United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 20-F

  

 

  

For the fiscal year ended: June 30, 20192020

 

OR

 

 

OR

 

 

Commission file number: 001-29190

 

CRESUDCresud SOCIEDAD ANONIMA COMERCIAL INMOBILIARIA FINANCIERA Y AGROPECUARIA

(Exact name of Registrant as specified in its charter)

 

Cresud Inc.

(Translation of Registrant’s name into English)

 

Republic of Argentina

(Jurisdiction of incorporation or organization)

 

(C1091AAQ) City of Buenos Aires, Argentina

(Address of principal executive offices)

 

Matías Iván Gaivironsky

Chief Financial and Administrative Officer

Tel +(5411) 4323-7449 – ir@cresud.com.ar

(C1091AAQ) City of Buenos Aires, Argentina

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

 

Securities registered or to be registered pursuant to Section 12(b) of the Act:

 

 

 

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

 

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

 

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the period covered by the annual report: 501,642,804.

 

Indicate by check mark if the registrant is a well known seasoned issuer, as defined in Rule 405 of the Securities Act:

 

☐ Yes ☒ No

 

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934.

 

☒ Yes ☐ No

 

Note: Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(a) of the Securities Exchange Act of 1934 from their obligations under those Sections

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

☒ Yes ☐ No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

 

☒ Yes ☐ No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

 

Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Emerging growth company ☐

 If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

 

 

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

 

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

☐ Yes ☒ No

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PRESENTATION OF FINANCIAL AND CERTAIN OTHER INFORMATION

 

 

 

 

 

 

 

 

 

 

Under IFRS 10 “Consolidated Financial Statements” (“Shufersal”IFRS 10”), an investor controls an investee if and only if the investor has all the following: a) power over the investee; b) exposure, or rights, to institutional investors, thereby ceasingvariable returns from its involvement with the investee; and c) the ability to have controluse its power over the investee to affect the amount of Shufersal. We deconsolidated Shufersalthe investor’s returns. Based on the facts and circumstances outlined above, our management believe that, as from September 25, 2020, IRSA lost control over IDBD and DIC (as this term is defined by IFRS 10). Accordingly, our investment in IDBD and DIC will be deconsolidated in our financial statements as of and for the three-month period ended September 30, 2020.

 

 

 

 

 

 

 

 

 

PART I

 

 

This item is not applicable.

 

 

This item is not applicable.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Historically, high rates of inflation have undermined the Argentine economy and the Argentine Government’sgovernment’s ability to foster conditions for stable growth. High rates of inflation may also undermine Argentina’s competitiveness in international markets and adversely affect economic activity and employment, as well as our business, financial condition and results of operations.

 

According to theThe INDEC reported cumulative variation of the CPI increasedof 24.8% infor 2017, 47.6% for 2018, 53.8% for 2019 and 47.6% in 2018. Regarding to the first nine months of the year 2019, there is a significant decrease with respect to inflation levels of 2018, registering rates of 2.9%2.3%, 3.8%2.0%,3.3%, 4.7%1.5%, 3.4%1.5%, 3.1%2.2%,1.9%, 2.7%, 2.2%, 4%2.8% and 5.9% in3.8% for January, February,March, April, May, June, July, August, September and September 2019,October 2020, respectively. Inter-annual inflation at September 2019, compared to the same month of 2018, was 53.5%.

In addition, the dilution of the positive effects of any depreciation of the peso on the export-oriented sectors ofrecent years, the Argentine economy would decrease the level of economic activity in the country. In turn, a portion of the Argentine Government’s outstanding debt is adjusted by the Coeficiente de Estabilización de Referencia (“CER”), a currency index tiedgovernment has taken certain measures to inflation. Therefore, any significant increase incurb inflation, would generate an increase in Argentina’s debt measured in pesossuch as implementing price controls and consequently, its financial obligations. In addition, if the Central Bank drops out the target of zero growth of the monetary base and validate the rise in prices, it could determine a possible start of a hyperinflationary process.

 

 

As of July 1, 2018, the Argentine Peso qualifiesqualified as a currency of a hyperinflationary economy and we arewere required to restate our historical financial statements in terms of the measuring unit current at the end of the reporting year, which could adversely affect our results of operation and financial condition

 

Pursuant to IAS 29 “Financial Reporting in Hyperinflationary Economies”, the financial statements of entities whose functional currency is that of a hyperinflationary economy must be restated for the effects of changes in a suitable general price index. IAS 29 does not prescribe when hyperinflation arises, but includes several characteristics of hyperinflation. The IASB does not identify specific hyperinflationary jurisdictions. However, in June 2018, the International Practices Task Force of the Centre for Quality, which monitors “highly inflationary countries”, categorized Argentina as a country with projected three-year cumulative inflation rate greater than 100%. Additionally, some of the other qualitative factors of IAS 29 were present, providing prima facie evidence that the Argentine economy is hyperinflationary for the purposes of IAS 29. Therefore, Argentine companies that prepare financial statements pursuant to IFRS and use the Peso as their functional currency arewere required to apply IAS 29 to their financial statements for periods ending on and after July 1, 2018.

