
date, it is estimated that these projects will be directly financed with cash resources and indebtedness capacity of the affiliates without
compromising the Holding’s resources.
Cementos Argos will invest in the construction of a Distribution Center at Cartagena’s plant. It will start operations in 2014, which will increase
the packing and shipping capacity of the plant to the Colombian market, going from 300.000 tons to 1.3 million of sack-packed cement and
from 200.000 tons to one million of cement in bulk per year. Additionally, the installed cement capacity will be increased at three plants located
in the center of the country: Rioclaro, Nare and Cairo, in order to reach a total near 10.9 million metric tons in the country per year. Finally, it
will invest in the grinding expansion at Harleyville plant in South Carolina. This project will add 0.5 million tons to the capacity in the east of the
country and will allow taking care of the growth projected in that region. On the other side, its international expansion process is not discarded,
61
PROSPECTUS
through the acquisition of cement assets, in what has been called the target region: North of South America, Central America, the Caribbean
and the south east of the United States.
Celsia will develop the Cucuana hydroelectric projects (55 MW), which is estimated to start operations at the end of 2014, San Andres (19.9
MW) and Porvenir II (352 MW). Also, it will invest in projects like that of intelligent networks, electrical transportation and efficiency associated
to renewable energies. Finally, it has announced its objective of starting an international expansion project, so it is possible that during this
period it makes assets acquisitions outside Colombia.
Situm will continue developing its city planning business in the lands owned in Barranquilla, Puerto Colombia, and the island of Barú. Also, it
will continue adding productive and stabilized assets and of operation, as well as projects in development, to its real estate business. All this,
according to a wise policy of evaluation of the returns and risks associated to each project.
Compas will invest in the adapting of the terminals acquired from the merger of the port assets of Grupo Argos with Muelles El Bosque: Tolú
and Barranquilla. Addionally, it will develop the project of bulk terminal and general cargo, in the port of Aguadulce in Buenaventura.
CHAPTER 8 – ADMINISTRATION’s COMMENTS AND ANALYSIS ON THE RESULTS OF OPERATIONS AND THE FINANCIAL
CONDITION OF THE ISSUER AND ITS SUBSIDIARY COMPANIES
The following analysis must be read along with the individual and consolidated financial statements of Grupo Argos, including the corresponding
notes. The financial statements and notes are also on this Information Booklet. This section contains forward-looking statements that involve
risks and uncertainties. Actual results may differ substantially from those indicated in the forward-looking statements, as a result of diverse
62
PROSPECTUS
factors, included without limitation, the risk factors pointed out in (Chapter 10) and other aspects mentioned in this Information Booklet.
A summary of the significant consolidated results at the end of 2013 is presented below:

Revenues were higher than $ 7,6 billion, with an increase of 14%.

EBTIDA went to in $ 1,9 billion, showing an increase of 18%.

The operating profit exceeded $ 1,3 billion, with an increase of 24%.

The consolidated net profit of the company amounted to 295 thousand million pesos.

The assets amounted to $ 27,4 billion.

More than 10,000 employees at the closing of the fiscal year between headquarters and all its business.

During 2013 Grupo Argos and its various business invested in strategies and sustainability programs over $ 76 thousand million.
In 2103 Grupo Argos advanced in its strategic business in which it invests, with high standards of good management of sustainability, generating
value for its stakeholders. In this way, the company closed a very positive year and iniciated a 2014 with more than 10,000 employees
commemorating 80 years of transformation and growth.
Sustainability milestones in 2013:

In 2014 Grupo Argos enterad Dow Jones Sustainability Index (DJSI).

