Structuring Incremental Loan Facilities: Key Terms, Most Favored Nation Provisions and Incremental Equivalent Agreements

Lender and Borrower Perspectives in Negotiating Incremental Facilities

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


Conducted on Wednesday, November 16, 2016

Recorded event now available

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Program Materials

This CLE webinar will discuss incremental loan facilities, the trends in use of these in large and mid-cap loans, and the current market loan terms, including conditions precedent, most favored nation (MFN) provisions and “sidecar” agreements. The program will look at issues from both lender and borrower perspectives.

Description

Incremental facilities allow borrowers to add new term loans or additional revolving commitments under an existing credit facility, usually subject to a hard dollar cap and/or leverage limits. Once the province of large cap deals, incremental loan facilities can be found in many middle market credit agreements.

Incremental facilities are advantageous for borrowers because they require only the consent of the lenders providing the additional commitments and require less documentation and fewer closing conditions.

Lenders typically want an MFN clause that provides existing lenders with interest rate protection. Borrowers will counter with short sunset provisions when lenders insist on an MFN clause. Sidecar agreements may be negotiated that allow the borrower to raise additional debt outside the credit agreement, typically to fund acquisitions.

Listen as our authoritative panel of commercial finance practitioners discusses current market trends in the use of incremental loan facilities, conditions precedent for these facilities, key loan terms, and related MFN provisions and sidecar agreements. The panel will provide perspectives from both the lender and the borrower.

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Outline

  1. Current trends in incremental loan facilities
  2. Conditions precedent and closing conditions
  3. Payment of break funding costs
  4. Key terms of incremental loans
  5. Most favored nation provisions (MFNs) and sunsets
  6. “Sidecar” agreements

Benefits

The panel will review these and other key issues:

  • Advantages for borrowers
  • Common and current loan terms for incremental facilities, including MFNs and sunsets and limited conditionality transactions
  • Trends in the use of incremental facilities—both in large and mid-cap loans
  • Perspectives from both lenders and borrowers, including typical provisions and agreements

Faculty

Nahr, J. Christian
J. Christian Nahr

Partner
Fried Frank Harris Shriver & Jacobson

Mr. Nahr represents investment banks, private equity sponsors, hedge funds and corporations in a broad array of complex...  |  Read More

Michael J. Steinberg
Michael J. Steinberg

Partner
Shearman & Sterling

Mr. Steinberg practices structured finance, corporate and bank finance law. He represents financial institutions, major...  |  Read More

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