Structuring Umbrella Credit Facilities in Fund Finance

Drafting Reps and Warranties, Covenants, Events of Default for a Fund Groups With Multiple Borrowing Bases

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


Thursday, June 3, 2021

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

or call 1-800-926-7926

This CLE webinar will discuss the structuring of credit facilities comprised of multiple funds having similar sponsorship but different borrowing bases. The panel will discuss how the fund group concept should be documented to provide a single credit facility with distinct covenants, reps and warranties, and events of default applicable to each borrowing base.

Description

Umbrella credit facilities are increasingly being used to provide financing to private equity fund groups with a single sponsor but hold distinct sets of assets and liabilities. In an umbrella facility, a single set of loan documents applies to multiple funds, but representations and warranties, financial covenants, events of default, and other provisions are tailored for each fund or funds with a shared borrower base (the fund group).

Drafting such provisions is a complex undertaking and should be done with care. Various defined terms throughout the loan documents will need to reflect the multiple borrower base structure, with terms like "borrower" or "borrowing" taking each fund group into account. Umbrella facilities also involve higher administrative costs than standard facilities; provisions must be made to share expenses among fund groups.

Fund groups may take on differing structures, including a traditional umbrella where the borrowers share a common borrowing base cross-collateralized concerning each other borrower in the fund group, multiple funds with a single investor but each with a different borrowing base, or a fund in which capital commitments and holdings are segregated within the fund's partnership agreement. Finance counsel must understand the nuances of each.

Listen as our authoritative panel discusses the mechanics and documentation of umbrella credit facilities.

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Outline

  1. Umbrella facilities: multiple borrower bases and the fund group concept
  2. Advantages and disadvantages of the umbrella structure
  3. Documenting umbrella facilities
  4. Types of fund groups
    1. Multiple borrowers with a shared borrower base
    2. Multiple funds with common investor(s) but each with a different borrower base
    3. Funds with capital commitments and assets segregated within the partnership agreement
    4. Luxemburg umbrella

Benefits

The panel will review these and other key issues:

  • When is an umbrella facility a desirable option for a borrower or a lender? What are the pitfalls?
  • In structuring the facility, what kinds of amendments must be made to each fund's partnership documents?
  • How should the loan documents address partial ownership of multiple assets by multiple funds?
  • How do the different types of fund groups affect the deal structure?

Faculty

Draper, Thomas
Thomas Draper

Partner
Foley Hoag

Mr. Draper is Co-Chair of the firm’s Debt Finance Practice. As one of the leading finance lawyers in New England,...  |  Read More

Sanford, Monika
Monika Singh Sanford

Partner
Haynes and Boone

Ms. Sanford is a partner in the Finance Practice Group of Haynes and Boone. Her practice is focused on the...  |  Read More

Tiller, Ramya
Ramya S. Tiller

Partner
Debevoise & Plimpton

Ms. Tiller is in the firm’s Finance Group and has experience in a broad range of financing transactions,...  |  Read More

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