Liability Management Transactions: Uptiering and Drop-Down Finance Structures, Impact on Existing Financing

A live 90-minute premium CLE video webinar with interactive Q&A


Thursday, May 20, 2021

1:00pm-2:30pm EDT, 10:00am-11:30am PDT

Early Registration Discount Deadline, Friday, April 23, 2021

or call 1-800-926-7926

This CLE webinar will discuss liability management transactions currently being employed in the syndicated loan market, including "drop-down" financings and "uptiering" transactions. The panel discussion will include subordination issues and intercreditor arrangements as well as negotiation and documentation of these facilities.

Description

Liability management transactions have become more commonplace during the past 12 months, typically taking one of two forms: drop-down financing and uptiering transactions. Both types of transactions involve complex structuring techniques that provide additional avenues of leverage for borrowers but can negatively affect existing lenders.

In a typical drop-down structure, the borrower forms and transfers assets to a subsidiary, allowing the subsidiary to incur new debt secured by the contributed assets. This alters the lien position of existing lenders who may have assumed they had first priority claim to assets that have now been transferred to the subsidiary.

In the uptiering transaction structure, the borrower incurs new debt provided by a group of lenders. The existing debt of the participating lenders is exchanged for a pari passu super-priority or second priority position. The result is that nonparticipating lenders are subordinated to two tranches of debt.

Lead and participating lenders should carefully review loan documents to assess borrowers' ability to enter into subsequent liability management transactions. From the lenders' standpoint, the subordination of claims should be a "sacred right," and pro-rata sharing provisions should include transactions that would have the effect of impacting pro-rata sharing.

Listen as our authoritative panel discusses drop-down and uptiering transaction structures and how lenders should respond to these financing maneuvers.

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Outline

  1. Emergence of liability management in the current loan market
  2. Drop-down financing
  3. Uptiering transactions
  4. Subordination issues and intercreditor relationships
  5. Negotiating initial credit documents to limit the ability of borrower to engage in liability management transactions--sacred rights

Benefits

The panel will review these and other key issues:

  • How does drop-down financing impact the collateral position of existing lenders?
  • Are there circumstances in which an uptiering transaction might be beneficial to nonparticipating lenders?
  • When is an intercreditor agreement needed in connection with a liability management transaction? What are the key terms?
  • What "sacred rights" provisions would limit the borrower's ability to engage in liability management transactions?

Faculty

Manzer, Alison
Alison R. Manzer

Partner
Cassels Brock & Blackwell

Ms. Manzer is a member of the Firm's Financial Services Group. Her practice encompasses a broad range of commercial...  |  Read More

Additional faculty
to be announced.
Attend on May 20

Early Discount (through 04/23/21)

Cannot Attend May 20?

Early Discount (through 04/23/21)

You may pre-order a recording to listen at your convenience. Recordings are available 48 hours after the webinar. Strafford will process CLE credit for one person on each recording. All formats include program handouts.

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