Combining Asset-Based and Term Lending Facilities: Navigating Competing Interests, Harmonizing Documentation
Recording of a 90-minute premium CLE video webinar with Q&A
This CLE course will examine the complexities in negotiating and documenting an asset-based lending (ABL) facility alongside a leverage loan facility with the same borrower, including the differing collateral and priorities between an asset-based facility and a term loan facility, and how those differences affect the terms of the documentation and ultimately the enforcement should either facility go into default.
Outline
- ABL and term loan facilities: differences in collateral, underwriting focus of each type of lender
- Advantages to borrowing under both types of facilities
- Documenting a split collateral financing
- Key concerns/provisions for the term lender
- Key concerns/provisions for the ABL lender
- Pros and cons of conforming ABL to term documents: preserving ABL rights and remedies
- Intercreditor agreement: addressing the diverging interests of the ABL and term lender if the borrower defaults
Benefits
The panel will review these and other essential issues:
- How does the underwriting and collateral for an ABL facility differ from a term loan?
- What are the added risks associated with split collateral financing?
- How should those risks be addressed in the loan documents and the intercreditor agreement?
- What are the pros and cons of conforming the ABL documents to the term loan documents?
Faculty
Wade M. Kennedy
Partner
Holland & Knight
Mr. Kennedy is an attorney in Holland & Knight's Chicago office and a member of the firm's Financial... | Read More
Mr. Kennedy is an attorney in Holland & Knight's Chicago office and a member of the firm's Financial Services Team and co-lead of the Asset-Based Lending Team. He has more than 30 years of experience and focuses his practice on representing lead financial institutions in complex syndicated credits to asset-based and leveraged borrowers. Mr. Kennedye has significant experience documenting asset-based credit facilities in the context of sponsor-driven acquisitions, unitranche facilities and working capital, high yield/term debt and first lien/second lien transactions. In addition, his practice includes representing national financial institutions in single and multicurrency credit facilities, cross-border financings and other leveraged finance and cash flow transactions. Mr. Kennedy's asset-based lending experience spans various industries, including manufacturing, trucking, food products, lender finance, retail, beverage and energy. Prior to joining Holland & Knight, he was the head of asset-based lending and a partner in the debt finance group of an international law firm.
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David W. Morse
Partner
Otterbourg
Mr. Morse represents banks, private debt funds, commercial finance companies and other institutional lenders in... | Read More
Mr. Morse represents banks, private debt funds, commercial finance companies and other institutional lenders in structuring and documenting domestic and cross-border loan transactions, including working capital facilities, financings for leveraged acquisitions and second lien loans, as well as loan workouts and restructurings. He is currently chair of the firm’s international finance practice. He has written for Lexis Practical Guidance as the expert on commitment letters, intercreditor agreements and asset-based lending, authored numerous articles and been recognized in Super Lawyers, Best Lawyers and selected by Global Law Experts for the banking and finance law expert position in New York.
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