It was included by the UN in the GC100, stock index that selects companies with greater adherence to the ten principles of the Global Pact
and a benchmark financial performance.
A. TRENDS, COMMITMENTS OR KNOWN EVENTS THAT CAN OR WILL SIGNIFICANTLY AFFECT THE LIQUIDNESS OF THE
ISSUER, ITS OPERATING RESULTS OR FINANCIAL SITUATION
The strategic businesses of Grupo Argos have good growth prospects in the long term.
The cement business has presence in regions with high growth projection in consumption: in Latin America, for its development and population
growth, increasing from 600 million people in 2012 to 790 million people in 2050, according to CEPAL figures; and in the United States, because
of the recovery from the last financial crisis. The Cement Production Association in USA, projects an 8% increase of cement consumption in
average for the next five years. In Colombia, the population growth, the decrease of the homes’ size, the housing crisis, the infrastructure delay
(which situates it in position 92 amongst 148 countries, according to data from the World Economic Forum), the government’s decision of
investing up to 3% of the PIB within the coming years (tripling the actual investment, reaching 99 billion pesos in the decade) allows estimating
that cement consumption per capita (currently 225 kgs.) will increase, according to Cementos Argos’ data.
The energy business will benefit from the demand growth in Colombia during the following years, because the consumption of 1.000 Kwh per
person is a lot lesser than the average of 2,000 Kwh per capita in Latin America, according to World Bank data. Besides, this is a market with
one of the best competitiveness at energetic level in the world and the best in Latin America, according to the 2012 Global Energy
Competitiveness Index of KPMG.
Finally, the real estate business will be favored from the demographic dynamics in Colombia, since the population will go from 46 to 51 million
in 2020 and the size of the homes will decrease to less than 3.5 persons, according to data from DANE. The previous implies that the population
will increase and the households will also grow at a higher rate, boosting the demand of constructed spaces industrially speaking, of services
and housing. This fact leaves a great opportunity for the sustainable development of land and property.
There are no known tendencies, commitments or additional events that will affect significantly the liquidity of Grupo Argos, its results or its
financial situation. Its affiliates are expanding and have the resources to cover this growth. However, Grupo Argos as a Holding eventually could
support certain of these operations, if the subsidiaries so require. These transactions include:
1,
Purchase of assets to Vulcan Materials by Cementos Argos in the United States.
On January 23rd 2014 Cemerntos Argos signed an agreement with the north American group Vulcan Materials to acquire assets in the State
of Florida, for an amount of USD $720 million.
The assets of the operation consist of a dry technology cement plant of 1.6 million tons per year capacity, two clinker grinders of 1.9 million
tons, which reaches about 13.1 million cubic meters of concrete per year, 69 concrete plants with 372 mixer trucks, 13 concrete block production
plants and 2 port facilities. With this operation, Cementos Argos becomes one of the most important cement producers en Florida and the
southeast of the United States
2. Porvenir Project developed by Celsia
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PROSPECTUS
Celsia has been carrying out Porvenir II, a hydro electrical project with a generation capacity of 352 MW. During 2013 the preconstruction
activities initiated in 2012 were continued, as well as the detailed and rigorous attention to resolution 0062 of the National Authority of
Environmental Licenses (ANLA). This entity issues the environmental license of the project. In this respect, during the second quarter of this
year, more than 30 meetings have been held with the communities, and 2 informal hearings, as a prelude to the consultation to be held soon.
To date, the engineering designs of the project are concluded and the design of compact concrete mixes with a roller is in progress.
On June 5th 2014 the Ministry of Mines and Energy declared the hydroelectric project Porvenir II as public utility and social interest, as well as
the necessary land for its construction and protection. The Ministry also issued other provisions.
Likewise, detail designs were completed in whose development, the task counted on technical assistance by a select group of international
advisors who provided the required support for some of the in accordance with state of the art engineering in its different disciplines.
B. RESULTS OF THE BALANCE
Variation of the main accounts of the Balance
The variation on the balance accounts 2012 vs. 2011 is due to the following:
The assets amount to $16.1 billion; they grow 34% in front of December 2011. Liabilities amounts to $2.1 billion, they grow 54%.
Equity totals $14.1 billion with an increase of 32%. It is important to point out that the changes shown on the individual general
balance were caused largely by the non-cement assets of Cementos Argos in May 2012, issuance of BOCEAS, and the revaluation
of the shares of Cementos Argos and Celsia.
The variation on the balance accounts 2013 vs. 2012 is due to the following:
The individual assets amount to $15.5 billion; they decrease 4% compared to December 2012. These variations came up mainly
because of the decrease of the revaluations and permanent investments, close to $832 thousand million, generated by devaluation
in the stock price where Grupo Argos has investments. Liabilities amount to $1.75 billion; it decreases 16%. Equity totals $13.7
billion; it decreases 2% compared to December 2012.
The variation on the balance accounts March 2014 vs. 2013 is due to the following:
The individual assets account amount to $16.2 billion; they increase 5% compared to December 2013, mainly because of dividends
register and lot client’s portfolio and Celsia share purchases for $87 thousand million. Liabilities amount to $1.96 billion; they
increase, mainly due to dividend decree of $196 thousand billion. Equity totals $14.25 billion, it grows 4% compared to December
2013, mainly because of surplus of shares’ revaluation, $393 thousand million, conversion of BOCEAS: $110 thousand million and
appropriation of reserves for future investments of $ 99 thousand million.
C. OPERATING RESULTS OF LAST YEAR
To the extent that Grupo Argos is a Holding, its principal operating revenues are represented in income by dividend participation
method, received dividends and investment sale, in addition to income generated by real estate assets that are managed by Situm.
The sale cost corresponds to the value of share’s acquisition, sold during the year. Following, the individual operating results for the
last three years are detailed:
64
PROSPECTUS
2013
Income by participation method
Dividends
Sale of investments
Sale of urbanized lots
Real Estate Renting
Other
Total operations income
Sale cost
Gross profit
Participation Method
Administration
Sales
Provisions for investment protection
Total operations expenses
Operations Profit
318,718
82,659
57,603
44,637
12,379
1,307
517,303
69,517
447,786
18,537
64,218
1,226
6,260
90,241
357,545
2012
2011
391,344
69,936
107,019
29,519
4,337
171
602,326
69,673
532,653
41,725
41,669
1,047
13,748
98,189
434,464
101,902
26,010
244,757
372,669
31,823
340,846
126,145
13,078
1,726
140,949
199,897
