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The specialist in highly technical, market-driven banking and corporate finance training

Debt / Leveraged FinanceAll courses can be presented In-House or via Live Webinar

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PUBLIC COURSES

• Structuring & Negotiating Mezzanine, PIK, Second Lien And Unitranche

• Intercreditor (&AAL) Issues in Leveraged, Real Estate and ABL Transactions

• Unitranche & Alternative / Direct Lending• Asset Based Lending• Negotiating & Issuing High Yield Bonds• Bond Documentation• Loan Documents and Security Issues• Restructuring High Yield Bonds• Advanced Debt Restructuring• Commercial Real Estate and Debt Finance• Advanced Private Equity and LBOs Training• Advanced Private Equity and LBOs Training Masterclass• Leveraged Loans in Private Equity and Corporate

Transactions

IN-HOUSE COURSES

• Debt Finance• Real Estate Finance for Commercial Lenders – Investment

Lending• Real Estate Finance for Commercial Lenders – Residential

Development• Aircraft Financing: Leasing & Financial Evaluation• Debt Finance for SMEs• Debt Restructuring: For Lawyers

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• Emerging Market Debt Analysis• Leveraged Buyouts - The LBO Course for Lawyers• Modelling for Debt Restructuring Course• Practical Understanding of Current Debt Markets• Senior Syndicated Leveraged Loans; Negotiating

Issues & Trends• Syndicated (Leveraged) TLB & Yankee loans• Yankee Loans Course


Corporate Membership Scheme

Our Corporate Membership Schemes are not valid on any courses held on an in-house basis and are in line with our standard Terms & Conditions

If you would like to enquire about one of our Corporate Membership Schemes then please call or email us for more information.

Email: [email protected] Tel: +44 (0) 20 7387 4484

Our Corporate Membership Scheme gives clients the benefit of discounted course places with absolutely no

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Clients pay an annual subscription fee of £595 + VAT to receive 20% discount on all public course and conference

bookings irrespective of the numbers booked.

You Corporate Membership Scheme can be used once payment is received and will be valid for one year.



Structuring & Negotiating Mezzanine, PIK, Second Lien And Unitranche

Date: 10 Jul 2018, 27 Nov 2018 Location: London Standard Price: £725 + VAT

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Course Overview

Credit markets continue to provide copious amounts of liquidity across the funding spectrum from senior debt through second lien, mezzanine and PIK-style instruments driven by traditional funding sources and a significant increase in capital formation from alternative lenders. Although unitranche continues to comprise the most popular offering from alternative lenders, these funds adopt an eclectic approach to credit and are willing to provide established junior products such as mezzanine and PIK either in conjunction with senior debt or to complement their unitranche offering.

The Second Lien market experienced a resurrection in July 2014 (after a nascent period post 2007) but, according to S&P, is expected to experience a renaissance in 2017, for a number of reasons. The appeal to borrowers is first, the ability to increase leverage from 2L to fund higher purchase price multiples; second, reduced public disclosure and need for credit ratings; third, lower pricing than senior/ mezzanine structures and finally, is easier to restructure in distress than high yield bonds. Lenders are keen to take the product as it provides higher margins than senior debt, includes some level of call protection, provides additional investment opportunities (given the relative dearth of senior paper) and is structured differently to first generation deals, so providing greater protection in distress.

Mezzanine continues to face pressure from other cheaper products (2L in larger deals and unitranche in smaller deals), Despite this, global mezzanine funds have raised very large amounts of capital over the last year (GSO, Highbridge, Prudential and Crescent together raised nearly $20 billion). Competition from competing forms of capital means it is less likely these funds will be deployed in entirely conventional structures so these lenders have had to evolve new strategies to deploy their funds although there remains demand for the traditional senior / mezzanine structure. Despite the decline in mezzanine issuance, mezzanine continues to exert a strong influence on other junior debt products as many direct lenders had their roots in mezzanine and have been willing to apply the practices in that market to direct lending (e.g. the use of PIK and warrants)

PIK itself continues to find a place in the sun for a wide range of purposes including LBOs and the €3.6 billion Schaeffler multi-tranche PIK in late 2016 (up-scaled from €2.5 billion) evidenced strong demand for that product notwithstanding the miserly pricing (275bps on the 5 year Euro). Many of these deals now tend to be issued in note, rather than loan, form. In current market conditions, PIK is expected to remain popular as lenders chase returns up the risk/reward curve.

European direct lending funds reportedly have c $17 billion of capital to deploy. Unitranche continues to be the most dynamic product in that market however the offering has splintered from the original-classical structures to more structured bespoke products embracing a wider range of more complex structures including dual unitranche, first-in/ first-out. Banks, unwilling to be left on the sidelines, have also proved willing to fund both the bank-led facilities as well as some of the unitranche itself. The recent £475 million unitranche financing Bridgepoint’s acquisition of Zenith illustrates that direct lending can compete with head-on high yield bonds whilst the recent redemption of Soho Houses’ high yield bonds, with a £275 million unitranche, reinforces that notion. The large amounts of dry powder available to funds coupled with stiff competition from the traditional senior/junior loans has compressed pricing so lenders have had to find innovative/alternative ways of deploying their funds. Despite this, the recent ECB leverage guidance is expected to hamper banks and boost direct lending in general.

Whilst junior debt offers attractive returns, this is not without risk and the lesson from the credit crisis is that these providers invariably ended up receiving little or nothing in distress (e.g. Imo Carwash, Stabilus). Against this background, junior lenders have sought ways to mitigate these risks and have been assisted by an updated LMA Intercreditor (2012). However, many, more sophisticated providers have sought other ways to improve their position, for example through the appointment of their own Facility and even Security Agents, although this is not without controversy.

This programme examines the range of junior debt loan products available in the market, their use and application, the typical terms and conditions, market pricing and returns. The program also considers the various techniques junior lenders can adopt to structure their credit ab initio (via Intercreditor issues), how they can monitor their credit thereafter (and have advanced warning of impending distress) and finally how they can maximise recovery in distress. The course is highly practical and interactive and will include case studies which will first, require participants to devise appropriate junior debt structures and second, to consider the various Intercreditor and other matters which can protect their position in distress.

The programme will review the impact of the draft ECB guidance on leveraged transactions.

A model will be provided in advance of the programme and participants will be required to bring a laptop to the course with that model loaded.

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Introduction to the junior debt spectrum ■ Overview of the market ■ The role of direct lenders ■ Review of the various products

• Mezzanine• PIK, PIYC & Toggles• Second Lien• Unitranche

Structuring parameters – how much senior and how much junior debt ■ Typical approaches to gauging debt capacity

/ capital structure ■ What are the key criteria to consider

• Multiples vs Capital approach • Key ratios (covenants where relevant)

used to right-size the debt ■ How Jurisdiction can affect debt capacity

(and how to mitigate)

Types of Mezzanine: use and key issues ■ Main features of the mezzanine ■ European vs US vs Asian mezzanine ■ Warrantless mezzanine – return structure

• Fixed vs floating rate• Cash pay• PIK• Redemption premia – stepped vs linear

■ Other tools for achieving the target IRR• OID to enhance returns• Using Libor/Euribor floors• Fees• Call protection - hard vs soft call protec-

tion ■ Key issues for warranted mezzanine

• Key issues & pitfalls for warrantless mezz• Dealing with recaps & refinancing• The order of priority vis-a-vis PE loan

notes ■ Other variants of mezzanine

• Senior mezzanine• Junior mezzanine• Hybrid mezzanine

Second Lien ■ Use and application ■ Market trends / recent deals ■ Documenting the 2nd Lien - composite or

separate facility agreement ■ “Typical” terms, leverage, pricing and call

protection ■ Pros and cons of 2L vs unitranche, high yield

bonds ■ Other tools for achieving the target IRR

PIK (PIYC, PIYW, Toggles) ■ Pay-in-Kind (PIK) generally ■ Different types PIK

• PIYW• Toggle • PIYC

■ “Typical” terms, leverage and pricing ■ Call protection - hard vs soft call protection ■ Market trends / recent deals

Unitranche & direct lending products

■ The onward march of direct lenders in Europe • Market trends• Recent developments

■ Where and how its used ■ Review of different “unitranche” structures

• Classic product• Clubbed • Dual tranche • Structured • First out / last out

■ Interaction with bank led finance & impact on bank lenders

■ “Typical” terms & leverage ■ “Typical” pricing

• Cash coupon• PIK• Warrants

■ Other tools for achieving the target IRR ■ Leverage – how much and impact on returns ■ Call protection

