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Representing Co-Lenders in Syndicated Credit Facilities

Consent Rights, Sacred Rights, Waterfall and Pro-Rata Sharing Provisions, Removal and Addition of Co-Lenders

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


Conducted on Tuesday, January 28, 2020

Recorded event now available

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Program Materials

This CLE webinar will examine syndicated loans from the co-lender's perspective. The panel will discuss deal points of particular concern to co-lenders, including pro-rata sharing and waterfall provisions, "sacred rights," assignment provisions, and the ability of the agent to add or remove co-lenders. The panel will also discuss the differing perspectives of majority vs. minority co-lenders and regulatory concerns for banks and other regulated entities.

Description

In most loan syndications, the loan agreement, promissory note, and other ancillary documents are negotiated and executed by the lead lender who, as an agent, sells portions of the loan in the secondary market. Co-lenders may not have a real-time opportunity to review or comment on the primary loan documents, so their focus will likely be on reviewing existing loan documents and seeking additional protections under a co-lender agreement.

Loan features of particular importance to co-lenders include waterfall and pro-rata sharing provisions and how those provisions operate under pre- and post-default scenarios, and sacred rights which may only be amended by agreement of all co-lenders. Other factors, such as the ability of the borrower to incur additional debt, or the ability of the agent to remove co-lenders or add new lenders, could significantly affect a co-lender's position in the deal.

The co-lender agreement must set forth which actions the agent may take without consent of the co-lenders, and which actions require a majority or unanimous consent. Co-lenders with a majority stake in the loan may have a different view than minority lenders when negotiating these consent provisions. The documents should also spell out the reporting obligations of the agent concerning the borrower and the collateral.

Listen as our authoritative panel discusses the key concerns of co-lenders in a syndicated credit facility.

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Outline

  1. Regulatory and compliance concerns for co-lenders entering into syndicated credit facilities
  2. Critical issues in loan documents
    1. Borrower structure, guarantors, recourse
    2. Consent rights of the borrower
    3. Assignment and assumption
    4. Ability to incur subordinate or additional debt
    5. Financial and other reporting obligations
  3. Waterfall and pro-rata sharing provisions
  4. Sacred rights: amendments requiring the consent of all lenders
  5. Non-consenting lenders--removal of lenders
  6. Minority vs. majority co-lenders
  7. Senior vs. junior creditors
  8. Approval of new lenders after initial syndication -- disqualified lenders

Benefits

The panel will review these and other vital questions:

  • What loan provisions might be considered deal breakers for a co-lender looking to invest in a syndicated credit?
  • What terms are considered sacred rights, and are there situations where they can be amended without unanimous consent?
  • How might waterfall and pro-rata sharing provisions deviate in the life of a loan?
  • When should co-lenders have input on the admission of new lenders?

Faculty

Patricia (Pat) Christ
Patricia (Pat) Christ
Assistant General Counsel, Senior Vice President
Bank of America

Ms. Christ is Assistant General Counsel, Senior Vice President at Bank of America, NA.

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Noland, Bobbi
Bobbi Acord Noland

Partner
Parker Hudson Rainer & Dobbs

As head of the Commercial Finance practice, Ms. Noland guides global banks, regional banks and finance companies...  |  Read More

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