The main changes in the operations results during the last year compared to the previous accounting periods correspond to received
dividends that from 2012 to 2013 increased 18%.
The change in investment sales is due to (i) in 2013, 1.470.000 preference shares of Grupo de Inversiones Suramericana S.A. were
sold and an investment at Zona Franca S.A.S. was settled; and (ii) in 2012, 1.381.519 preference shares of Grupo de Inversiones
Suramericana S.A. were sold as well as 8.331.613 of Cementos Argos, 4.200 common shares of Celsia and 403.130 common shares
of Sociedad Portuaria Bocas de Ceniza.
2013 also increased its revenue from the sale of urban lots and real estate, primarily in the city of Barranquilla.
Furthermore, since the income by the participation method is directly influenced by the profit of each one of the affiliated companies,
a summary of the operating results of them is below presented:
Results by type of business
The cement business:
Cementos Argos presents positive accumulated earnings at the closing of 2013, where EBITIDA the record achieved by the company
stands. This, tanks to the increasingly apparent economic recovery in the United States, the positive market dynamics in the regions
of Colombia, Caribbean and Central America and the operational efficiency achievements during the year.
The energy business:
Celsia concluded a year of outstanding results thanks to the mix of technologies of power generations (thermal and hydroelectric)
reaching generation historical records which represent 10% of the total Colombian market demand. Also, a highlight is made that
during the fourth quarter it recovered its capital structure and successfully issued its first ordinary bonds in the local stock market.
The business of Ports:
Compas continues with the investments and ad equations plan of its terminals, highlighting the progress in the construction of three specialized
warehouses for bulk handling at Tolú terminal. In Aguadulce, the construction of 21 road kilometers is in progress, which connects the terminal
with the main to Cali – Buenaventura, the completion of the deepening dredge at the access channel and the improvement of the maneuvering
areas. The crude oil loading operations began in the fourth quarter at Barranquilla terminal.
The property business:
Situm took steps developing important urban areas, where Portal de Genova – stage II in Puerto Colombia is included, and is ready
to start urban works of stages I and II of Portal Empresarial Norte in Barranquilla. Viva Villavicencio closed the year with an
execution of 53% in the property income business. Likewise, late in 2013 Situm signed a promise of buying and selling, to purchase
an important package of commercial rooms and offices at the future stage site of Centro Comercial Mayorca in Medellin, worth
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PROSPECTUS
USD $ 65 million.
D. PENSION LIABILITIES AND BENEFITS LOAD
On March 31st 2014 Grupo Argos had a pension liability of $ 3.252.993.713. This value is derived from the actuarial calculation of
the fiscal year, at the end of last year, plus the provision for 2014 of $ 61,907,081 which corresponds to the data based on 2013
inflation increase.
Its impact on the company’s finance is moderate, with a share of 0.16% within the total liability.
The following were the main factors used in the actuarial calculations:
2012
2013
Number of employees
Future pension increase
46
4.80%
55
4.80%
E. INFLATION IMPACT AND FLUCTUATIONS IN EXCHANGE RATES
On a consolidated basis the results of Argos Group and its subsidiaries are indirectly affected by inflation and the exchange rate.
However, these impacts are mitigated by each of these companies to hedge their risks by natural hedging and financial derivatives.
Individually, Grupo Argos covers debt transactions in foreign currency with forwards held until maturity of such operations and the
natural hedge that the accounts in current assets grant in dollars. Given the absence of foreign operations, exposure to currency
risk is minimal. Similarly, the operating performance of the business impact of changes in inflation is also reduced, since the
correlation of this variable with the cycle of the economy provides a natural protection to the cost of its debt.
F. LOANS AND INVESTMENT IN FOREIGN CURRENCY OWNED BY THE ISSUER
On March 31st 2014, Grupo Argos had loans in foreign currency for USD 235.5 million, which are totally covered by forward
contracts that seek eliminating the exchange exposition faced by the Issuer with this type of indebtedness.
H. INFORMATION ON THE LEVEL OF DEBT AT THE END OF LAST THREE (3) FISCAL YEARS
Following, the level of debt at the end of the last 3 fiscal years is presented:
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PROSPECTUS
Credits do not have seasonality.
Following is the debt profile of Grupo Argos on March 31st 2014, indicating whether it is fixed or variable rate, as well as the financial
instruments used:
*Synthetic: Structured Operation through which a dollar credit is covered by a derived purchase instrument, to convert it synthetically into a
Peso credit.
I. INFORMATION ON CREDITS OR LEVIES THE COMPANY HAD DURING THE LAST FISCAL YEAR
The taxes, levies and rates balance at March 31st 2013 comprised the following:
2013
Income tax
Income tax for la equidad CREE
Estate tax
Sales tax
Commerce and Industry tax
2012
8,596
2,030
953
478
-
2,039
1,905
417
2,179
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PROSPECTUS
12,057
6,540
Less – short term portion
(5,587)
Long term portion (1)
953
(1) The log term taxes, levies and rates in 2012 correspond to the shares of the estate tax, whose due date is in 2014.
The net income tax at December 31st 2013 comprised:
2013
Current Income tax
Less – tax advances and withholding taxes
Net income tax
2012
7,669
2,039
(2,624)
5,045
(1,575)
464
J. INFORMATION RELATED TO CAPITAL INVESTMENTS THAT WERE COMMITTED AT THE ENDING OF THE LAST
FISCAL YEAR AND INFORMATION OF THE LAST REPORTED FIRST QUARTER
At the ending of last fiscal year Grupo Argos did not have committed capital investments.
At the end of the first quarter 2014 Grupo Argos made the bought from Celsia 15.652.473 shares, of which 10.652.473 were paid in
March and 5.403.735 in April for being its compliance t+3. With this operation, Grupo Argos’s participation in its energy affiliate
went from 50.18% to 52.35%. This purchase was funded with divestments from the treasury portfolio.
K. PROGRESS IN THE IMPLEMENTATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
In accordance with the provisions of Law 1314 of 2009, the Regulatory Decree 2784 of December 2012 and Decree 3024 of
December 2013, Grupo Argos is required to start the process of convergence of accounting principles generally accepted in
Colombia to international financial reporting standards (IFRS), as issued by the IASB (International Accounting standards Board).
Given this convergence to IFRS would impact companies in Colombia, the Technical Board of Public Accountancy classified the companies in
three groups, in order to formalize the transition. Grupo Argos falls into Group 1, whose compulsory transition period begins on January 1st
2014 and the first comparative financial statements issued under NIIF standards will be those cut in December 31st 2015.
As a result, Grupo Argos with the support of the consulting firm Ernst & Young, established a schedule of activities for the transition
to the new accounting standards, which is being fulfilled in accordance with the originally approved by the Board.
At the closing of 2013 the following activities had been performed:

Diagnosis of the financial, technological impact and at process level.

Preliminary Opening Balance.

Definition of the main accounting policies and practices.

Initiation of the adequacy of the information systems.
Through its Audit and Finance Committee, The Board monitors the progress of the implementation process of IFRS in order to
ensure compliance of the schedule, in accordance with the regulations.
It is noteworthy that Grupo Argos provided timely to the SFC requested information through circular letters 10 of January 24 th 2013
and 112 of November 21st 2013, on the progress of convergence to IFRS. Likewise, in order to comply with circular letter 038 of
December 26th 2013, Grupo Argos will send to the SFC the status of its opening financial situation at January 1st 2014 at the latest,
on June 30th of the same year.
CHAPTER 9 – FINANCIAL STATEMENTS
A.
FINANCIAL INDICATORS
Individual Financial Statements (Figures in $ millions)
2013
Growth %
2012
Growth %
2011
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PROSPECTUS
Current Liabilities
Non-current Liabilities
Total Liabilities
Financial Obligations CP
Financial Obligations LP
Total Financial Obligations
Total Assets
Equity
Net profit
Cuentas de orden
555,502
1,195,343
1,750,845
-42%
7%
-16%
960,059
1,121,721
2,081,780
-9%
272%
54%
1,051,327
301,177
1,352,504
373,158
445,109
818,267
-38%
48%
-9%
601,271
300,109
901,380
-39%
1%
-30%
984,668
296,109
1,280,777
15,469,384
13,718,539
294,950
4,257,743
-4%
-2%
-14%
87%
16,142,171
14,060,391
343,938
2,274,632
34%
32%
124%
-72%
12,005,255
10,652,751
153,657
8,013,197
-21%
-3%
-10%
2012
3,624,032
5,524,344
9,148,376
720,914
1,063,692
1,784,606
-49%
-37%
-42%
27,415,335
12,441,163
294,950
-6,857,069
2%
-3%
-14%
-552%
Consolidated Financial Statements (Figures in $ millions)
Current Liabilities
Non-current Liabilities
Total Liabilities
Financial Obligations CP
Financial Obligations LP
Total Financial Obligations
Total Assets
Equity
Net profit
Memorandum accounts
2013
2,858,691
5,374,339
8,233,030
Growth %
Growth %
-22%
24%
1%
2011
4,633,466
4,450,769
9,084,235
1,409,261
1,685,905
3,095,166
-40%
-22%
-32%
2,352,804
2,170,285
4,523,089
26,799,834
12,781,338
343,938
1,515,956
6%
34%
124%
-142%
25,394,114
9,565,759
153,657
-3,621,389
The main direct investments of Grupo Argos by productive sector and the corresponding share of each of the companies in the
sector of its core business and its evolution over the last three years are listed below:
On March 31st 2014: $ 20,3 billion.
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PROSPECTUS
On December 31st 2013: $19,4 billion
On December 31st 2012: $20,3 billion
70
PROSPECTUS
On December 31st 2011: $12,6 billions
For further information regarding the companies participating in each sector, please refer to Section J, Chapter 5 of the present Information
Booklet.
B. FINANCIAL INFORMATION FORMATS
See Annex B of the present Information Booklet.
C. FINANCIAL STATEMENTS INDIVIDUAL AND CONSOLIDATED OF GRUPO ARGOS
See Annex C of the present Information Booklet.
D. FINANCIAL STATEMENTS IN THE COMPANIES WHERE GRUPO ARGOS HAS INVESTMENTS
See Annex B of the present Information Booklet.
CHAPTER 10 – RISK INFORMATION OF THE ISSUER
The potential investor of this Emission should consider the risks described below, as well as the additional information included in
this Information Booklet.
The Issuer will try its best effort for mitigate the risks described herein, as well as any other that may come up within the development of its
71
PROSPECTUS
operations. For such purpose, Grupo Argos permanently monitors the industry risks, the economical environment variations of the main markets
where it operates, amongst other. Notwithstanding the foregoing, the Issuer can not guarantee that the risks described herein will not become
true, thus affecting the Issuer. Different risks not known to the Issuer or that it currently believes are not material, can as well affect the ability of
the Issuer to repay the Securities.
A. RISKS ASSOCIATED TO MACROECONOMIC FACTORS
The results of the Issuer may depend on political or macroeconomic circumstances, local or international, including variables, such as
inflation, devaluation, interest rates, social instability, changes in the Colombian legislation and government policy.
A significant global risk in 2014, is the effect it could have on the capital markets, the continued exit trend of investment flows from the
emerging markets to the developed ones. This is based on the better prospects developed economies currently have, thanks to the effects
in the last cycle of the expansionary monetary policy.
Through its subsidiaries, Grupo Argos is exposed to macroeconomic risk in Colombia, United States and the Caribbean countries. The
market continues showing positive and clear signals of recovery in the United States. Despite this, a significant relevant risk is the evidenced
normalization of monetary policy in the monetary stimulation cut the Federal Reserve is carrying out.
It is expected that the rebound of the developed economies in the Caribbean will strengthen external demand. However, the effect can be
mitigated by the decrease in the price of raw materials, financial conditions and domestic demand.
In Colombia, the Central Bank estimates that growth will stand at 4.3% and will continue the positive trend shown in the last years. Hence,
this is why the risk is focused in the sense that such growth can be affected by a lesser recovery of the external sector, as a result of greater
difficulties than the expected ones in emerging economies. This could have a negative impact on the internal demand and the recovery of
industry.
B. DEPENDENCE ON KEY PERSONNEL
The organizational structure of the Issuer and the responsibilities’ allocation scheme adopted based on risk management, allows that on
critical activities a group of people may exist, with the skills and knowledge required to provide continuity to business management, in the
case of temporary or permanent absence of staff with key functions.
The Issuer has developed a strategic plan for career management and succession, which is its main objective by supporting business
continuity, identifying collaborators with potential, and successors of the critical and key positions, according to corporate and competitive
strategy. This eases the insight to know the Issuer better and allows professional growth and retention of key persons.
C. DEPENDENCE ON A SIGLE BUSINESS SEGMENT
In less than 10 years Grupo Argos went from being the major shareholder of various cement companies in Colombia, to being a group with
international presence and investments in strategic sectors with high current growth and generally, good future perspectives: cement,
energy, ports, real estate. Also, with a professional team with active participation In the strategic decisions in each one of the companies
through which business is conducted.
The strategic positioning of Argos Group has focused on investment in key sectors of the economy, with natural entry barriers, intensive in
capital and broad business cycles. Also, Grupo Argos seeks for both sectorial and geographical diversification, maximizing opportunities
within the investment target and at the same time seeking to limit the negative economic, political and regulatory effects. This allows Grupo
Argos to mitigate risk of dependence on a single business segment.
Grupo Argos is well positioned to capture value in new growth opportunities, leveraging in its management capacity and with the advantage of
having a sound financial position. Grupo Argos has a financial strength and a diversified portfolio of highly liquid investments, which allows it
flexibility to grow and going for new businesses.
D. INTERRUPTION OF THE ISSUER’s ACTIVITIES, CAUSED BY DIFFERENT FACTORS OTHER THAN LABOR RELATIONS
Considering Grupo Argos is a Holding company, it is not directly exposed to the risk of interruption of activities.
