Payment-in-Kind Interest Terms in Private Credit: Negotiating and Drafting, Structures, Benefits, Potential Pitfalls
A live 90-minute premium CLE video webinar with interactive Q&A
This CLE webinar will discuss the growing popularity of payment-in-kind (PIK) interest features in private credit facilities. The panel will explore common PIK structures, highlight the benefits and risks associated with PIK interest terms, and provide practical guidance for negotiating and drafting these terms in new and existing loan agreements.
Outline
- Background: What is PIK; growing use of PIK interest provisions in today's private credit market
- Types of PIK interest terms and their key features ranging from less risky to more risky
- PIK at origination
- Partial PIK
- PIK toggle
- Synthetic PIK
- Restructured PIK
- Circumstances when PIK provisions are used
- Triggers, toggles, premiums, and availability periods
- Benefits of PIK interest provisions
- Potential pitfalls to avoid
- Strategic considerations for borrowers, lenders, and equity holders in distressed companies
- Negotiating and drafting tips
- Practitioner pointers and key takeaways
Benefits
The panel will discuss these and other key considerations:
- How have current market conditions created a rise in the number of PIK interest loans?
- What are the various forms of PIK interest terms and what are their key features?
- What are the benefits and potential pitfalls with PIK interest loan terms?
- What are key considerations for negotiating and drafting PIK interest provisions from both the borrower's and lender's perspective?
Faculty
Greg Kramer
Partner, Co-Chair New York Capital Markets and Securities Practice Group
Haynes and Boone
Mr. Kramer represents investment funds and public companies in his broad-based corporate practice. Clients particularly... | Read More
Mr. Kramer represents investment funds and public companies in his broad-based corporate practice. Clients particularly seek his representation in connection with private investments in public equity (PIPEs), private credit transactions and mergers and acquisitions. A go-to transactional lawyer with broad and adaptable experience, Mr. Kramer offers clients creative, keen insights in addition to documenting deals, and is willing to jump in and handle whatever is needed to keep a transaction moving forward until it crosses the finish line. Having represented both issuers and investors, he understands deals from the perspective of each party, making him a skilled and effective negotiator.
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Justin Riess
Partner
Haynes and Boone
Mr. Riess is the managing partner of Haynes Boone’s Charlotte office. His practice focuses on leveraged finance,... | Read More
Mr. Riess is the managing partner of Haynes Boone’s Charlotte office. His practice focuses on leveraged finance, specialty finance, private credit finance and syndicated lending. During his 21 years of practice, Mr. Riess has advised global financial institutions, corporate borrowers and private equity firms in syndicated lending transactions ranging from $50 million to $3 billion. He has experience in many industries including healthcare, franchise, defense and aerospace, food and beverage and financial services. In addition to corporate lending, Mr. Riess has represented banks and other lenders in loans to high-net-worth individuals. These individuals often have complex lending needs with collateral ranging from stock portfolios and real property to ownership interests in sports franchises, private planes and yachts. More recently, he has added experience in digital currency loans secured by specific mining equipment and various digital currencies.
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