International Acquisition Finance Law and Practice

by Griffiths, Gwendoline

• ISBN13: 9780199290765
• ISBN10: 0199290768
• Format: Hardcover
• Copyright: 2006-06-01
• Publisher: Oxford University Press

Summary

International Acquisition Finance is a new joint project with the International Bar Association providing a comprehensive analysis on the law and practice relating to acquisition finance at an international level. Filling a gap for a book on acquisition finance with a comparative nature, thiswork highlights the structure of practice and emphasises the differences of acquisition finance across 20 major jurisdictions including UK, Belgium, China, France, Germany and USA.Written by leading experts from around the world this work will be of practical use to private practice lawyers and in-house lawyers at banks and companies. It contains an overview of the relevant issues to provide a basic understanding and to enable general decisions to be made when structuringcross-border acquisition finance transactions. Each chapter deals with the stages of the proposed transaction and its financing and the related issues which need to be considered in the different jurisdictions

Author Biography

Gwendoline Griffiths is an English solicitor specialising in banking and finance law. She has worked in private practice for over 25 years, mainly in London with one year on secondment to an investment bank and two years in Singapore. She is currently a Consultant with Barlow Lyde & Gilbert.

Table of Contents

Preface	xxiii
Notes on Contributors	xxv
Table of Cases	xxxiii
Table of Legislation	xxxvii
1. Introduction
Gwendoline Griffiths
A. Background
B. Structure
C. Underlying Scenario
D. Contributors' Approach
E. Diversity
F. Comparative Table
G. Other Comparative Issues
H. Cross Border Developments
I. Legislative Changes
J. A Stimulating Environment
2: United Kingdom—England
Gwendoline Griffiths
A. Introduction
B. Methods of Acquisition Finance
(1) Bank loans
(2) Debt securities
(3) Bridge financing and post-completion syndication
C. Terms of a Senior Syndicated Facilities Agreement
(1) Types of facilities
(2) Ira-group loan agreement
(3) Condition, precedent: and drawdown mechanics
(4) Representations arid warranties
(5) Positive covenants
(6) Negative covenants
(7) Financial covenants and information
(8) Prepayment and repayment
(9) Assignments and transfers
(10) Role of agent and security trustee
(11) Tax aspects
(12) Related facilities
D. Guarantees and Security
(1) Common issues relating to guarantees and security
(2) Financial assistance
(3) Guarantees
(4) Security
E. Intercreditor Arrangements and Subordination
(1) General introduction
(2) Common terms agreement
(3) Intercreditor agreement
(4) Subordination
3. United Kingdom-Scotland
Alan Soppitt
A. Introduction
(1) Areas where there are fundamental differences between Scots law and English law
(2) Areas where Scots law and English law are similar or identical
B. Methods of Acquisition Finance
(1) Bank loans
(2) Mezzanine finance
C. Guarantees and Security
(1) Guarantees
(2) Security
(3) Security-Scotland only
(4) Security Scotland and England
D. Intercreditor Arrangements and Subordination
(1) Ranking
(2) Subordination
4. Belgium
Johan De Bruycker and Tim Verdickt
A. Introduction
B. Methods of Acquisition Finance
(1) Equity investors
(2) External lenders
(3) Debt securities
C. Specific Requirements for Parties that Provide Loans to Commercial Entities
D. Terms of a Senior Syndicated Facilities Agreement
(1) The right to choose the law that will govern the loan agreement
(2) Negotiating the contract: precontractual liability
(3) Negotiating the senior syndicated facilities agreement: letter of intent
(4) The specific terms: contractual freedom
(5) Assignments and transfers
(6) Role of agent and security trustee
(7) Interpretation of contracts