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PROSPECTUS
Despite this, the risk of disruption its subsidiary companies assume because of events such as weather conditions, transporter’s strikes,
technological failures, problems with suppliers, failures in the supply of inputs, technical failures, fire, explosions or other accidents
among others, could affect the activities of the Issuer.
For most of these eventualities, the subsidiaries have the necessary policies, preventive maintenance plans, physical protection
measures and geographic distribution of assets, to minimize the impact of these risks.
In any case, due to the structure of the Issuer, it has investments in different sectors and segments, allowing it to continue earning
income, in front of an eventual adverse change in the conditions of a sector.
E. LACK OF A SECONDARY MARKET FOR THE SECURITIES OFFERED
The securities offered are registered at the BVC and therefore, they can be traded freely in the Secondary Market. However, the securities
offered can have a higher or lower negotiability in the market, which can affect the valuation price of such securities, as well as other
private debt securities in the Colombian market, if it is the case. Furthermore, a reduction in the quality of credit of the Issuer could affect
trading and the negotiation of the securities offered.
F. ABSENCE OF A HISTORY REGARDING THE OPERATIONS OF THE ISSUER
The Issuer has Ordinary Shares registered in the Colombian Stock Exchange since 1941, which are highly liquid and are part of the market
index COLCAP. Similarly, the Issuer has Preference Shares with BOCEAS, inscribed in the RNVE since the year of 2012.
The operations history of the Issuer can be looked up at the Web page of the SFC (www.superfinanciera.gov.co). The financial statements
are available for consultation since 1994. Ss well, the relevant information since the year of 1996 can be found, among others, the
management report, financial statements with their respective notes and quarterly reporting in recent years, and also information leaflets of
regulations emissions...
On the website of the Issuer www.grupoargos.com among others, the management report, financial statements with their respective notes
and the quarterly reports of the last years can be consulted, alongside with the information leaflets of the actual issues.
G. NEGATIVE OCCURRENCE OF OPERATING RESULTS, NULL OR INSUFFICIENT IN THE LAST 3 YEARS
As detailed below Grupo Argos has not had a null or negative operation in a consolidated way nor individual, in the last three (3) years:
Operating income
Sales cost
Trading expenses
Operating Profit
Consolidated operations
($ millions)
2013
7,629,359
5,536,545
745,297
1,347,517
Operating income
Sales cost
Trading expenses
Operating Profit
Operating Profit (Individual)
($ millions)
2013
517,303
69,517
90,241
357,545
Description
Description
2012
2011
6,681,155
4,900,511
692,197
1,088,447
2012
5,786,283
4,092,232
531,360
1,162,691
2011
602,326
69,673
98,189
434,464
372,669
31,823
140,949
199,897
Additionally, for its condition of Holding, an important part of the results of Grupo Argos depends on the results of the subordinate societies
that consolidate, which are mentioned in Section J, Chapter 5 of this Information Booklet.
H. FAILURE TO PAY BANK LIABILITIES AND STOCK MARKET
Grupo Argos has taken care of all of its bank stock market commitments on the agreed terms. The eventual failure to comply with any of its
bank or stock market obligations could result in a decrease in the quality of credit of the Issuer, which could also affect the negotiation and the
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PROSPECTUS
prices of the BOCEAS.
I.
RISKS ASSOCIATED WITH THE TURN OUT OF THE BUSINESS
The corporate purpose of the Issuer is the investment in all types of land and buildings, premises, property and real estate and especially, in
stocks, shares of parts or any other participation equity in companies, entities, organizations, funds legal figure that allow resource investment.
In addition, the Issuer may invest in securities or instruments of fixed, variable rent, whether or not recorded in the Values Public Market. In any
case, issuers and / or recipients of the investment may be public, private or mixed, domestic, or foreign.
In this sense, thee Issuer is exposed to risks that directly impact its business and indirectly, through the contingencies to which the Issuer’s
subordinate societies are exposed, and their portfolio investments.
Grupo Argos directly faces eventual situations that influence the normal turn out of the business, like changes in the national or international
regulation and adverse economical conditions and finance risks.
Regarding the indirect risks assumed, Grupo Argos carries out investments that are part of a predefined strategy, and that is present in diverse
activity sectors. Currently, it is mainly exposed to typical risks of the cement, energy, property, coal and ports sectors. These sectors are
subordinated to factors that in occasions are not controlled by all the companies.
Such factors include for the cement and energy sectors, the availability of raw material, coal, and other fuels, water and energy. Additionally,
these businesses along with the coal business are exposed to operational risks, like climate conditions, interruption of energy supply, strikes at
transportation companies, technical failures, fire, explosion and other accidents, amongst other.
Additionally, the cement sector is exposed to the deceleration in the construction activity that could affect the price at medium term. In turn, a
decline in economic growth could reduce government revenues and affect the development of infrastructure projects in the country.
Regarding the coal sector, its affiliate could become affected because of the price variation of raw materials both in the country and the foreign
markets as well as penalties for contingencies in the operation.
For the real estate sector, the risks depend on the segment in question. In the urbanism segment, the main risks are the regulatory, based
on the regulations of the land defined in the plans of territorial ordering (POT) of each city, and to the market risk responding to the demand
of lots by its clients. In the property or real estate segment, the main risk is the market itself, which is embodied in the eventual allocation of
income and assets, and for the specific case of development projects, the construction risk that contemplates construction excess costs due
to increase in direct work activity costs and / or an increase in administrative expenses, due to increased runtime.
In the port sector, the company may be exposed to contamination events (drugs, contraband and money laundering), labor risks and changes
in the typical legislation changes of the sector.
All of these risks could affect the activities of the subordinate companies that develop them and in its turn, the profit and loss of the Issuer.
J. RISKS GENERATED BY BENEFITS LOAD, PENSION AND TRADE UNIONS
The Issuer makes contributions that correspond to the social security system, in accordance to the applicable law. The detail of pension
liabilities by the Issuer is described in Section E, Chapter 8 of this Information Booklet. Such pension liability is calculated based on actuarial
studies, which are prepared according to the legal requirements.
Labor processes the Issuer faces have been taken care of adequately and the contingencies associated with them are disclosed in the
consolidated financial statements of Grupo Argos cut at December 31, 2013 The Issuer has no unions.
K. RISKS OF THE CURRENT STRATEGY OF THE ISSUER
Grupo Argos has established itself as a Holding company of infrastructure, with the following strategic investments:
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PROSPECTUS





