Acquisition Facility Agreement

Geschrieben am Mittwoch, September 8, 2021 | Kommentare: 0

This practice note provides an introductory guide to the typical provisions contained in a simple agreement on acquisition financing facilities. It provides an overview of possible funding sources for leverage acquisitions before examining the main possibilities in which a standard leverage acquisition facility agreement differs from a standard investment level facility agreement. Each part of a standard agreement on priority funding mechanisms is then discussed one after the other. Securities receivables are generally included in declarations of commitment or royalty letters in which lenders provide a transition facility that will be refinanced as soon as possible by the proceeds of a bond offering. The conditions of the application for securities provide that lenders may compel the borrower to issue securities subject to certain agreed criteria. Negotiations may focus on the timing and frequency of issuance, the need to issue for a minimum amount of bonds (to ensure a certain degree of efficiency for the issuer in terms of transaction costs and administrative time), the maximum interest rate at which the issuer may be compelled to issue the bonds and the terms of the bonds (e.g. B.B currencies and maturities). In the case of acquisition of private businesses, lenders will want to benefit from any adverse modification clause that a buyer negotiates in the contract of sale of the destination, but which will generally not require that these provisions be replicated in the letter of commitment or in the credit agreement, which instead provided that the conditions for acquisition were met and will not be abandoned. Conditions of change detrimental to commercial equipment are not as common in Britain as in other jurisdictions.

Lenders require controls on the buyer`s ability to modify or adopt certain essential elements of the sales contract, such as. B the long period of termination, the price and the conditions of the rights of closure or termination. Credit agreements and intercredit agreements are usually based on the latest LMA forms. Acquisitions of private companies are often the subject of a letter of commitment accompanied by a detailed long-term sheet. For certain transactions, the arrangers also undertake to enter into an interim facility agreement attached to the letter of commitment, which includes provisions for a facility that matures within a short period of time of closing and is available to finance the acquisition at closing in order to reduce execution risk. In cases where an interim facility agreement is signed, a long-term credit agreement to finance the acquisition is usually concluded before the conclusion of the share purchase agreement. . . .

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