E. Securing the Acquisition Finance: Restrictions on Giving Security and Guarantees
(1) Corporate power: limitations included in the memorandum and articles of association
(2) Corporate benefit
(3) Financial assistance rules
(4) The limitations on s 617 of the Belgian Company Code
(5) Abuse of law (fraude à la loi)
F. Securing the Acquisition Finance: Possible Security and Formalities
(1) Security—the general principles
(2) Mortgage
(3) Pledges over tangible assets
(4) Pledges over shares and other financial instruments
(5) Pledges over invoices
(6) Pledges over receivables
(7) Pledges over bank accounts
(8) Pledges over intellectual property rights
(9) Pledges over business—'floating' charge
(10) Guarantees
(11) Jointly and severally liable debtors
(12) Specific contractual protection: limitation of recourse
(13) Set off
(14) Transfer of financial instruments as security
(15) Repo-agreement re financial instruments
(16) Enforcement of Belgian security
G. Intercreditor Arrangements and Subordination
H. Caveat: Lender's Liability
5. Canada
Simon Finch, Anna MacMillan, and John Teolis
A. Introduction
B. Methods of Acquisition Finance
(1) Commercial bank loans
(2) Debt securities
(3) Limited recourse financing
(4) Bridge financing
(5) Other types of debt financing
C. Terms and Conditions of a Senior Syndicated Facilities Agreement
(1) Types of facilities
(2) Intra-group loan agreement
(3) Conditions precedent and drawdown mechanics
(4) Representations and warranties
(5) Positive covenants
(6) Negative covenants
(7) Financial covenants and information
(8) Prepayment and repayment
(9) Assignments and participations
(10) Role of agent and security trustee
(11) Related facilities
D. Guarantees and Security
(1) Financial assistance
(2) Guarantees
(3) Security
E. Intercreditor Agreements
(1) General introduction
6. China
Heida Donegan and Páraig Walsh
A. Introduction
B. Basics of PRC Company Law
(1) Limited liability companies
(2) Foreign investment enterprises
(3) Investment categories
(4) Regulatory bodies
C. M&A Regulatory Environment
(1) M&A environment
(2) Acquisition by established FIEs
(3) Acquisition structures
(4) Foreign investors acquiring a domestic PRC company or its assets
(5) Foreign investors acquiring SOEs and State-owned assets
D. Structuring the Loan Finance
(1) Intercompany loans
(2) Borrowing by domestic PRC companies
(3) Borrowing by FIEs
(4) Domestic syndicated lending
(5) Syndicated loan agreement
(6) Governing law and dispute resolution
E. Taking and Enforcing Security in the PRC
(1) Mortgages
(2) Guarantees
(3) Pledges
(4) Liens
(5) Deposits
(6) Security to a foreign entity
(7) Specific acquisition finance issues
F. Offshore Acquisitions
(1) Advantages of offshore acquisitions of PRC companies
(2) Merger control
G. Conclusion
7. Denmark
Thomas Kaas and Kim Rasmussen
A. Introduction
(1) Documentation
B. Methods of Acquisition Finance
(1) Bank loans
(2) Debt securities
(3) Bridge financing and post-completion syndication
C. Terms of a Senior Syndicated Facilities Agreement
(1) General
(2) Types of facilities
(3) Debt servicing-intragroup loan agreements and dividends
(4) Conditions precedent and drawdown mechanics
(5) Representations, warranties and covenants
(6) Prepayment and repayment
(7) Assignments and transfers
(8) Role of agent and security trustee
(9) Tax aspects
(10) Related facilities
D. Guarantees and Security
(1) Common issues relating to guarantees and security
(2) Financial assistance
(3) Security trustees and security agents
(4) Guarantees
(5) Security
E. Intercreditor Arrangements and Subordination
(1) General introduction
(2) Intercreditor agreements
(3) Subordination
8. Finland
Tarja Wist and Hans Wassgren
A. Introduction
B. Methods of Acquisition Finance
(1) Introduction
(2) Senior and mezzanine financing