• Why it matters to lenders• Hard vs soft call protection

■ Pros & cons vs other types of products• Senior / junior (mezz/2L)• High Yield Bonds

Intercreditor issues & Agreement Among Lenders (“AAL”) ■ Typical inter-creditor issues for junior debt

• Enforcement standstills• Turnover – why and where this matters• Option to purchase - Practical issues

■ Key issues in distress• Information rights• Why going on the Board may not help• Costs in distress• Valuation in distress (q.v. IMO Carwash)• Release of collateral (q.v. European Directo-

ries) ■ The role of the Agents - how and why it mat-

ters in distress• Appointing a separate Facility Agent• Appointing a separate Security Agent – key

issues to consider

Draft ECB Guidance on Leveraged Transactions ■ Which lenders are affected ■ Which deals are affected ■ EBITDA calculation ■ Ramifications for market players

Structuring & Negotiating Mezzanine, PIK, Second Lien And Unitranche


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Intercreditor (& AAL) Issues In Leveraged, Real Estate and ABL Transactions

Date: 18 Jun 2018, 01 Oct 2018, 30 Nov 2018Location: London Standard Price: £695 + VAT

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Course Overview

Intercreditor Agreements come to the fore in distress and restructurings. In essence their aim to provide lenders with the tools to implement an orderly restructuring by mimicking some (but not all) of the features available under Chapter 11. In particular, ranking/priority available under the “Absolute Priority rule (recently reaffirmed in the Jevic case), enforcement standstills (especially junior lenders), payment stop notices, turnover process and the ability to sell assets free of collateral (the so-called “intercreditor release mechanism which featured in the European Directories case). The course reviews the key aspects of typical Intercreditor agreements, especially the various LMA precedents for leverage loans, pari-loan/bond deals and real estate transactions. However, as the LMA acknowledges, their precedents are simply a point of departure so the programme also reviews other approaches found in the market. Moreover the LMA does not yet boast a precedents for transactions which include ABL or Unitranche deals (although the latter is in the works at present). Dovetailing ABL with other forms of debt has proved problematical outside the EU so the course calls on the presenter’s expertise to consider some solutions to this issue. This course will provide participants with an understanding of the role of the key intercreditor and how these tools are used in practice. The course also covers related aspects of topical issue of value and price which was central in both the IMO Carwash and the Stabilus cases. The role and importance of the Facility And Security Agents is also considered.

Introduction to Ranking and Subordination techniques ■ Summary of key terms of relevant Junior

debt instruments • Mezzanine • Second Lien Loans & Notes • Subordinated/Unsecured Notes • PIK Loans & Notes

■ Methods of creating ranking/subordination • Taking collateral / security • Contractual • Structural

■ Temporal • Equitable subordination (US, Germany,

Spain, France, Italy)

Relevant LMA precedents and market documentation ■ 2012 Leveraged precedent ■ SSRCF 2013 version for pari Loan Bond

structures ■ The Real Estate intercreditor precedents –

Structural & Contractural ■ The LMA ICA as a point of departure for

negotiations ■ Agreement Amongst Lenders (“AAL”) – no

standard approach!

Review of relevant deal structures ■ “Traditional” senior loan vs. mezzanine,

shareholder loans ■ Legacy deals - senior, 2nd lien loans, mezza-

nine, shareholder loans ■ Pari-Senior Loan/Bond structures (“Loan and

Note”) ■ Real Estate transactions ■ Unitranche / direct lending structures ■ Asset Based Lending structures

Ranking & the Payment Waterfall: general approach ■ Who should be a party to the ICA ■ Problems with Shareholder Loans ■ Ranking of the various “layers” of debt

• Typical ranking • Position of hedge liabilities • Dealing with intra-Group & parent liabilities • Issues arising in re Loan notes, Equity sub-

stitutes, Vendor loans • Rationale for inclusion as parties to the

Intercreditor • Rationale for exclusion as parties in the

Intercreditor ■ Position in pari Loan / Bond structures ■ Ranking as to Payment

• Permitted Payments on Hedge Liabilities • Permitted payments & restrictions on Mez-

zanine


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• Mezzanine Payment “Stop Notice” • Potential abuse and cure • Mezzanine Debt purchase by sponsor

■ Ranking as to Proceeds of Enforcement of Transaction Security

■ Senior Facility Liabilities - Restrictions and Permissions

■ Security and guarantees/indemnities - Sen-ior Lenders

Enforcement of Security ■ Who can Enforce – importance of the “In-

structing Group” • Instructing Group in Senior loan v Mezz

structures • Instructing Group in pari Loan / Bond

Structures • Role of the “Security Agent”

■ Timing of Enforcement standstills • Enforcement standstills • Senior loans vs. mezz • pari Loan / Bond structures • When can Mezz and other junior lenders

Enforce? ■ Problem areas re Enforcement

• Timing, manner of Enforcement • Role of the Security Agent in Enforce-

ment • Lessons from Saltri v MD Mezzanine

(Stabilus) case

Non-Distressed disposals ■ Application and scope – “Non-Distressed”

defined ■ Interaction with the Senior Facilities Agree-

ment ■ Interaction with the Mezzanine Agreement ■ Release of Security ■ Waterfall of “Disposal Proceeds” ■ Position in pari Loan / Bond structures

• Covenants in High Yield Bonds affecting Disposals

• Reconciling conflicts in pari Loan / Bond structures

Distressed Disposals ■ Release of Guarantees and Security

• What can be released? • Circumstances in which the junior lend-

er’s claims can be “discharged” • Lessons from the European Directories

case ■ Valuation issues – Price vs Value

• Lessons from IMO Carwash case – what went wrong (and how to fix it)

• A closer look at Stabilus – is this more

instructive? • Valuation approach – going concern vs.

liquidation • Valuation method - problems with “tradi-

tional approaches” in distress • “Fair value” defined • Approaches per the 2012 LMA ICA • Potential problems with “Fair Value” (why

“fair” may not be “fair”) • What is a “Competitive Sales Process”? • Solutions for Junior lenders re “Fair Value”

■ Form of consideration; cash vs. non cash con-sideration

■ Credit bidding • Is it available under the Intercreditor • The Stabilus position • Credit bidding in action • Potential pitfalls

Interaction of cross-default vs. cross-acceleration between senior & junior ■ Implications for EoD under the SFA on the

Mezzanine ■ Trigger options for Mezz EoD

• SFA EoD, Default or Acceleration ■ Limit to specific Events / covenants

• Typical carve-outs ■ Position in pari Loan / Bond structures

• Potential solutions

Issues with Hedging & Hedge parties ■ Definitions relevant to Hedging

• “Close-out Netting” • “Senior Credit Participation”

■ Voting pre-close out – key issues ■ Post close out - inclusion in “Majority Senior

Lenders”

Option to Purchase & Turnover ■ Key terms ■ How effective is this remedy: Examples in

practice • Lessons from IMO Car Wash • Does Stabilus change things

■ Approach in pari-Loan/Bond structures • Is it workable solution?

■ Current market trends / wish-list for Mezza-nine

■ Turnover per and post enforcement

Key differences between the Leveraged and Real Estate Intercreditor ■ Differences in deal structure and ramifications ■ Approach to security ■ Issues with the Security Agent ■ Dealing with Hedging ■ Acquisition of shares in the mezzanine bor






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■ rower ■ Cure rights – a different approach ■ Release of security and disposals

Intercreditor issues in Asset Based Lending structures ■ Key concerns of ABL lenders ■ Key concerns of the other finance parties

(high yield, unitranche, Loans) ■ Interaction with ABL Facilities (Algeco Scots-

man) ■ Intercreditor issues in ABL

• Standstills • Enforcement • Dealing with “pools” of collateral

■ Possible solutions in the European context

Issues in Agreement Amongst Lenders ■ Use and application (lessons from America?) ■ Intercreditor vs AAL ■ Issues in the AAL ■ Problems for borrowers

Inter-creditor issue re additional debt ■ Should the new debt be subject to an inter-

creditor ■ Issues with Secured Debt ■ Accordions vs Incremental Equivalent Debt ■ Issues with Unsecured debt ■ Documentary options – upfront ICA or de-

ferred?

Intercreditor issues arising from US parties / security ■ Terms to include in LMA / European Inter-

creditor • Bankruptcy waiver • Automatic Acceleration • Separate security

■ EU terms to include in NY style Intercreditor • Release / Assignment of claims on sale or

enforcement • Payment subordination






Unitranche & Alternative / Direct LendingDate: 19 June 2018 & 09 Nov 2018

Location: London Standard Price: £725 +VAT Membership Price: £580 + VAT

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Course Overview

Direct lending in general, and unitranche in particular, continues to make significant inroads across Europe. The offering has received a further boost from the relaxation on direct lending in France, Germany and Italy whilst the ECB guidance on leveraged transactions, which is expected to come into effect mid 2017, will hamper bank lending providing further impetus to direct lenders.