Cement business
Energy business
Port business
Coal business
Property business
And the following portfolio investments (among others):



Grupo Nutresa S.A.
Bancolombia S.A.
Grupo Argos’ Infrastructure is a coveted sector by the investing public, because of its stable returns and low correlation to traditional asset
sector.
Grupo Argos will be exposed to all risks that can affect its strategic investments, and the variations in the Shares’ price of its portfolio
investments.
L. VULNERABILITY OF THE ISSUER TO CHANGES IN INTEREST RATE, INFLATION AND / OR EXCHANGE RATE
Grupo Argos’ debt portfolio at March 31st 2014 has a 49.63% of fixed rate and 50.37% of variable rate, tied to the DTF, the IBR and the IPC. This
allows Grupo Argos to update its debt according to the rate cycle of the Central Bank, which in correlation with the economy’s cycle, provides a
natural protection on the cost of its debt, due to the operative performance of its business.
In respect to the Exchange rate exposure, the Issuer covers the dollar operations of the balance sheet. Grupo Argos has liabilities in dollars,
covered with purchase forwards, thus allowing a credit in Pesos.
M. DEPENDENCE OF THE BUSINESS REGARDING LICENSES, AGREEMENTS, BRANDS AND OTHER VARIABLES, OTHER THAT
ARE NOT OWNED BY THE ISSUER
There is no depence of the business regarding licenses, contracts or brands that are not owned by the Issuer.
N. SITUATIONS RELATED TO COUNTRIES WHERE THE ISSUER OPERATES
The Issuer through its affiliates: Cementos Argos, Celsia, Situm, Sator and Compas is exposed to the inherent risks of the activities in the
following countries:









Colombia.
United States.
Panamá.
Haití.
Dominican Republic.
Caribbean islands (Antigua, Saint Marten, Dominica, and Saint Thomas).
Surinam.
Honduras.
French Guayana.
The performance of the cement business, on one side, is highly dependent of the construction industry of each one of the countries in which it
operates and in which it sells its products. Any economic deceleration in one of these countries could have a negative impact in the residential
construction, commercial and the infrastructure, as well as in the expenses level, which in its turn could affect Cementos Argos’ business.
Likewise, factors of legal, political and public order type in such countries could affect the Issuer’s operation. In order to mitigate such risk,
Cementos Argos has started an internationalization process, which has permitted the diversification of the dependence risk, in one single
market.
Regarding the energetic business, focused in the Colombian market, an economical deceleration or important changes in legal or political
aspects could have a negative impact on the profit and loss of the companies devoted to this business.
The property business on its part is subject to the demand conditions in the Colombian market and the national regulations for the urbanism
segment.
The coal and ports sectors on their side are exposed by the dynamics of the international market and its impact on the local economy.
O. ACQUISITION OF ASSETS DIFFERENT FROMT THOSE OF THE NORMAL TURN OUT OF THE BUSINESS OF THE ISSUER
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PROSPECTUS
In its condition as a Holding, Grupo Argos carries out capital investments in affiliated companies that convert natural resources in products
and services of high aggregate value for the development of the basic segment o economy. This is why that currently, its investments and
the purchase projects of its affiliates focus in the cement, energetic, property, mining and port sectors. The risks of these activities are
controlled by its affiliates and their materialization should not affect the liquidity of Grupo Argos.
P. EXPIRATION OF SUPPLY CONTRACTS
Taking into consideration that Grupo Argos is a company devoted exclusively to its task as a Holding, it does not directly have any supply
contracts.
Q. IMPACT OF REGULATIONS AND RULES INVOLVING THE ISSUER AND THEIR POSSIBLE CHANGES
Changes in regulations are always a risk factor for any company. It can not be assured that the actual regulatory frame will continue in force
in Colombia and in the countries where the subordinate companies to Grupo Argos have operations. Thus, profit and loss of Argos could be
affected by this concept. In order to mitigate the risk, the lawyers team of each subordinate follow up permanently on the projects of legislation
or regulatory changes, anticipating themselves to such changes and proposing the necessary and required adjustments to the respective
company.
In respect particularly to Cementos Argos that is subject to the regulatory framework of the foreign countries where it operates it is worth
noting about the existence of the rule of “impairment” in some of these regions. The accounting standards in the United States and in some
of the Caribbean operation force the companies to quantify the deterioration of assets, or impairment, to adjust the value of their investments.
This effect is purely accounting and does not affect the cash flow of the company. A deepening of the crisis in the United States could
generate an adjustment to the value of the assets and negatively affect the operating profit. Since December 2008 to March 2014 Cementos
Argos has carried out an accumulated impairment of USD $156,07 million on its investments in USA. In 2013 and to date in 2014, Cementos
Argos has not carried out impairment on its assets abroad.
On the other side the subordinate companies to the Issuer that participate in the energy sector, are highly regulated by the National
Government, thus, being exposed to new regulations that can impact the operational business and the finance situation.
To date, there is no knowledge about any significant impact coming from regulations or standards affecting the Issuer and that are in progress,
as well as their possible changes.
R. IMPACT FROM ENVIRONMENTAL DISPOSITIONS
There are no direct environmental impacts, as Grupo Argos’ activities, which consist on being a Holding, do not have any type of
environmental influence. Despite this, the activity of its subordinate companies could potentially have environmental impacts.
The subordinate companies have a commitment with the sustainability of the environment, and are aware of the impacts of their decisions
and activities on the society and the environment. Thus, their behavior is ethical and transparent; it contributes to the sustainable
development, including the welfare of society.
The operations and projects developed by the subsidiaries in countries where they have presence, they submit to national, regional and local
environment regulations of each country. Getting to violate these norms would entail adverse effects to image, heritage and their operations
and those of the Issuer, Costs associated with possible not foreseen environmental damage caused by their operations, could also affect
the Issuer.
S. EXISTENCE OF CREDITS FORCING THE ISSUER TO KEEP CERTAIN RATIO IN ITS FINANCIAL STRUCTURE
Grupo Argos does not have any credit forcing it to keep certain ratio in its financial structure.
T. OUTSTANDING OPERATIONS THAT COULD AFFECT THE NORMAL BUSINESS DEVELOPMENT