 

 

During the first three fiscal years as fromstarting after January 1, 2018, the tax indexation will be applicable if the variation of the CPI exceeds 55% in 2018,2019, 30% in 20192020 and 15% in 2020.2021. The tax indexation determined during any such year will beas of June 2019 was allocated as follows: 1/3One-third in that same year, and the remaining 2/3two-thirds in equal parts in the following two years. FromThe tax indexation determined for fiscal years beginning on July 1, 2019 and July 1 2020 will be allocated as follows: One-sixth in that same year, and the remaining five-sixth in equal parts in the following five years. For fiscal years starting after January 1, 2021, the tax indexation procedure will be triggered under similar standards as those set forth by IAS 29.

 

We cannot predict the future impact that the eventual application of tax indexation and related inflation adjustments described above will have on our financial statements or their effects on our business, results of operations and financial condition.

 

 

During recent years, the Argentine Governmentgovernment has substantially increased public spending. In 2015, government spending increased by 34.4% as compared to 2014, resulting inArgentina recorded a primary fiscal deficit of 3.8%3.9%, 2.4% and 0.4% of GDP. In 2016, government spending increased by 42.8% as comparedGDP in 2017, 2018 and 2019, respectively. However, the new Fernández administration has indicated that will seek to 2015, resulting in a primary fiscal deficit of 4.2% of 2016 GDP. In 2017, government spending increased by 25.9% as compared to 2016, resulting in a primary fiscal deficit of 3.8% of 2017 GDP. In 2018, government spending increased by 13.1% as compared to 2017 resulting in a primary fiscal deficit of 2,4% of 2018 GDP, but meanwhile the primary fiscal deficit decrease compared to 2017, the financial deficit (interest rates of the international debt with IMF) increased to 2,8% resulting in a total deficit of 5,2% for the year 2018.foster economic growth, which may require additional public spending. If government spending continues to outpace fiscal revenues,revenue, the fiscal deficit is likely to increase. Additionally, the economic impact of the COVID-19 pandemic and the nationwide lockdown may also require the Argentine government to increase and past sources of funding to address such deficit may be required to be utilized.public spending.

 

 

 

Argentina’s 2001 sovereign default and its failure to fully restructure its sovereign debt and negotiate with the holdout creditors has limited Argentina’s ability to access international capital markets.markets to obtain financing. In 2005, Argentina completed the restructuring of a substantial portion of its defaulted sovereign indebtedness and settled all of its debt with the IMF. Additionally, in June 2010, Argentina completed the renegotiation of approximately 67% of the principal amount of the defaulted bonds outstanding that were not swapped in the 2005 restructuring. As a result of the 2005 and 2010 debt swaps, Argentina has restructured approximately 92.1% of its defaulted debt that was eligible for restructuring (the “Debt Exchanges”).restructuring. Holdout creditors that had declined to participate in the exchanges commenced numerous lawsuits against Argentina in several countries, including the United States, Italy, Germany, and Japan.

 

As a result of the litigation filed by holdout bondholders and their related efforts to attach Argentina’s sovereign property located in the United States and other jurisdictions, Argentina’s ability to access the international capital markets was severely limited. In February 2016, the Argentine Government agreed with a group of Italian bondholders to pay in cash the total principal amount of debt owed to such holders. In mid-2016, the Argentine Government emerged from default and paid US$ 900 million to the approximately 50,000 Italian bondholders who owned government securities with defaulted payments part due.

In 2018, due to Argentina’s limited access to the international capital and lending markets, the Argentine government and the IMF entered into a “stand-by” arrengment forUSD57.1 billion principal amount of bonds. On April 22, 2016, the Argentine Government paid amounts due under the agreement and the U.S. courts removed all previously issued sanctions and injunctions. From December 31, 2015 to September 30, 2018, Argentina’s sovereign debt increased by US$66,991 million, according to the Ministry of Treasury.

Shortly after taking office, the Fernández administration also initiated by holdoutsnegotiations with creditors in order to restructure the country’s current Peso- and other international creditors that did not accept Argentina’s payment offer continue in several jurisdictions, althoughU.S. dollar-denominated public debt. In this context, on February 5, 2020, the sizeArgentine Congress passed Law No. 27,544, pursuant to which the sustainability of the claims involved has declined considerably. The potential consequencessovereign debt was declared a national priority, authorizing the Ministry of final judgments from courtsEconomy to renegotiate new terms and conditions with Argentina’s creditors within certain parameters.

Additionally, in various jurisdictions are unclear and further adverse rulings could adversely affectthe midst of debt restructuring negotiations, on April 5, 2020 the Argentine Government’s abilitygovernment issued Decree No. 346/2020, through which the repayment of Argentine law-governed dollar-denominated notes was postponed.

On April 21, 2020, the Argentine government launched an exchange offer with the aim of refinancing its external indebtedness in a manner which does not compromise the development and potential growth of Argentina over the next years. On August 17, 2020, the Argentine government submitted its modified bond restructuring offer to issuethe SEC. On August 31, 2020, the Argentine government announced the results of its bond restructuring offer, announcing that holders owning 93.5% in principal amount of bonds outstanding and that this participation percentage was subsequently increased to 99% by virtue of the application of collective action clauses of the restructured bonds. However, the Argentine government faces the challenge of restructuring its debt securities or obtain favorable terms whenin foreign currency issued under Argentine law, as well as its debt with the need to accessIMF. We cannot predict the outcome of these negotiations.