Note Purchase Agreements and Private Placement Debt: Key Terms and Structuring Issues

Recording of a 90-minute premium CLE video webinar with Q&A

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Conducted on Thursday, May 26, 2022

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Course Materials

This CLE webinar will provide finance counsel with the tools to structure private placement debt. The panel will discuss the drafting and negotiation of the note purchase agreement, the offering memorandum, and the role of the agent, issuer, and investors in the private placement transaction.

Description

Private placement transactions provide companies with an alternative source of financing to traditional bank lending without the need for formal credit rating and reporting requirements. But, counsel must thoroughly understand the private placement process and the parties involved.

The company will appoint a placement agent (usually a relationship bank). The agent and the company must then prepare an offering memorandum and a roadshow presentation (if applicable), serving as the primary marketing documents to sell the debt instruments.

The note purchase agreement governs the transaction and usually comes with covenants similar to those required in bank credit facilities, but although there are standard clauses, many are specific to each transaction. Financial and other covenants must be drafted with care as they can significantly impact pricing and the long-term success of the deal.

The American College of Investment Counsel has created Model Form Note Purchase Agreements to address different financing scenarios. They have also produced model documentation for debt rating, swap indemnity, financial covenants, and guaranty, among others, which can be a helpful reference in structuring private placement debt.

Listen as our authoritative panel discusses drafting and negotiating note purchase agreements and other structuring aspects of private placement transactions.

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Outline

  1. Overview of the private placement debt market
  2. Private placement process
    1. Role of placement agent
    2. Preparing the offering memorandum
    3. Presentation to potential investors
  3. Note purchase agreement
    1. Key terms: tailoring covenants to fit the transaction
    2. Recommended industry forms: American College of Investment Counsel
  4. Other documentation

Benefits

The panel will review these and other vital issues:

  • What kinds of companies are appropriate borrowers in the private placement market?
  • What is the role of the placement agent in preparing the offering memorandum?
  • How can covenants in the note purchase agreement affect the marketability of the deal?
  • Why might the note purchase agreement be especially difficult to amend after closing, and how does that inform the initial preparation?

Faculty

Bates, Brian
Brian A. Bates
Senior Counsel
Morrison & Foerster

Mr. Bates represents clients in a wide range of financing transactions, including private debt and equity placements,...  |  Read More

Culpepper, Clint
Clint Culpepper
Partner
Baker Botts

Mr. Culpepper represents agent banks, underwriters, institutional investors, borrowers, issuers, and other investors in...  |  Read More

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