Archives: Syndicated Loans

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Jumping Across the Pond: Syndicating European Borrower Debt in U.S. Markets (Part 3 of 3)

Restructuring Differences in the U.S. and European Financial Markets This post was also written by Abbey Mansfield, Phil Slater and Ben Wulwik. Recent uncertainty in the European financial markets has led many European borrowers to look to the U.S. debt markets for liquidity.  However, U.S. and European debt markets have developed very different market terms … Continue Reading

Jumping Across the Pond: Syndicating European Borrower Debt in U.S. Markets (Part 2 of 3)

Particular Terms of European Borrower Debt in the U.S. Financial Markets This post was also written by Abbey Mansfield, Phil Slater and Ben Wulwik. As our prior post noted, recent uncertainty in the European financial markets has led many European borrowers to look to the U.S. debt markets for liquidity. However, U.S. and European debt markets … Continue Reading

Jumping Across the Pond: Syndicating European Borrower Debt in U.S. Markets (Part 1 of 3)

The Basics of Structuring and Documenting European Borrower Debt in the U.S. Financial Markets This post was also written by Abbey Mansfield, Phil Slater and Ben Wulwik. Recent uncertainty in the European financial markets has led many European borrowers to look to the U.S. debt markets for liquidity, and data shows that there is an … Continue Reading

Promissory Notes

Do you require a promissory note from the borrower when you make a loan under a syndicated credit facility? In syndicated deals, promissory notes -- like bell-bottom pants and polyester suits with wide lapels -- really seem to have gone out of style.… Continue Reading

Interest Rate Swaps: What to do When the Loan Agreement Terminates

Here's the story: A lender wants to refinance a loan made by another bank, and the other bank has provided an interest rate swap to the borrower. The problem is that the swap is "out of the money" -- meaning that, in this case, the borrower would owe the bank about $20 million if the swap were terminated today. Termination of the credit facility causes the swap to terminate too, so, unless we can come up with another option, this additional $20 million will be owed on the day the loan is refinanced. What can we do?… Continue Reading

False Financial Statements — Can You Rely on Representations from Your Borrower?

When you want to make a loan, you probably get copies of the borrower's recent financial statements, and you probably take a pretty close look at them as part of your credit process. You might even ask for more information about certain items that you see on the financial statements. But how often do you dig deeply behind the financial statements and conduct your own audit? Probably never, right? So what happens if the financial statements later turn out to be false?… Continue Reading

Can We Credit Bid Or Not?

Credit bidding has become a really hot issue recently.   For those of us who don’t normally work on bankruptcy matters, the right to credit bid is an important right that secured lenders usually have in a bankruptcy proceeding.  If you’re the senior secured lender and you want to buy the company’s assets in a bankruptcy sale, you can show up at the … Continue Reading

Loan Participations – To Consent or Not To Consent?

Here's an easy one for you: How many of you (lenders) think that you should have to get consent from the borrower to sell a participation in a loan? I'll take the safe bet and guess "none" -- since it's such standard practice for lenders to sell participations without borrower consent. Really, you'd be hard pressed to find a credit agreement that said otherwise. With that in mind, let's take a quick look at a recent case from a federal court in New York that said just the opposite.… Continue Reading

What if an Equity Sponsor is also a Lender in your Bank Group?

In today's challenging economic climate, private equity sponsors are trying to figure out how to fill funding gaps in acquisition financings -- and how to provide additional capital to their troubled portfolio companies. In lieu of providing additional equity, some sponsors are requesting the ability to participate as a lender in the senior debt facilities of the portfolio company. If the lenders decide to allow the sponsor to become a lender in their debt facilities, what steps should they take to best protect themselves, given the different hats this new lender will be wearing?… Continue Reading

Good News for Buyers in the Secondary Market

The New York Court of Appeals has decided that under New York law, buyers of debt in the secondary market can also assert claims related to the loans they purchase. As you might imagine, it's important that lenders who acquire loans know that they will not just be passive holders of the loans, but that they also will be able to take steps to enforce those loans if necessary.… Continue Reading

What to Do When a Lender Defaults – Part Two

In our last post on this topic, we discussed some basic provisions that provide protection for the bank group and the borrower if a lender in a syndicated loan deal defaults. Now let's take it to the next level. What kinds of things could you add to your loan agreements that would give you even more protection, and better rights, if a lender defaults?… Continue Reading

What to Do When a Lender Defaults

Lenders often express concern about potential defaults under their loan agreements - but it's usually default by the borrower that they're concerned about, not default by the lenders. However, with an increase in the number of bank failures and FDIC receiverships over the past year, we've begun to see an increase in the number of lender defaults in syndicated loan deals. If you're a lender (or a borrower) in a syndicated credit facility, you might well find yourself facing this situation at some point. What can you do - and what can't you do - when a lender defaults?… Continue Reading

Covering Your Cost of Funds in a Syndicated Deal

In the past year, we've seen many changes in how interest rates are calculated. Volatility in the quoted rates for LIBOR created problems for several lenders, who suddenly found that the interest rates they were earning on some of their outstanding loans didn't cover their cost of funds. In a syndicated loan, there is additional tension between the need for each of the lenders to have its own cost of funds covered, and the problem that would be created if a situation affecting only one member of the bank group could be used to drive the interest rate up on the entire credit facility.… Continue Reading

Can You Amend Your Loan Agreement Without a 100% Vote?

One question we hear a lot these days is whether a syndicated loan agreement can be amended to do certain things without consent of all of the lenders. With more borrowers in financial trouble, it has become increasingly important - and sometimes necessary for the borrower's survival - to get amendments passed quickly. But it can be difficult, if not impossible, to get all of the lenders to agree. This is part one of a series of posts about what to do when this issue comes up.… Continue Reading
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