Initially unitranche structures competed mainly with traditional senior/junior structures; however, the ability and willingness of direct lenders to lend increasingly larger amounts means the offering now competes with the high yield bond market as evidenced by the recent £475m unitranche backing Bridgepoint’s acquisition of Zenith. At the smaller end, direct lenders are providing increasingly smaller tranches with Beechbrook’s €7.1m unitranche and equity co-invest indicating that all but the smallest deals are now within reach.

Geographically, direct lending continues its advance inside the three main markets (UK, France and Germany) while Scandanavia, Italy, Spain and Ireland are all seeing strong growth and demand for the product. Unitranche recently appeared on the radar in Asia in the shape of the $480m unitranche backing Carlyle’s bid for Australian based pharma company, iNova, so the product seems set to grow in those markets too.

Unitranche continues to evolve as a highly bespoke product offered in a wide variety of forms including; clubbed, bifurcated, “dual-tranche” and even junior unitranche, all of which seem to beg the question of whether the term ‘unitranche’ adequately describes these various structures. Direct lenders are being forced to develop a wider range of strategies and products in an effort to differentiate their offering from other providers and some are increasingly willing to offer undrawn facilities as part of the financing (q.v. the £50 million undrawn capex line provided by Goldmans as part of unitranche financing for Zenith).

Some funds have elected to ride the risk curve in search of higher yields whilst others have gone back to their roots in the mezz market and are using equity to enhance returns; a few are creating mezz funds through the back door. Traditional bank lenders, initially slow to recognise the challenge from thise new providers, have developed various strategies to partner up with direct lenders and are willing and able to provide the “first out” portion of unitranche.

Documentation continues to adapt to the myriad of structures in the market but liquidity in high yield bond market and the syndicated loan market is also having an impact on terms in the mid-to-larger unitranche-style deals.

The complex nature of these structures means that Intercreditor issues have become a key negotiating area for lenders and borrowers, however, the evolution of US-style clubbed (and syndicated?) deals has introduced a further complication via the introduction of the Agreement Amongst Lenders between the parties in some deals although some practitioners question whether these AALs are necessary.

Last, direct lender’s hurdle rates have prevented them from targetting more traditional, unleverage credits leaving a funding gap in the 400–550 bps space. With this in mind, capital formation is taking place to address this, hitherto, neglected sector of the market although providers are having to find other, traditional ways of meeting their target returns; such as warrants.

On the restructuring front, Unitranche has avoided the landmines so far. However the volume of issuance over the past few years means that defaults have occurred with ICG’s investment in Courtepaille the most high-profile restructuring to date but market chatter suggests other deals are already experiencing distress. The course considers how the market has and will address these issues.

Participants will receive various models (including a professionally designed LBO model which measures debt capacity and exit returns) along with a market report from Debt Explained on trends in the loan market.

The programme will review the impact of the draft ECB guidance on leveraged transactions and its potential impact on direct lending

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Unitranche & Alternative / Direct LendingContinued...

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Direct Lending – review of lenders and the market ■ Introduction to direct lending & unitranche ■ Overview of the basic unitranche product ■ The direct lending market in Europe –

where does it fit in? ■ Reviw of direct lending fundraising ■ The changing landscape of direct lending

providers ■ Review of market trends and developments

in direct lending ■ Impact of the ECB guidance on leveraged

transactions

Direct lending vs other forms of financing ■ Direct lenders approach to the unitranche

• Are all lenders the same• What do they want• General approach pricing & terms

■ The borrower’s perspective ■ Direct lending vs traditional bank-led fi-

nance ■ Unitranche vs Senior / junior structures

(mezz/2L)• Pros and cons

■ Direct lending vs High Yield Bonds ■ Pros and cons ■ Review of Zenith

How are traditional bank lenders respond-ing? ■ Can traditional bank lenders work with

funds ■ Banks and direct lenders – creating a sym-

biotic relationship ■ Three ways banks can stuucture their rela-

tionships with direct lenders• Formal JV - pros and cons• Framework agreements - - pros and

cons• Ad-hoc - - pros and cons

■ Other stratagies banks can adopt to retain market share

Review of Unitranche and direct lending structures – past, present, future? ■ Overview of direct lending spectrum ■ “Original” Unitranche – the US product ■ European Unitranche - The “classic” struc-

ture ■ “Structured” unitranche

• Review of recent deal structures• Bifurcated unitranche• “Dual” tranche unitranche • Parallel unitranche• “Junior” unitranche• JV structures• Syndicated unitranche

■ Bilateral vs. Clubbed unitranche ■ Unitranche vs Senior+Mezz/2L vs SSHYB ■ Bond structure

• Rationale, use and application in other EU jurisdictions

■ Interaction with the bank-led facilities - RCF, Acquisition, Capex

Facility size and leverage ■ Facility size and application – how small or

large can it go? ■ Leverage ratios

• Is there a typical range?• Comparison with separate senior/junior

facilities - senior/mezz and senior /2L ■ Tenor – what’s market ■ Bullets vs amortising – impact on the deal

Role play: Traditional senior / mezz vs Uni-tranche structure

Margins & Call protection ■ Where’s the market now - current trends ■ Approach to margin ratchets - ■ Other margin protection measure – OID and

floors ■ Structuring the coupon

• Cash vs PIK & Warrants ■ Warrants – which investors want these and

why?• Why these matter to investors• Key issues for lenders (information, rep-

resentation)• Issues for borrowers

■ Hard vs. soft call-protection • Why it matters• “Typical” terms

Terms where unitranche differs from “stand-ard” LMA terms ■ Permitted actions

• M&A• Additional borrowing, security & guarantees• Permitted payments (to equity)

■ Cash sweeps




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Unitranche & Alternative / Direct LendingContinued...

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• Approach of the funds• What about the banks

■ Covenants generally• Guarantor coverage

■ Financial maintenance covenants• Standard LMA?• Cov-lite vs cov-loose• Springing covenants• Aggressive borrower-friendly terms -

EBITDA add-backs

Use and application for non-sponsored corporate deals ■ Review of the US market examples ■ European examples – deals we have seen ■ A viable option for corporate deals – what’s

changed ■ Pros and cons of using unitranche in corpo-

rate deals ■ “Typical” use and application for European

corporates

Documentation ■ Overview of the loan structure ■ MA precedents as a point of departure ■ Documenting bifurcated deals: who is the

lender of record? – various approaches ■ Hedging facilities

• Who provides this• Ranking (always first?)• Handling large RCFs

■ Voting issues & thresholds• The traditional LMA approach • Will it work in clubbed or dual tranche

deals• Is it time for a change?

Collateral & Security ■ Collateral in the UK & Europe ■ Financial assistance ■ Separate Facility agents – are they neces-

sary? ■ Separate Security Agents – why and how

Transferability, Assignment and Portabil-ity ■ Transferring / selling post completion

• Who is the Lender of Record – does it matter

■ Methods of selling down - impact• Assignment• Sub-participation

• Other structure methods ■ What borrower controls might apply

Role play: Borrower vs lenders – negotiating selected aspects in the term sheet

Inter-creditor issues and Agreements Among Lenders (“AAL”) ■ Who are the Lenders of Record – pre and post

sell-down? ■ Who are the parties to the ICA ■ Who are the key parties to the AAL

• Should the Borrower be a party to the AAL - Pros and cons

■ What is the “typical” ranking ■ Hedge facilities – are they always super sen-

ior? ■ Deciding which aspects go in the ICA or the

AAL ■ Amendments and Waivers

• What is controlled and by whom• Dual consent structures – a viable solution?

■ Enforcement and Standstill issues • Who is the “Instructing Group” – what hap-

pens in dispute• Reconciling the unitranche and the RCF

tensions• Reconciling tensions in split unitranche • Standstill periods

■ The concept and application of “Material Events of Default” • What does it cover• When does it matter• Are there other solutions

■ Problems when things go wrong• How will dual or bifurcated structures affect

Schemes of Arrangement• Potential problems with “class” where lend-

ers are in both RCF and unitranche• When unanimous consent is no longer

unanimous




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Asset Based LendingDate: 05 Oct 2018

Location: London Standard Price: £675 +VATMembership Price: £540 + VAT

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Course Overview

Asset based lending (“ABL”) has been a well established part of the financing environment in the U.S. for many years and has seen increasing volumes globally. Despite this ABL has struggled to gain the same level of acceptance here for three reason; first, a lack of familiarity, if not confusion, with the product; second, borrower’s reluctance to abandon their traditional-bank led facilities and last, the dated perception of the product. These headwinds are abating and 2015 has seen record issuance in Europe as borrowers, both corporate and PE, are increasingly recognizing the multiple benefits of ABL, not least the increased flexibility and reduced cost vis-à-vis RCFs.