At the date of performing this Information Booklet, there are no known operations that could significantly affect the normal development of
business, its results or its financial situation.
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PROSPECTUS
U. POLITICAL FACTORS, SUCH AS SOCIAL INSTABILITY, ECONOMIC STATE OF EMERGENCY, ETC.
Grupo Argos is exposed to those political factors that could affect the performance of the economy of the country and the countries where
its affiliates operate, and the region in general. Traditionally, in the Latin American countries the political noise has incidence in
macroeconomic indicators as a trust index, investment levels and minor growth expectations. An adverse macroeconomic situation in the
countries where its affiliates operate or with whom there are commercial relationships could affect the results of the Holding. The Issuer
mitigates the impact of the political risk through geographic diversification strategies of its affiliated.
V. COMMITMENTS KNOWN BY THE ISSUER THAT CAN SIGNIFY A CHANGE OF CONTROL IN ITS ACTIONS
On March 31st 2014 there was no commitment known by the Issuer that could imply a change of control in its actions.
W. POTENTIAL DILUTION OF INVESTORS
On March 31st 2014 the Issuer has the BOCEAS in force, described on section G, Chapter 7 of the Information Booklet. Once all the
BOCEAS are redeemed, the issuer will have emitted thirty five million two hundred and fifty thousand (35.250.000) Preference Shares, that
correspond to 4.46% of the total asset in circulation after their issue. As a result of the BOCEAS’s redemption, the shares investors will see
their participation diluted in the Issuer’s capital.
acciones verán diluida su participación en el capital del Emisor.
PART III – CERTIFICATIONS
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PROSPECTUS
CHAPTER 11 – EVIDENCE OF DUE DILIGENCE
A.
EVIDENCE OF THE LEGAL REPRESENTATIVE OF THE ISSUER
In terms of article 46 of Law 964 of 2005, in mi capacity as legal representative of Grupo Argos S.A., I certify, within my competence and
according to the current regulations, that the finance statements and additional relevant information fo the public, contained in the Information
Booklet, that it does not contain flaws, imprecisions or errors that could hinder the true equity situation of the Issuer.
Signed in Medellin on July 18th 2014.
Signed by
RICARDO ANDRÉS SIERRA
Legal Representative
Grupo de Argos S.A.
B.
CERTIFICATION OF THE LEGAL REPRESENTATIVE AND THE PUBLIC ACCOUNTANT OF
The undersigned Legal Representative and Public Accountant of Grupo Argos S.A. certify each one within our competence, that we have
performed the proper due diligence in the verification of the Information contained in the Information Booklet in such a way, that we certify its
78
PROSPECTUS
truthfulness and it does not show information omissions that can suggest materiality and could affect the decision of the potential investors.
We also certify that the finance figures shown in the present Information Booklet have been previously verified according to regulations and
that they have been faithfully taken from the books.
Signed in Medellin on July 18th 2014
Signed by
RICARDO ANDRÉS SIERRA
Grupo Argos S.A.
Signed by
LUZ CENELIA HERNANDEZ
Accountant
Grupo Argos S.A.
C. CERTIFICATION OF THE LEADER STRUCTURING AGENT
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PROSPECTUS
The undersigned legal representative of Banca de Inversión Bancolombia S.A. Corporación Financiera, certifies that within his competence,
in his duties as Placement Leader Structuring Agent, used the due diligence in the compilation of the information during the meetings with
the Board of Grupo Argos S.A., and based on them, performed the verification of the Information Booklet of the emission and placement
program of the Ordinary Bonds and Commercial Papers of Grupo Argos S.A., in a way that he certifies its truthfulness, and that it does not
show information omissions that can suggest materiality and could affect the decision of the potential investors.
Banca de Inversión Bancolombia S.A. Corporación Financiera for not being within its functions, has not audited independently the
information furnished by Grupo Argos S.A., that developed into the elaboration of this Information Booklet and thus, will not have any
responsibility on any affirmation or certification (explicit or implicit), contained in it.
Signed by
ALEJANDRO PIEDRAHÍTA BORRERO
D. CERTIFICATION OF BONDS HOLDER’s LEGAL REPRESENTATIVE
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PROSPECTUS
The undersigned Legal Representative of Alianza Fiduciaria S.A., certifies that within her competence as Legal Representative of Bonds
.Holder, used the due diligence in the verification of the contents of the Information Booklet of the emission and placement
program of the Ordinary Bonds and Commercial Papers of Grupo Argos S.A., in such way that she certifies its truthfulness, and that it does
not show information omissions that can suggest materiality and could affect the decision of the potential
Alianza Fiduciaria S.A., for not being within its functions, has not audited independently the information furnished by Grupo Argos S.A.,
which developed into the elaboration of this Information Booklet and thus, will not have any responsibility on any affirmation or certification
(explicit or implicit), contained in it.
Signed by
CATALINA POSADA MEJÍA
Alianza Fiduciaria S.A.
www.grupoargos.com
81

prospectus - Grupo Argos

Transcription

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