THE LSTA S COMPLETE CREDIT AGREEMENT TEACH-IN

Transcription

1 BEIJIN G FRAN KFU RT H O N G KO N G LO N D O N LO S AN G ELES M U N IC H N EW YO RK SIN G APO RE T O KYO W ASH IN G T O N, DC THE LSTA S COMPLETE CREDIT AGREEMENT TEACH-IN November 12 & 13, 2014 Michael J. Bellucci Richard M. Gray

2 COMMITMENTS, LOANS, AND LETTERS OF CREDIT 2 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014

3 Commitments, Loans, and Letters of Credit Loans Revolving Credit versus Term Loans A and B Loan Tranches Competitive Bid Loans Swingline Loans 3 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014

4 Commitments, Loans, and Letters of Credit (Cont d) Letters of Credit Application for Issuance Form of Letter of Credit Expiration Date Limitations on Amount Examination of Documents Borrower s Reimbursement Obligation Participations by Lenders Strict versus Substantial Compliance Indemnification Cash Collateral Bankers Acceptances 4 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014

5 Commitments, Loans, and Letters of Credit (Cont d) Commitments Several Liability Reducing Revolving Credit Commitments Terminating Commitments Increasing Commitments: Accordion Features and Incremental Facilities Termout of Revolving Credit Commitments Multicurrency Facilities Second Lien and Unitranche Facilities 5 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014

6 INTEREST AND FEES 6 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014

7 Interest and Fees Interest Base Rate Interest LIBOR Interest General Principles Interest Periods Reserve Requirements Why LIBOR? 7 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014

8 Interest and Fees (Cont'd) Competitive Bid Loans Other Pricing Options Applicable Margins General Principles Margins Based upon Credit Ratings Margins Based upon Financial Tests Interest Payment Dates PIK Interest and Toggle Loans Default Interest 8 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014

9 Interest and Fees (Cont'd) Fees Commitment Fees Facility Fees Utilization Fees Letter of Credit Fees Swingline Fronting Fees 9 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014

10 Interest and Fees (Cont'd) Yield Protection; Dodd-Frank; Basel III and FATCA Increased Costs Capital Costs LIBOR Market Disruption Illegality Breakfunding Taxes 10 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014

11 AMORTIZATION AND MATURITY 11 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014

12 Amortization and Maturity Payments Generally Obligation to Repay Absolute Scheduled Repayment Advancing the Maturity Date 364-Day Facilities Voluntary Prepayments 12 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014

13 Amortization and Maturity (Cont'd) Mandatory Prepayments Revolving Clean Downs Borrowing Base Asset Sales Casualty Events Debt and Equity Issuances Excess Cash Flow/Cash Sweep Change of Control Currency Adjustments in Multicurrency Deals 13 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014

14 Amortization and Maturity (Cont'd) Loan Buybacks Allocation of Prepayments Cover for Letters of Credit Prepayment for Opt Outs Prepayment Premiums; Call Protection 14 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014

15 INTERLENDER, VOTING AND AGENCY ISSUES; DEFAULTING LENDERS 15 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014

16 Interlender, Voting and Agency Issues; Defaulting Lenders Agency Issues Lender Indemnification Pro Rata Treatment Sharing of Setoffs and Other Claims The Clawback Clauses Access to the Loan Register Defaulting Lenders Loan Buybacks 16 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014

17 Interlender, Voting and Agency Issues; Defaulting Lenders (Cont d) Voting Basic Rule Multitranche Agreements Consents Requiring More than a Majority Money Terms Pro Rata Provisions Voting Conditions 17 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014

18 Interlender, Voting and Agency Issues; Defaulting Lenders (Cont'd) Unanimous vs Affected Lender Consent Special Lender Consents Collateral Security Vote Splitting Lenders that Default Amend & Extend 18 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014

19 ASSIGNMENTS AND PARTICIPATIONS 19 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014

20 Assignments and Participations Consent Rights Over Lender Assignments Defaults Assignments to Lenders and Lender Affiliates Assignments to Borrower Affiliates Agent Consent Rights Issuing and Swingline Lender Consent Rights Unreasonably Withholding or Delaying Consent Absolute Consent Rights Other Considerations 20 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014

21 Assignments and Participations (Cont'd) Eligible Assignees Minimums Transfer Fees Loan Register Participations Loan Pledges 21 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014

22 CONDITIONS PRECEDENT 22 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014

23 Conditions Precedent Effectiveness Conditions Signing versus Closing Execution; Lender Addenda Matters Relating to Organization and Authorization Opinions The MAC Condition Other Conditions SunGuard Ongoing Conditions Representations Defaults 23 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014

24 24 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014 REPRESENTATIONS

25 Representations Legal Matters Representations Financial Condition Representations Representations and Disclosures Regarding the Business Other Representations Special Circumstances of Acquisition Financings 25 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014

26 26 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014 COVENANTS

27 Covenants Some General Principles Categorizing Subsidiaries Covenant Definitions Definitions Generally; GAAP Key Financial Definitions Debt EBITDA Financial Covenants Date-Specific versus Performance versus Hybrid Covenants; Annualized and Rolling Periods Phase-In and Pro Forma Treatment Equity Equity Cure Rights 27 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014

28 Covenants (Cont'd) Affirmative Covenants Negative Covenants Negative Pledge Equal and Ratable Sharing Clause Negative Negative Pledge Debt Fundamental Changes Investments Lines of Business Dividends and Equity Repurchases Dividend Blockers Modification and Prepayment of Other Debt Covenant Lite 28 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014

29 DEFAULTS AND ENFORCEMENT 29 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014

30 Defaults and Enforcement Default in Payment Inaccuracy of Representations Breach of Covenants Cross-Default; Cross-Acceleration Why a Cross-Default? What Debt is Crossed? Meaning of Cross-Default and Cross-Acceleration Mandatory Prepayments Insolvency Judgment Default ERISA Events Environmental Events Change of Control or Management Invalidity of Guarantees or Liens Foreign Borrowers 30 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014

31 Defaults and Enforcement (Cont'd) Material Adverse Change Specialized Events of Default Significant Subsidiaries Remedies Stop Lending Terminate Commitments Accelerate Demand Cover for Letters of Credit Institute Suit Demand Payment from Guarantors Foreclose on Collateral Setoff Action by Individual Lenders Lender Liability Risks 31 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014

32 Notes 32 The LSTA s Complete Credit Agreement Teach-In l November 12 & 13, 2014