In practice the credit markets adopt two distinct approaches to a credit decision: a cash-flow based approach and an asset-based approach which includes asset based lending. Most lenders are familiar with the former but not the latter. Moreover, ABL is often confused with other asset-related financing techniques especially asset-backed lending and asset finance. In simple terms ABL is a form of secured lending where loans are advanced against specific assets. The main focus is on working capital, although ABL also extends to hard assets such as plant, machinery and equipment, real estate and, more rarely, intangibles.

This programme provides practitioners with a practical toolkit to understanding ABL from the perspective of borrow, advisor, supporting professional and lender. It covers the key assets to which ABL is applied and the typical terms and conditions applied to each class. It also identifies the pros and cons in each asset class such, for example, retention of title in the case of inventory and ineligible items in the case of accounts receivable.

In the U.S. market ABL is frequently used along-side with other forms of lending (especially high yield bonds) and this is partly true of Europe, however, thus far inter-creditor have inhibited these structures from evolving in Europe although these problems have been addressed by asset based lenders who are adopting an increasingly borrower-friendly approach in order to gain market share. For the same reason ABL are also more willing to up their ABL facilities with cash-flow based facilities

The programme will include a number of hands-on cases illustrating ABL in practice which will provide a practical angle to the topic and reinforce the learning experience.

Introduction ■ Two approaches to the credit decision

• Cash-flow based lending• Asset based lending

■ Asset based lending defined and compared with other asset-related finance techniques• Asset-backed lending • Asset Finance compared

■ Comparison of funding options • TLB vs. HYB vs. Cash flow vs. RCF

■ Which types of business are suitable for ABL ■ Which types of firms are not suitable for ABL ■ Two key concepts in ABL

• The “borrowing base”• “Headroom”

■ Use and application of ABL• M&A• Restructuring• General corporate purposes

• Other ABL in in tandem with other funding sources ■ ABL and traditional senior (bank) loan facili-

ties ■ ABL & high yield bonds (q.v. review of Algeco

Scotsman) ■ ABL & Unitranche

Key intercreditor issues for the ABL ■ Security – resolving the conflict over compet-

ing claims for collateral• Review of various approaches

■ Enforcement Standstills – resolving conflicting agendas with other lenders

■ Option to purchase – does it help ■ Consents & Waivers

Case: Review of key conflict issues between ABL and other funders

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Financing accounts receivable (“AR”) ■ The basic approach ■ Loan vs. debt purchase structure

• Confidential Invoice discounting• Disclosed Invoice discounting• Full service Factoring

■ Key differences between discounting and factoring

■ The key benefits of ABL ■ Critical legal issues for lenders ■ Key accounting issues – off-balance sheet or

not requirements• Recourse vs. Non-recourse• Credit insurance – key issues and tips

■ Ineligible AR – review of typical ineligibles ■ Other typical limits

• Permitted territories• Permitted currencies• Debtor concentrations• Export concentrations

■ Typical Reserves ■ Calculating the advance

Case: Calculate the effective Advance rate on AR Inventory financing ■ What types of inventory qualify

• Finished goods• WIP• Raw materials / Commodities• Typical list of ineligible stock

■ Calculating the Advance• Gross Orderly Liquidation Value• Net Orderly Liquidation Value• Reserves

■ Typical reserves • Prescribed part• Employees• Preferential creditors• Landlord’s “distraint”

■ Retention of title issues – “simple” vs. “all monies”

■ Key risks for the lender ■ Specific issues with “branded” products

Plant, Machinery & Equipment ■ What types of PME qualify ■ Key concerns for the lenders

• Ability to sell & relocation ■ Advance rates ■ Pros and cons of other forms of funding

(leasing, vendor finance)

■ Key terms of the facility• Margins, amortisation & tenors

■ Funding PME on a revolving (inventory) basis ■ Legal issues – Taking adequate security

• Plating (why it isn’t always an option) Real Estate ■ What types of property qualifies ■ Advance rates ■ Valuation issues ■ Key terms of the facility

• Margins, amortisation & tenors ■ Pros & cons of using ABL vs. specialist lenders ■ Legal issues – taking adequate security

Other matters - overview ■ Intangible Assets - Rationale for leveraging

intangibles (unlocking hidden value)• What types of intangibles qualify

■ Cash flow (top-up) loans• Typical terms• Potential pitfalls for the parties

Case: Create a funding structure using ABL Documentation: Overview of a typical term sheet ■ Review of main headings ■ Security package ■ Information & Reporting requirements ■ Financial covenants

• why and when ■ Operational undertakings

• “Dilution” defined ■ Reps and Warranties – typical ■ Events of Default ■ Fees and charges (one size does not fit all) ■ The lender’s approach to margin, fees and

charges ■ Other costs and expenses ■ Exit / termination fees

• “Typical” fees – review various options• Typical triggers• Issues for Borrower’s to consider (potential

pitfalls)


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Negotiating & Issuing High Yield Bonds

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Course Objectives

Date: 1 June 2018, 20 Nov 2018 Location: London Standard Price: £695 +VAT

Membership : £556 +VAT

Participants will: ■ Learn who is issuing HYB and why? Understand the size of the market, and what these bonds

look like when they are issued. ■ Understand how deals are brought to market, allowing for market conditions and examine the

documentation, which is key to the deals value. ■ Gain an understanding of the key terms, such as Pledges, Maintenance Covenants and Equity

Cures. ■ Appreciate the latest trends in the market and why they are happening. For example, why in-

vestors are excepting the move to Cov-Light deals, despite them not offering the same protec-tion as investors insisted on in the past.

■ Have explained to them all the main terminology used in HYB deals and just as importantly in what context they are used.

■ Will look at recent issues to highlight the main points discussed in the programme, and to illus-trate the terminology discussed.

Overview of High Yield Bonds ■ Size of the Market / Market Growth ■ Examples of High Yield Bonds

• A look at real bonds in today’s market place

■ Credit Ratings• The Ratings Agencies• Investment Grade v High Yield Debt

■ Current Credit Spreads• What are the current Credit Spreads in

the Market for High Yield Bonds ■ The Role of AFME

• Association for Financial Markets in Europe• Focus on promoting transparency and li-

quidity in the high yield market• How affective are AFME?

■ Fallen Angels ■ Private Equity Issuance ■ Recent New Issues

• Case study: We look at recently issued High Yield Bonds from the market

• What is being issued and why? ■ The Major Bookrunners

• Ranking of Lead Managers / Global Capital• Life Cycle of an Issue

■ Origination / Syndication / Underwriting / Distribution

The High Yield Bond Market reached a record of €75bn issuance in 2017. This year has so far shown no signs of slowing down. Selecta Group, the Dutch incorporated food and drinks vending machine provider, started 2018 with two large issues, already equalling some of the largest deals of 2017. Both bonds were issued on the 1st February this year. Selecta issued two 6 year bonds; a €765 m 5.875% fixed and a €365m floater paying 3 month Euribor + 537.5 bp.

The HYB market is complex with detailed jargon and documentation. This course is designed to demystify the terms used in negotiating and issuing. We use real life examples to explain the issues in an easy to understand way. We will look in to the latest trends and explain the motivations and outcomes behind recent changes affecting the market, such as the deterioration of covenants and investor protection.

The programme is designed to give participants an in depth understanding of the High Yield Bond Markets and how deals are negotiated and issued. Delegates will understand how the market operates, seeing who is issuing and who is bringing the debt to market. We will look at recent “real life issues” as examples.

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Pricing a High Yield Bond Issue ■ From the Government curve ■ From the Mid Swap curve

• Interest Rate Swaps Overview• Where Mid swap rates come from

■ Duration Risk• Market risk of a bond

■ What impact do changing interest rates have?

■ Case study: we look at the pricing of the recent issues of

• Aston martin• Selecta Group

The Documentation ■ Pledges

• Negative Pledges ■ Early redemption / Callable and Puttable

bonds• Examples are used to show the impact for

investors of call and put options imbedded in to bonds

■ Events of Default• Seizing Collateral• Recovery Rates

■ Cross Default ■ Risk Factors

• Case study: We look at an example of a High Yield Bond and discuss the “Risk Fac-tors” listed in the documentation.

