Structuring Subscription Facilities: Borrower Base, Investor Covenants, GP Authority, UCC Perfection

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


Tuesday, September 14, 2021

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

Early Registration Discount Deadline, Friday, August 20, 2021

or call 1-800-926-7926

This CLE webinar will discuss the structuring of subscription credit facilities, focusing on partnership agreement provisions that provide financing flexibility, defining borrowing base and exclusion events, loan covenants particular to subscription facilities, and UCC perfection of the lender's security interest. The panel will also discuss the role of the GP, and how to minimize administration costs.

Description

Subscription facilities serve various purposes, from financing acquisitions to giving a fund the flexibility to issue letters of credit or enter into hedging transactions. While they can provide several benefits, practitioners must structure subscription facilities that consider the competing interests of GP, investors and lenders.

A lender will typically require "investor letters" in which investors make various representations and covenants and agree to provide periodic credit information and fund capital contributions into a deposit account that will be pledged to the lender. The lender will also want investors to acknowledge the lender's right to make capital calls and waive any setoff rights, counterclaim, or other defenses. If possible, counsel should address these and other matters relating to future financing in the partnership agreement.

Under UCC Article 9, a security interest is enforceable when a value has been given, the debtor has the right to transfer collateral to a secured party, and a security agreement describing the collateral has been executed. In the subscription facility context, the perfection of a security interest in capital commitments is accomplished by filing a financing statement (UCC-1). A security interest in a deposit account may be perfected by control.

Listen as our authoritative panel discusses the nuances of structuring and documenting subscription credit facilities.

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Outline

  1. General structure and uses of a subscription facility
  2. Deal terms:
    1. Borrowing base and exclusion events (when capital commitments get kicked out of the borrowing base)
    2. Representations and covenants provided by investors
    3. Actions the GP and fund agree to take or not take concerning the capital commitments
  3. Limited partnership agreement and side letter review: provisions with potential issues and structuring mitigants
  4. Perfection under the UCC

Benefits

The panel will review these and other critical issues:

  • How can a subscription facility benefit a fund and its investors?
  • What kinds of conditions or circumstances that might be considered exclusion events are in defining the borrowing base?
  • What investor reps and warranties are considered standard in subscription facilities?
  • How is UCC perfection achieved in a subscription credit facility?

Faculty

Loftis, Holly
Holly Loftis

Special Counsel
Cadwalader Wickersham & Taft

Ms. Loftis is a special counsel in the Finance Group focused on fund finance. She regularly advises banks and other...  |  Read More

Nesdill, Mark
Mark Nesdill

Attorney
Cadwalader Wickersham & Taft

Mr. Nesdill is an associate in Cadwalader’s Finance Group. His practice focuses on fund finance and he represents...  |  Read More

Oosterhouse, Kurt
Kurt T. Oosterhouse

Partner
Cadwalader Wickersham & Taft

Mr. Oosterhouse represents financial institutions and corporate clients in syndicated senior debt facilities,...  |  Read More

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Early Discount (through 08/20/21)

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Early Discount (through 08/20/21)

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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