(3) Receivables and the assignment thereof under Finnish law
(4) Shareholder's equity
(5) Shareholder loans
C. Terms of a Senior Syndicated Facilities Agreement
(1) General
(2) Drawdown mechanics
(3) Conditions precedent
(4) Representations, warranties and covenants
(5) Execution of financing agreements
(6) Prepayment and repayment
D. Related Facilities
E. Guarantees and Security
(1) Introduction
(2) Pledges of moveable property under Finnish law
(3) Security interest in certain registered moveables
(4) Real estate mortgage
(5) Floating charge
(6) Guarantees
(7) Structuring issues in respect of security
F. Financial Assistance and other Restrictions Affecting Corproate Borrowing
(1) General
(2) Financial assistance provisions
(3) Corporate benefit considerations
(4) Consequences of breach
(5) Relevance for post-acquisition structure 1
(6) Relevance for post-acquisition structure 2
(7) Reform of the Companies Act
G. Intercreditor Arrangements and Subordination
(1) General
(2) Finnish regulation on contractual subordination
(3) Intercreditor arrangements in bankruptcy
(4) Intercreditor arrangements and company reorganization
(5) Other relevant provisions of intercreditor agreements
9. France
Jean-François Adelle
A. Introduction
B. Methods of Acquisition Finance
(1) Loans
(2) Equity
(3) Debt security
(4) Specific constraints
(5) Financial assistance
(6) Dividends distribution
(7) Cash pooling arrangements
(8) Merger/absorption of the target company
(9) Terms of a senior syndicated facilities agreement
(10) Types of facilities
(11) Mandatory rules
(12) Intragroup loan agreements
(13) Conditions precedent and drawdown mechanics
(14) Financial covenants and obligations
(15) Prepayment and the repayment
(16) Assignments and transfers
(17) Role of the agent and security trustee
(18) Usury and effective global rate ('taux effectif global')
(19) French language
(20) Tax aspects
C. Guarantees and Security
(1) Aspects common to all guarantees and securities
(2) Draft reform on company security interest
(3) Guarantee and security at the level of the holding company and its shareholders
(4) Guarantee and security at the level of the target company and its subsidiaries
(5) Enforcement in a bankruptcy situation of the target company
D. Intercreditor Arrangements and Subordination
(1) Subordination
10. Germany
Hans-Günther Nordhues
A. Introduction
(1) Civil law concept
(2) Interest
(3) Material adverse effect
(4) Currency indemnity
(5) Standard business conditions
(6) Summary
B. Methods of Acquisition Finance
(1) Bank loans
(2) Debt securities
(3) Ranking of debt
(4) Bridge financing and syndication
(5) Future pledges
(6) Parallel debt
C. Drawdown Mechanics and Conditions Precedent
(1) Major differences
D. Representations and Warranties
E. Covenants
(1) Positive covenants
(2) Negative covenants
(3) Financial covenants
F. Prepayment and Repayment
(1) Prepayment options
(2) Normal repayment
(3) Mandatory prepayment
(4) Events of default
G. Related Facilities
(1) Ancillary facilities
(2) Hedging
H. Guarantees and Security
(1) Types of security interests
(2) General limitations on taking security interests in Germany
(3) Additional issues in connection with the creation of security interests
(4) General aspects of the enforcement of security
(5) Overview of insolvency proceedings
(6) Investor security
(7) Acquisition holding security
(8) Target security
I. Intercreditor Arrangements and Subordination
(1) Debt
(2) Equity
(3) Guarantees and security
11. Ireland
William Johnston
A. Introduction
B. Methods of Acquisition Finance
(1) Bank loans
(2) Debt securities
(3) Ranking of debt
C. Terms of a Senior Syndicated Facilities Agreement
(1) Drawdown mechanics and conditions precedent
(2) Representations and warranties
(3) Positive covenants
(4) Negative covenants
(5) Financial covenants
(6) Repayment and prepayment options