Covenants ■ EBITDA as a constituent of Covenants ■ Maintenance Covenants ■ Case study: we look at examples of cove-

nants and their impact• Carve Outs• Baskets• Breach of Covenant

■ Covenant Erosion• Impact on the market of these recent

developments• Cov- Loose (leverage only financial main-

tenance)• Cov Light (Springing Leverage)

Equity Cure ■ Recent provision changes allowing the com-

pany to receive equity capital and the impact on investors• Shareholders curing a covenant breach by

injecting further equity funding.• Case study: we look at an Equity Cure

Sample Clause and discuss the meaning and jargon.

• Post Default Alternatives

Toggle Notes ■ Deferred payment ■ PIK

Case study: Transaction Execution – the pre-launch task time line from week 1 through to week 6. We discuss all the steps that must be taken before we can bring an issue to market.

Exercise: Delegates look at a recent issue prospectus and examine the risk / reward ratio. Class discussion: Should we invest, what are the risks?



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■ Aggressive EBITDA add-backs ■ Ratio definitions applied differently leverage

vs other corporate actions ■ Flexibility for Limited Conditional Acquisi-

tions ■ Narrower numerators for leverage ratios ■ Enhanced Basket flexibility for Leverage &

EBITDA grower caps ■ Upfront “free & clear” basket credit in build-

up basket ■ Asset sales available for dividends ■ Looser Affiliate transactions ■ Equity clawbacks – what market ■ Redemption & Special optional redemption/

non-call diluted

Call Protection: Change of Control and Equity Claw ■ The “historical” change of control (CoC)

position • The “portability” issue – the 3 variations

on the standard CoC position ■ Standard call protection (absent CoC) –

Fixed vs FRNS ■ “Equity Claw”

• Investor issues • Issuer matter

Intercreditor Issues (LMA SSRCF) ■ Overview of key provisions ■ Assumed Funding Structure ■ Security Structure ■ Ranking ■ Payment waterfall ■ Restricted Payments ■ Enforcement

Specific Issues re: Junior (PIK) Notes ■ Specific issues relating to Junior notes ■ Review of Veralia PIK Notes (using Report

from Debt Explained) ■ Review of Schaffler PIK (using Report from

Debt Explained) ■ Review of key differences in PIK covenant

packages vs Senior Secured Notes cove-nants

■ Intercreditor issues in PIK deals

Included in the Appendices ■ Overview of the issuance process

• Initial preparation • Preparation phase • Targeting the investors (framing the is-

sue) • Execution phase

■ The Pricing discovery process






Bond DocumentationDate: 18 Sep 2018

Location: London Standard Price: £695 +VAT Membership : £556 +VAT

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Course ObjectivesParticipants will: ■ Be introduced to the international capital markets, the ICMA and the key features of bonds. ■ Get an overview of the plain vanilla listed securities, including the four stages of a bond issue. ■ Have explained to them the bond documentations with the payment obligations and mechanics,

including bond trustees and bondholder meetings. ■ Gain an understanding of the prospectus directive (PD) with the PD regulations and key provi-

sions. ■ Learn about the EU and UK regulatory frameworks.

Trained as a lawyer, the trainer has over 19 years experience in international banking and structured finance transactions, including real estate finance, loans, leverage finance, debt capital markets, securitisation, structured products, repos, derivatives and financial regulatory and compliance. She has been actively involved in the creation of innovative award winning structured transactions and negotiating complex financings.

She has advised global institutions such as Credit Suisse, Citigroup and Goldman Sachs and spent many years practicing law at Allen & Overy LLP, Linklaters and Sidley Austin Brown & Wood in multiple jurisdictions including London, New York, Hong Kong, Singapore etc.She holds a Law LL.B (Hons) degree from University College London and has worked in the Finance Know-how team at Clifford Chance. She is an author and now runs her own business advisory, training and legal consultancy.

This Bond Documentation course provides an overview of debt securities and bond trading. It is relevant for in-house lawyers and private practice lawyers alike as well as bankers, bond traders involved in anything from the day to day business such as the usual plain vanilla bonds to the more complex heavily negotiated transactions involving structured securities or unusual assets. This course will also be relevant to the Operations and Documentation teams involved in bond transactions from time to time, structurers, compliance personnel as well as accountants who advise clients on bond trades.

The first part of this course sets the scene by giving an introduction to the international capital markets, the categories of securities and characteristics of plain vanilla bond securities. We then cover the 4 stages of a bond issue and look at stand-alone vs programme-based bond issues.

We go through the various aspects of due diligence that is required followed by a review of the bond documentation overview. In this part we cover the key parties and documents involved, the payment obligations and mechanics and the terms and conditions of the bonds. We discuss in detail the subscription agreement, the representations, warranties, covenants, conditions precedent and the key areas of negotiation. We discuss the events of default and the role of the trustee followed by legal opinions, ratings and the issues around the clearing and settlement of bonds.

Background of the trainer

Course Overview

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Introduction ■ The International Capital Markets ■ The ICMA ■ 4 Categories of Securities ■ Key Features of Bonds ■ Key Concepts

• Fungibility• Negative Pledges• Custody• Subordination

ӹLegal ӹStructural ӹContractual

ӹ Trust Subordination ӹ Contingent Debt Subordination

• Bearer vs Registered Bonds• Global vs Definitive Bonds• Temporary vs Permanent Global Notes• CGN vs NGN Structure

Plain Vanilla Listed Securities ■ 4 Stages of a Stand-alone Bond Issue ■ Programme-based Note Issue ■ Due Diligence

• Purpose and Scope• Legal due diligence• Accounting and financial due diligence• Business due diligence• Process

Overview of Bond Documentation ■ Parties Involved ■ Main Documents

• Fiscal Agent Structure

• Trust Structure ■ Payment Obligations

• Bullet vs Amortising• Call/Put Options• Spens Clause• Failure to Pay

■ Payment Mechanics• Paying Agent and Credit Lines• Calculating Fixed and Floating Rate Inter-

est• Day Count Fractions• Withholding Tax and FATCA

■ Terms and Conditions of Bonds ■ Representations and Warranties ■ Covenants ■ Events of Default ■ Bond Trustees and Bondholder Meetings ■ Subscription Agreement

• Key Terms• Key Areas of Negotiation

■ Legal Opinions• Issues to be covered• Reliance• 10b-5 Opinions

■ Credit Rating of Bonds ■ Clearing and Settlement of Bonds ■ Selling Restrictions

• EU• US• Other Jurisdictions


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Loan Documentation & Security IssuesDate: 11 Jun 2018, 18 Sep 2018, 05 Nov 2018

Location: London Standard Price: £725 + VATMembership: £580 + VAT

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This course provides a full coverage of all of the important aspects of lending. It sets the scene by explaining the banks approach to lending, the roles of the key departments in the bank and the key documents in the process.

The programme then proceeds to discuss where to focus in analysing the loan and examines the key commercial terms in the loan and security documents from the perspective of both the lender and the borrower. Reference is made to established case law (Spectrum) and to recent cases, such as Stabilus and Urvasco and their relevance to key clauses and aspects.

Whilst Loan Market Association precedents are widely used as a point of departure for loans throughout Europe, there are a number of key clauses which are left “blank” for negotiation, in particular the various “permitted” baskets which need to be tailored on a case by case basis. Furthermore, syndicated (and club) loans raise additional issues which are not relevant in bilateral loans, such as voting thresholds and transfer restrictions.

In view of the standardised approach to lending across Europe, the course is presented so that it has a pan-European relevance.The course will also discuss briefly the potential impact of Brexit on existing and new documentation. The longer term impact on loan documentation will depend upon what is agreed between the UK and the EU.

