Equity Cure Rights In Commercial Loan Transactions: Curing Financial Covenant Defaults
Recording of a 90-minute premium CLE webinar with Q&A
This CLE course will discuss equity cure rights provisions in commercial credit agreements. The panel will examine the complex interaction of equity cures with earnings before interest, tax, depreciation, and amortization (EBITDA) financial covenants, forms the equity cure may take when applied in the prepayment of the loan, and limitations that may apply on the right to cure.
- Relationship of equity cure rights to financial covenants--a mechanism for avoiding default
- Effect of equity contribution on EBITDA
- Equity cure right structures, restrictions, and limitations
- Type of equity
- Source of capital
- Use of proceeds
- Impact of prepayment
- Alternatives to equity cure
The panel will review these and other notable issues:
- What benefits do equity cure right provisions provide borrowers in sponsor-backed deals?
- What restrictions do lenders seek to impose on the right to cure?
- How should a preferred equity contribution be accounted for in calculating EBITDA at the time of application and thereafter?
- When should a cash contribution from the sponsor be applied to pay down the principal balance of the loan? When not?
Paul W. Hespel
Alston & Bird
Mr. Hespel focuses on transactional finance matters, including leveraged acquisition financings and transactional... | Read More
Mr. Hespel focuses on transactional finance matters, including leveraged acquisition financings and transactional finance matters in distressed settings, representing corporate borrowers, financial sponsors, portfolio companies, financial institutions, and alternative capital sources. He has extensive experience in structuring and negotiating secured and investment grade credit facilities; first-lien, second-lien, mezzanine, and multitranche financings; liquidity lines; and high-yield debt offerings. He represents private equity funds and alternative capital sources.Close
Brownstein Hyatt Farber Schreck
Mr. Spader has considerable work experience representing both borrowers and lenders in a wide variety of complex... | Read More
Mr. Spader has considerable work experience representing both borrowers and lenders in a wide variety of complex financing transactions, including significant experience drafting and negotiating loan agreements, security documents, inter-creditor agreements and commitment papers. On the borrower side, his practice has been focused on representing private equity sponsors and their portfolio companies principally in connection with leveraged buyouts.Close