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Change Of Control Credit Agreement

This approach often presents considerable challenges when applied in the context of acquisition financing (e.g. .B. is generally not formulated in such a way that the parties to the transaction provide sufficient assurance, that a change of control is not triggered by the transaction, so that it would not be necessary to finance bridges or backstops) and we often see change of control agreements for companies, even with these „rating“ portability structures. Overall, high-yield indentures define a „change of control“ as the entry of (1) of a person (with the exception of „eligible holders“ (this term varies between the deal-by-deal and the inclusion of the original shareholders in issuers, related parties and management) becomes the „beneficial owner“ of more than a certain percentage (typically 50%) of the voting rights of the voting issuer`s shares or (2) the disposal of all the assets of the g restricted rump, with the exception of an approved holder. In the past, the change of control clause in the high European indentures was also triggered when the „Continuing Directors“ no longer constituted the majority of the issuer`s board of directors, but such a provision is not common today. The term „beneficial owner“ is generally defined by reference to Rule 13(d)-3 („Rule 13(d)-3“) of the Securities Exchange Act of 1934, as amended (Exchange Act). The threshold of economic ownership can vary from one agreement to another and is sometimes less than 50%. For transactions with listed companies, usually 20 to 40 percent. The threshold of „economic ownership“ is inversely triggered in a minority of high-value agreements (and, as was historically typical of the credit market), where a change of control would take place when the authorised holders were no longer the beneficial owners of a certain percentage of the voting rights of the voting issuer`s shares. Where an offer of change of control is required, it should be noted that, recently, the indentures include more and more mandatory calls in favour of the issuer at 101%. if the holder is at least 90 per cent.

the total amount of a number of bonds that have been issued by the issuer in a change of control offer. This „clean up“ or „squeeze-out“ call allows the issuer to sweep away the remaining bonds and thus avoid being blocked with a small tranche with possibly covenants other than new debts. There is also some advantage for holders, because while it may sweep away some holders who have deliberately held the bonds, it may be that some holders miss an offer to change control, and the use of the mandatory call takes them out of a probably very illiquid loan. Leverage-based portability allows a change in the beneficial ownership of the group, without causing a change of control, as long as the leverage of the group is below a certain threshold. Leverage-based portability is highly negotiated and can depend on many variables, including: As mentioned above, the definition of „Change of Control“ indenture refers to Rule 13(d)-3 of the Exchange Act, which defines a beneficial owner as any person who directly or indirectly has the right to vote and/or the allegation of investment in the issuer`s shares or voting shares. Voting rights include the power to vote on such voting shares or to direct voting rights and to direct the ordinance on such voting shares. Rule 13(d)-3 of the Exchange Act also contains an anti-valuation provision that covers any person (or „group“) who, directly or indirectly, creates or uses a contract, agreement, or device that has the object or effect of circumventing the requirements of the rule. Credit agreements and bonds often contain a provision that allows lenders to repay (or accelerate) their debts in the event of a „change of control“ of the borrower.

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