Facilities in general ■ Investment grade vs high yield - key dividing

line in credit markets, why & how it matters ■ Preliminary issues for the borrower – the 7

key aspects ■ Types of bank facilities & key issues

• Committed vs uncommitted facilities• Overdraft, term loans, RCFs, multiple op-

tion facilities, swingline facilities ■ Obtaining a loan - bi-lateral vs club vs syndi-

cated deals• Key differences

■ Repayment styles and what drives them• Amortising vs balloon vs bullet• Lenders approach to amortisation

Overview: Key documents & their uses ■ Commitment and mandate Letter ■ Term sheet ■ Fee letter ■ The loan facility agreement ■ Security documentation

Case Study: Review key aspects of a sheet in the context of a relevant deal including the market flex

The key players in a loan & their roles ■ Dramatis personae in the loan (bilateral, clubs

& syndicated) ■ The mandated lead arranger ■ Origination & syndication departments ■ Credit department ■ Portfolio department ■ The facility agent & security agent

• key lessons from the Stabilus case

Issues relevant to syndicated (& club) deals ■ The various types of Lenders & what they

want • Banks, CDOs, institutional lenders, credit &

hedge funds, direct lenders ■ Role and importance of “The Instructing

Group” ■ Critical voting thresholds ■ Transfer restrictions

General approach to the loan ■ The Lender’s approach to the Loan ■ The borrower’s aims ■ Interplay of the various “models/scenarios” ■ How to “read” a loan facility agreement

• What to do and what not to do• What are the key areas to focus on

■ Generic drafting issues• Materiality

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• Reasonableness• De minimis / permitted baskets• Other conditional clauses (might, may,

will, would etc)• Further assurances – provide less assur-

ance since Ford v Polymer Vision ■ Negotiating tactics in handling the banks

• What do the lenders want – the 3 key areas

• Knowing where to focus your negotiating firepower

• How to handle the lenders when things “go wrong”

Different types of facilities – use and key issues ■ Overdraft - why these are unsuitable for

corporates ■ Term Loans

• Uses – general corporate purposes, M&A, capex

• Typical terms• Tranching and alphabet notes – rationale

and use ■ Revolving credit facilities

• Typical terms & problem areas• Fee /margin structure – what’s market for

committed amounts• Clean-downs – why they matter, what to

look for• Rollovers & cashless rollovers (lessons

from Lehman)• Dealing with “headroom”

The senior facility agreement – the key commercial terms ■ Primary loan senior facility agreements

• when and where are they used ■ Scope of the Loan

• “the Restricted Group” - where and why it matters

■ “Permitted baskets” what they are and why they matter

■ Interest & fees• Arrangement fees• Commitment fees• Typical margins• Utilisation periods• Use and interaction with hedging (SWAPS)

■ Default vs. events of default and cross de-fault

■ LMA approach vs market ■ Impact of a breach; theory vs practice ■ Covenants generally

• Information• General undertakings (the negative pledge

& guarantor coverage test)• Financial covenants – typical covenants

■ MAC / MAE• Does it matter• Impact of the recent Urvasco case

Case Study: Discuss specific terms in the Senior Facility Agreement specifically various formulations of the MAC clause, the maintenance covenant package (which ones should be used and why), the role of the “Permitted” baskets

Types of security ■ Debentures defined (UK only)

• Companies Act (UK) approach vs case law (impact of recent Fons case)

■ Mortgages• Charges – fixed vs floating• Key differences • Key issues for lenders & why it matters

(Spectrum & Brumark Cases) ■ Pledges ■ Liens ■ Security re intellectual property and contracts ■ Security in the EU – general approach

• Parallel debt arrangements ■ Collateral in the US – general approach

Case Study: Discuss some of the key issues affecting security from both lender’s and borrower’s perspective

Registering & perfecting security ■ Registering security interests created by com-

panies & LLPs• Charges created on or after 6 April 2013• Charges created before 6 April 2013• Charges created by overseas companies

■ Registering security over land ■ Registering security over intellectual property ■ Priority between company mortgages and

charges ■ Methods of perfecting security

• The five key questions

Impact of Brexit on loan documentation ■ Events of default ■ Mandatory prepayments (illegality) ■ MAC clauses ■ Force majeure ■ Other matters (repeating reps, gross up) ■ Passporting issues ■ Governing Law and Jurisdiction


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Restructuring High Yield BondsDate: 6 July 2018, 09 Oct 2018

Location: London Standard Price: £695 + VATMembership Price: £556 + VAT

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Course Overview


Restructuring high yield bonds pose a range of challenges not found in dealing with purely loan-driven structures; custody chains means that noteholders are more difficult (and take longer) to identify; the listed nature of notes means that all stakeholders need to be aware of market abuse aspects; the machinery for instituting action in bonds is more convoluted than loans, since notes are invariably governed by NY State law restructurings may need to take account of compliance with onerous U.S. securities’ laws and last, bond restructurings often use different tools not available in loan structures, such as Exchange offers and consent solicitations (which can be used to covenant strip notes in certain circumstances). The market has also experienced an increase in coersive exchange offers where parties have made use of innovative solutions to encourage holders to accept and discourage holdouts from remaining on the side-lines. DTEK’s triple track Exchange offer, Scheme and consent solicitation being an excellent example.

This programme summarises the methods and tools that have been used to restructure bonds and reviews some of the topical and innovative solutions that have been used to address these more complex restructurings. English schemes of arrangement have gained increasing traction in the bond markets, as they have in the loan markets, and appear to have emerged as the primary pathway of choice in a number of recent restructurings for foreign companies. Despite this Chapter 11 does offer some solutions not available in a Scheme, for example where operational restructuring is required. The programme will illustrate these methods with discussions of recent landmark restructurings including; Zlomrex (parallel Exchange offer and Scheme), Metinvest (Standstill Scheme), Privatbank, Edcon, Codere.

The course will also review the current potential cross-border restructuring options for CGG Restructuring which potentially could involve either US or French pathways or both simultaneously.

The programme will also review the key points of the Draft EU Directive harmonising restructuring and insolvency matters published on 22nd November 2016.

Introduction ■ Bond Restructuring routemap: overview of the

stages in the process ■ Overview of current Loan/ Bond structures

(what’s market)• SSRCF/Senior Secured Notes• Pari Loan/ Bonds

■ Double Luxco – has back on the agenda

Restructuring triggers ■ Review of the key EoDs in Notes ■ Key EoDs in Loans which will trigger earlier than

Notes ■ Asymmetry of information between Loans and

Notes ■ Other aspects which may give lenders a head

start over the Notes

Gaining leverage ■ Key voting thresholds for Notes ■ Problem areas

• “One Euro One vote” the Schmolz problem in Germany legislation

• Numericable’s change of voting cap• The Bakkavor problem & hedging issue (Who

controls the Restricted Group) ■ Key voting thresholds for loans (vis-a-vis the

Notes) ■ Impact of distressed disposals & release of col-

lateral pre and post distress

Pathways - Chapter 11 and Adminsitration ■ General application and founding jurisdiction ■ Procedure & voting thresholds ■ Key benefits

• Automatic stay - Worldwide impact (practical application)

• Cherry picking contracts• Assets sales• DIP funding• Cram-downs and Cram–ins

■ Review of Truvo ■ Administration & pre-packs ■ Review ATU “flip-up” case

Case Review: CGG Restructuring US and French options

Other problem areas in Bond restructurings ■ CoMi & Jurisdiction issues ■ Organising the Bondholders

• Relationship between the issuer, trustee and bondholders

• Identifying the Bondholders – difficulties and tactics

• Standstill Agreements• Lockup Agreements• Reporting requirements• Obtaining information – problem areas

■ Insider dealing, Fraud and other issues • US anti-fraud• UK & EU rules and regulations

■ Impact of CDS on restructuring• How it matters q.v. Truvo

Stabilization & liquidity ■ Standstills re the Issuing Group – positive and

negative ■ Liquidity – the options and requirements

• New shareholder funding• Payment extension and deferment techniques• New debt incurrence via the HY indenture –

sources and problems• Take-outs • Review of Towergate solution for liquidity

■ Issues affecting junior Notes / mezz etc• Standstills (on junior Noteholders and other

creditors)• Payment Stop notices

Draft EU Harmonisation Directive on restructuring ■ Backgorund ■ The three minimum key elements ■ Review of the Key principles ■ Relevance of Brexit

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Advanced Debt RestructuringDate: 20-21 Nov 2018

Location: London Standard Price: £1,300 +VATMembership Price: £1,040 +VAT

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In a low interest rate environment, bankers and financiers are under increased pressure to undertake more corporate business at higher returns, but at the same time ensuring a low risk weighting. Given that the business climate remains uncertain and volatile, the risk for bankers of developing problem loans through their lending activities, is therefore increasing.

This course has been designed for bankers and financiers to develop a holistic, applied approach to early problem loan workout through a range of different techniques currently applied in UK and international finance. It aims to provide the attendee with a comprehensive overview of the challenges of problem loan workout and with an insight into some of the key methods than can be implemented to assist in the recovery of their financial exposure.

By offering a range of different case studies, financing scenarios and potential solutions to workshop case studies, the attendees will be able to develop a broad applied overview of debt restructuring techniques. This is particularly important in an area of finance where ‘one size fits all’ solutions are not possible and where the financier needs to be open minded, flexible and quick to react to changing circumstances.