(7) Mandatory prepayment
(8) Events of default
(9) Assignment and transfers
(10) Related facilities
D. Guarantees and Security
(1) Form of guarantee
(2) Execution of guarantee
(3) Commercial benefit
(4) Prohibition of guarantees
(5) Fees for guarantees
(6) Fixed and floating charges
(7) Avoidance of guarantees and security
(8) Stamp duty and registration of security
E. Financial Assistance
(1) Prohibition on financial assistance
(2) Authorized financial assistance
(3) Form of declaration
(4) Directors' liability
(5) Procedure
(6) Filing of statutory declaration
F. Intercreditor Arrangements and Subordination
(1) Governing law and jurisdiction
12. Italy
Lisa Curran and Francesca Romana Turitto
A. Introduction
B. Methods of Acquisition Finance
C. Bank Loans
D. Terms of a Senior Syndicated Facilities Agreement
(1) Drawdown mechanics and conditions precedent
(2) Representations and warranties
(3) Covenants
(4) Financial covenants
(5) Events of default
E. Financial Assistance
(1) The 2004 reform of Italian company law
(2) The 2-tier structure
F. Corporate Benefit
(1) The 'ultra wires' transaction
G. The New Regime of Corporate Group Responsibility
H. The 'Thin Capitalization' Rules
I. Debt Securities
(1) Subordinated bonds
(2) The tax regime
J. Intercreditor Arrangements and Subordination
(1) Structural subordination and the impact of shareholder loans
K. Security Interests
(1) The 'floating charge' in Italy
(2) Pledges and the assignment of receivables
(3) The enforcement procedures
(4) Security subject to a 'financial collateral arrangement'
(5) The suspect period
13. Japan
Akira Marumo
A. Introduction
B. Methods and Structure of Acquisition Finance
(1) Loans
(2) Securities
(3) Senior loans v subordinated loans
(4) Secured loans v unsecured loans
(5) Bridge financing and post-completion syndication
(6) Other issues
C. Terms of Loan Agreement
(1) Types of facilities
(2) Intragroup loan agreement
(3) Conditions precedent and drawdown mechanics
(4) Representations and warranties
(5) Positive covenants
(6) Negative covenants
(7) Financial covenants and information
(8) Prepayment and repayment
(9) Assignments and transfers
(10) Role of agent and security agent
(11) Related facilities
D. Guarantees and Security
(1) Common issues relating to guarantees and security
(2) Guarantees
(3) Security
E. Intercreditor Arrangements
14. Luxembourg
Toinon Hoss and Pit Reckinger
A. Introduction
B. Methods
(1) Bank loans
(2) Lending as an investment
C. Subordination and Limited Recourse
(1) Subordination
(2) Limited recourse
D. Guarantees and Security
(1) Validity conditions
(2) A new regime governing collateral introduced by the financial collateral directive
(3) Consequences and risks
E. Financial Assistance
15. The Netherlands
Marlon van der Maat and David Viëtor
A. Introduction
B. The Terms of the Facility Agreement
(1) Applicable law
(2) A Dutch transaction with international aspects governed by Dutch law documentation
(3) An international transaction with Dutch aspects governed by foreign law documentation
C. Grounds Under Dutch Contract Law for Contesting the Validity or Enforceability of the Finance Documents
(1) A Dutch transaction with international aspects governed by Dutch law documentation
(2) An international transaction with Dutch aspects governed by foreign law documentation
D. Grounds Under Dutch Company Law for Contesting the Validity or Enforceability of the Finance Documents
E. Other Grounds which May Affect the Validity or Enforceability of the Finance Documents
F. The Giving of Security by Dutch Companies
(1) Types of security
(2) In rem security rights
(3) Quasi or contractual security rights
(4) The Dutch conflict of law rules
(5) Joint security rights/ parallel debt
(6) The effect of amendments of the facility agreement and of loan transfers on security
(7) Enforcement of security rights