The programme draws from the experience of a range of different high profile debt restructuring case studies as well as the experience and project work of the trainer’s 23 year experience in debt structuring, restructuring and problem loan workout. A number of the case studies used during the course are those that have been undertaken directly by the trainer.

The course is highly interactive, with the course attendees working in project teams. They will be required to work in their project teams in devising solutions and providing recommendations to the rest of the delegates who will cross examine their proposals in a credit committee environment.

During the second day of the programme, the attendees will use forecast cash flow analysis as part of the strategic business review for the restructuring candidate. A knowledge of the working of Microsoft excel with therefore be an advantage for the attendees.

Participants will: ■ Fundamental concepts in early problem loan workout ■ Early Warning Signals in spotting potential problem loans ■ International classifications of problem loans ■ The fundamental methods and application of successful restructuring and rescheduling ■ The key methods that can be applied to successfully restructuring debt facilities ■ The aims of the problem client ■ Application of international frameworks to management the restructuring process ■ The importance of believing the restructuring strategy and the need for the independent busi-

ness review ■ The use of forecast cash flows in identifying the key risks of the recovery strategy and in as-

sessing the client’s ability to honour its debt service going forward. ■ The use of the ‘Standstill’ process in controlling the credit recovery process ■ The application of the Standstill Agreement and the cooperation of the other creditors ■ Key security and guarantees required in securing the lender’s position

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Since June 2013, the trainer has been providing regular Debt Restructuring training to senior members of the banking team at the European Investment Bank in Luxembourg. For the past 14 year the trainer has provided training programmes to some of the world’s largest financial institutions. Cooperating with a number of leading training companies, he has trained delegates from some of the largest industrial and financial institutions across the Middle East, Far East, Europe and Southern and Eastern Africa. He also lectures in a number of professional papers for the ACCA and CIMA examination boards at the Tianjin University of Finance and Economics, the leading Business School in China.

In parallel to his training, the trainer also has a 24-year career in Banking and Finance that originated in the City of London and has specialised in credit risk analysis, debt structuring and problem loan workout and debt restructuring for international corporate clients. He has worked with a number of the world’s leading financial institutions providing lending facilities or private placements worth over US$ 5 billion to the corporate sector. It is this practical, hands on experience of credit risk analysis and balance sheet restructuring that he brings to his professional finance workshops.

Before embarking on his career in banking he acted as an Economic and Political Adviser to the Prime Minister of the Slovak Republic.

Day 1

Session 1Introduction to Debt Restructuring – Key drivers ■ Non-performing loans and the challenges

faced by bankers ■ When to recognise the non-performing loan ■ How to deal with problem clients that have

not defaulted ■ Introduction to a framework to deal with cov-

enant breaches ■ Review of common reasons for company

default and the creation of non-performing loans

■ Understanding the attitude of problem clients and the difference between ability to pay and willingness to pay

■ When to restructure / reschedule and when to accelerate.

Workshop – Advanced discussion of different alternative scenarios in dealing with loans in default and covenant breaches from case study examples.

Session 2Early Warning Signals of potential distress ■ Review of key financial EWS ■ Danger levels of different financial covenants

in different industries ■ EWS derived from the financial statements ■ Identification of the manipulation of the fi-

nancial statements ■ Using univariate and multivariate frameworks

to identify financial distress ■ Application of the Z Score to distressed sce-

narios to identify potential failure ■ Review of the IFC’s classification and check

list of Early Warning Signals

■ The importance of identifying key external factors affecting corporates

■ The application of GNPESTEL model to exter-nal risk analysis

■ Systemic risk and its impact on problem loans ■ Identifying defects and mistakes committed by

the company ahead of time ■ Management risk and its impact on corporate

recovery ■ Interrogating problem management and un-

derstanding gaps and areas for improvement ■ The role, power and limitations of the lender in

restoring management effectiveness ■ Strategic risk and its impact on the problem

client

Workshop – Delegates in their project teams will analysis the EWS and external and qualitative risks facing a case study problem loan, providing recommendations for how a lender could seek to improve those risks and protect itself from potential risk crystallisation.

Session 3Identifying work out solutions versus insolvency solutions ■ The importance of understanding whether the

problem loan can be ‘worked out’ as a going concern

■ The importance of and belief in the recovery strategy

■ Using cash flow forecasts to believer the busi-ness plan and recovery strategy

■ Expectations of financial performance and fi-nancial covenants under the recovery strategy

■ Deciding whether to leave the borrower in col-lateral possession or not

■ Application of the Butler Matrix ■ The IFC framework for problem loan resolution ■ The use and application of sensitivity analysis



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Course Content

in understanding the strength of the compa-ny’s recovery plan.

Case Study Workshop – During this session, the delegates will be given a case study project complete with forecast financial projections designed by management. Having applied the Butler and IFC frameworks to the case study, the delegates will use the excel financial model provided by the trainer, to undertake a sensitivity analysis of the forecasts financials. The aim will be for the attendees to assess whether they believe the company’s recovery strategy and its ability to honour the restructured loan’s debt service going forward.

Session 4Different restructuring and recovery methodology ■ The concept of automatic stay and protec-

tion of the going concern from other credi-tors

■ Administration ■ Receivership ■ Liquidation ■ Automatic stay in administration ■ Different rescue procedures ■ Cram down of creditors ■ Position and rights of management ■ Personal liability of directors ■ Ranking and claims of creditors ■ Time limits of filing claims ■ Introduction to Standstill Agreements and

controlling the banking syndicate

Case Study Workshop – During this session the attendees will review a new case study and review the potential application of the different recovery methodology discussed during the session. The delegates in their project groups will also assess how they need to engage with other creditors and assess the drafting of a standstill agreement for the problem loan restructuring.

Day 2

Session 1Implementing the Restructuring process ■ Understanding different stakeholder objec-

tives ■ Creating the restructuring team ■ The 10 point plan for effective restructuring ■ The case for and against a moratorium ■ Mediation

■ Workout arrangements and responsibilities within the lending institution

■ Protecting security throughout the workout ■ Financial projections and sustainable cash flow

and debt ■ The importance of the Independent Business

Review ■ Negotiations and pricing the workout

Session 2

Workshop – Having reviewed the implementation process and the various worked examples developed during the session, in their project teams the attendees will review a new major new case study problem loan complete with financial forecasts in an excel financial model. In order to assess whether they would proceed with the restructuring, the attendees will draft the Scope of Works for an Independent Business Review as part of their initial analysis

Sessions 3 & 4Final Case study - Implementing the restructuring process in practice.

Final Case Study Workshop – Using a new case study, the attendees working in their project teams, will provide a complete restructuring / workout solution to the problem loan on the basis of the information covered during the course. They will required to identify the key EWS inherent in the problem loan, review the sensitivity of the forecast financial projections in the excel model and propose a schedule of the restructured loan. The team will also include terms of a Standstill Agreement, if required. A selected team will asked to present their restructuring solution to the rest of the delegates.

What Redcliffe’s clients are saying about the course and our trainer

“The course was very well structured and presented. I learnt new techniques that I

could apply to my work”

“The presentation was excellent with a lot of examples and case studies”

“Extensive coverage of multiple topics, matching with relevant case studies and

insights”




Course Overview

Commercial Real Estate and Debt FinanceDate: 29 Nov 2018

Location: London Standard Price: £575 + VATMembership: £460 + VAT

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The Trainer has over 40 years’ experience in banking, finance and financial training. He has had practical banking experience with major banks in the areas of corporate credit analysis, Corporate Banking Relationship Management and Commercial Real Estate Debt Finance. The trainer was subsequently involved in Commercial Real Estate Financial Advisory business with a then newly formed financial services subsidiary of one of the world’s largest Real Estate advisory firms.

The Trainer has almost 25 years’ financial training experience in about 60 countries focused on large scale Corporate Credit Analysis, Corporate Banking and Structured Debt Finance (Project, Infrastructure and Real Estate Finance). He holds an MSc Real Estate Investment and Finance degree from the University of Reading (2014).

The trainer has worked with participants in a wide range of job functions and experience from Commercial and Investment Banks, Development Finance Institutions, Export Credit Agencies, Public Sector organisations and large corporates.

Commercial Real Estate is a major investment Asset Class, represents a very substantial portion of corporate assets and provides collateral and credit support for a huge volume of bank and Capital Markets financings, ranging from lending to the SME sector to Commercial Mortgage Backed Securitisations.

Risks:Commercial Real Estate values are very sensitive to the underlying economic fundamentals as well as the financial markets. Additionally Commercial Real Estate values and performance are also influenced by specific factors such as the quality of the Real Estate, lease terms, tenant risk, market sector and geographic focus making it essential to understand the specifics of each Commercial Real Estate Asset.