Appendix: Market information
16. Norway
Sverre Tyrhaug
A. Methods of Acquisition Finance
B. Terms of a Senior Syndicated Facilities Agreement
(1) Intragroup loan agreements
(2) Assignments and transfers
(3) The Norwegian Financial Contracts Act
C. Guarantees and Security
(1) Common issues relating to guarantees and security
(2) Financial assistance
(3) Limitations on upstream and sidestream security
(4) The Norwegian Financial Contracts Act
(5) Security
D. Intercreditor Arrangements and Subordination
17. Spain
Miguel Buxó, Javier Illescas, Ángel Pérez Lopez, Eduardo Rodriguez-Rovira, and Maria Luisa Tortosa
A. Introduction
B. Methods of Acquisition Finance
(1) Drawdown mechanics and conditions precedent
(2) Representations and warranties
(3) Positive covenants
(4) Negative covenants
(5) Financial covenants
(6) Prepayment and repayment
(7) Ancillary facilities
C. Guarantees and Security
(1) Common issues relating to guarantees and security interests
(2) Guarantees
(3) Security interests
D. Intercreditor Arrangements
(1) General introduction
(2) Collective action
(3) Holding and enforcing security
(4) Share of payments
E. Subordination
(1) Contractual and structural subordination
(2) Contractual subordination in insolvency situations
(3) Other subordination causes in insolvency situations
18. Sweden
Magnus Hedsund and Peter Linderoth
A. Introduction
B. Methods of Acquisition Finance
(1) Bank loans
(2) Debt securities
(3) Bridge financing and post-completion syndication
C. Terms of a Senior Syndicated Facilities Agreement
(1) Conditions precedent and drawdown mechanics
(2) Representations and warranties
(3) Positive covenants
(4) Negative covenants
(5) Financial covenants and information
(6) Prepayment and repayment
(7) Assignments and transfers
(8) Role of agent and security trustee
(9) Related facilities
D. Guarantees and Security
(1) Common issues relating to guarantees and security
(2) Financial assistance
(3) Other relevant provisions of law
(4) Guarantees
(5) Security
E. Intercreditor Arrangements and Subordination
(1) General introduction
(2) Intercreditor agreement
(3) Subordination
19. Switzerland
Stefan Breitenstein and Fedor Poskriakov
A. Introduction
B. Common Financing Methods
(1) Senior debt
(2) Mezzanine debt
(3) Fully subordinated debt (shareholders' loans)
(4) Intragroup loan agreements
(5) Debt securities
(6) Bridge financing
C. Terms of a Typical Senior Term and Revolving Facilities Agreement
(1) Facilities
(2) Legal characterization
(3) Common legal issues
(4) Form of documentation
(5) Selected terms of a typical senior loan facility agreement
D. Financial Assistance
(1) Legal concepts restricting the giving of financial assistance
E. Guarantees and Security
(1) Introduction
(2) Governing law
(3) Common issues
(4) Guarantees
(5) Taking security in Switzerland
F. Intercreditor Arrangements and Subordination
(1) Introduction
(2) Validity under Swiss law
(3) Intercreditor agreements
20. United States
Marsha E. Simms, Danek A. Freeman, and Michael Wenger
A. Introduction
B. Methods of Acquisition Finance
(1) Types of financing
C. Initial Considerations
(1) Acquisition structure
(2) Group structure
(3) Acquisition agreement
(4) Due diligence
(5) Bankruptcy proceedings
(6) Fraudulent conveyance
D. Terms of the Bank Loan Facility
(1) Types of facilities
(2) Conditions precedent/deliverables
(3) Opinions
(4) Representations and warranties
(5) Covenants
(6) Prepayment and repayment
(7) Events of default
(8) Choice of law
(9) Tax
(10) Security interests and related issues
(11) Recent developments
E. Debt Securities
(1) Covenants
(2) Regulatory issues
(3) Subordinated debt
(4) Bank financing v debt securities
F. Intercreditor Arrangements and Subordination
(1) Payment subordination
(2) Structural subordination
(3) Lien subordination
Appendix	629	(12)
Index	641