Objectives of the training:By the end of this course, participants will be able to: ■ Assess the key risk issues in Commercial Risk and risk mitigation techniques; overview of

developments in the Commercial Real Estate markets ■ Macroeconomic cycles…what can be learned from past economic cycles? ■ Recent developments and issues arising from the “credit crisis” ■ Key risks and mitigants in Commercial Real Estate Financings

Exercise: Review of a commercial real estate financing to identify key credit risks and potential mitigants

Principles of Commercial Real Estate Valuation ■ Summary of Commercial Real Estate valuation methods and how the different methods can influ-

ence value• Comparable buildings• Capitalisation of yields• Open Market Values• Discounted cashflow valuation methods

■ Occupational lease terms – examples from selected markets, and how this affects value ■ Yields in Commercial Real Estate Valuations

• Initial yields• Reversionary yields• Equivalent yields

■ Development vs investment financings, and factors to consider in valuation assumptions

Exercise: Calculating and sensitising Commercial Real Estate Finance valuations using discounted cashflow techniques

Commercial Real Estate Companies and Investment vehicles ■ Typical types of Commercial Real Estate investment companies and their approach

• Developers• Trading companies• Investment companies

■ Real Estate Investment Trusts (REIT) vs non REIT

http://redcliffetraining.com/training/asset-management-courses/commercial-real-estate-debt-finance-course/

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Commercial Real Estate and Debt FinanceContinued...

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Course Content

Risk and risk mitigation techniques; overview of developments in the Commercial Real Estate markets ■ Macroeconomic cycles…what can be learned

from past economic cycles? ■ Recent developments and issues arising from

the “credit crisis” ■ Key risks and mitigants in Commercial Real

Estate Financings

Exercise: Review of a commercial real estate financing to identify key credit risks and potential mitigants

Principles of Commercial Real Estate Valuation ■ Summary of Commercial Real Estate valua-

tion methods and how the different methods can influence value• Comparable buildings• Capitalisation of yields• Open Market Values• Discounted cashflow valuation methods

■ Occupational lease terms – examples from selected markets, and how this affects value

■ Yields in Commercial Real Estate Valuations• Initial yields• Reversionary yields• Equivalent yields

■ Development vs investment financings, and factors to consider in valuation assumptions

Exercise: Calculating and sensitising Commercial Real Estate Finance valuations using discounted cashflow techniques

Commercial Real Estate Companies and Investment vehicles ■ Typical types of Commercial Real Estate in-

vestment companies and their approach • Developers• Trading companies• Investment companies

■ Real Estate Investment Trusts (REIT) vs non REIT

■ Commercial Real Estate Funds ■ What are the key elements of a creditworthy

Commercial Real Estate company – principal elements in credit rating

Exercise: Review of key aspects of the financial statements of a Commercial Real Estate Company or REIT

Debt financing choices for Commercial Real Estate transactions and debt structuring issues

Financing choices ■ Private debt financing choices

• Development vs investment financings• Asset specific financing• Secured vs unsecured debt• Senior vs subordinated / mezzanine debt• Sale and leaseback transactions• Capital markets financings• Use of hybrid financings – convertible bonds

■ Commercial Mortgage Backed securitisations – review of a Commercial Mortgage Backed Securitisation

Case Study: participants review and sensitise a financial model with a view to developing an acceptable debt structure for a Commercial Real Estate project

Risk and return in Commercial Real Estate Finance – the equity investors’ perspective ■ Principles of evaluating investments – dis-

counted cashflow methods, NPV and IRR ■ Value creation – the development process;

active Real Estate management; financial market influences

■ Risk and return – Commercial Real Estate Finance vs other asset classes

■ Use of Equity vs. Subordinated Debt

Case Study: sensitising a financial model for a Commercial Real Estate project to illustrate the sensitivity of equity related returns to key assumptions

Debt structuring issues and risk mitigation techniques ■ Use of covenants and developing a covenant

package• Debt Service Coverage measures (interest

and debt service coverage)• Asset Coverage measures (Loan to Value

ratio and “top up” requirements)• Development vs. investment financings –

completion and cost overrun undertakings ■ Third party credit support

Case Study: participants review the key elements of a summarised Term Sheet


http://redcliffetraining.com/training/asset-management-courses/commercial-real-estate-debt-finance-course/

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Advanced Private Equity & Leveraged Buy-outsDate: 25-27 Jun 2018, 12-14 Nov 2018

Location: London Standard Price: £1,800 + VATMembership Price: £1,440 + VAT

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Course Overview


This programme provides participants with a comprehensive view of private equity, particularly the various types of buy-outs (e.g. LBOs, MBOS). The programme takes participants through all the major stages of the deal; from entry, through the operational phase to exit (liquidity events). In doing this the course provides insight into how the PE firm can add value to the process at each of the three major stages. To do this it approaches PE from the respective perspective of all the main protagonists; Private equity professionals, lenders and other providers of debt financing; the various professional advisers (lawyers, accountants in due diligence or audit), corporate finance advisors and management teams looking to enter or exit the market. It will also appeal to investors who may wish to invest directly (co-invest) or indirectly (via funds) in different parts of the debt or equity capital structure, such as pension funds, insurance companies, private family offices and corporates who are trying to understand the radically different business model of their PE competitors

Whilst simple in theory private equity, the highly competitive nature of the PE market means that adding value can no longer be achieved by leverage and reliance on rising markets. The course covers the three key stages of PE value creation. Stage 1; the acquisition, where it is vital to structure the transaction in the optimal fashion in terms of both the Offer to minimize risk. Disastrous mistakes can be made ab initio by failing to understand the main risk areas of the equity bridge (i.e. the value traps from enterprise value to equity value) or in the completion method (e.g. locked box rather than completion accounts). Developing the optimal capital structure is a critical as it is essential to use both the correct level of debt for and the most appropriate type of debt that will allow the company to achieve its business plan (e.g. organic growth or buy and build).

The second stage requires the PE firm to add value during the operational phase and here there is much the PE firm can do in terms focusing on operation improvements. These do not occur in a vacuum and require the best management team. Top quartile PE firms have large in-house teams to assist them in the process but smaller firms can achieve the same results through different “operating partner” models. In the current seller friendly environment, deal origination is another key point of differentiation between top quartile teams and the course reviews various ways of approaching this issue.

The third and final stage relates to liquidity events however PEs have the luxury in the current market of opting for soft as well as hard exits to generate value for LPs.

The programme adopts a pan-European approach to the topic but the presenter has experience of PE in other jurisdictions including, USA, Asia Pacific and Africa. Reference will be made to current trends and data in the markets across Europe.

Participants will be provided with numerous case studies to reinforce the various aspects and will also be provided with an LBO model which will be used to structure a transaction. Post the course participants will receive a number of other PE related models (e.g. how to calculate warrants and ratchets) as well as current review of debt trends in the debt market.

Day 1

Introduction to PE: The PE value creation model; PE fund structures

Introduction & background ■ Overview of the PE market

• Venture capital• PE / leveraged deals

■ The three stages of the deal• Entry, operations & exit

■ The traditional PE value creation model – the 3 key value drivers

■ Techniques for enhancing returns• Capital structure’s impact on value• Using soft exits recaps / refinancings • Equity bridges• Leveraging the fund

Structuring issues & structuring parameters ■ Structuring issues

• Taking security / collateral generally• Security contrasted: UK vs Europe vs USA• Financial assistance • Ranking & priority of senior vs junior debt

& pari passu loan/bond structures• Tax issues - group tax relief & thin cap• Squeeze-outs

■ Spectrum of financing instruments in LBOs - overview

■ Structuring parameters - creating an appro-priate financial structure (overview)• Percentage senior, junior and equity in debt

capital structure• EBITDA multiples• Target returns for PE & mezzanine funds

■ Deriving the funding structure• Funding uses


http://redcliffetraining.com/training/corporate-finance-training-courses/private-equity-training/


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Advanced Private Equity & Leveraged Buy-outsContinued

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• Funding sources

Structure and key terms and trends for PE funds ■ Review of typical (Luxco) fund structure ■ Key terms & conditions ■ Investment period (how long) ■ Preferred return (rate, calculation) ■ Carry (European vs US approach) ■ How PE fund structures optimise value ■ Hot topics for LPs & GPs

Generating and originating deal flow ■ Why proprietary origination matters ■ Deal sourcing strategies ■ What makes a good originator ■ What motivates intermediaries ■ What motivates target’s / sellers ■ How the “right type” of specialisation can

boost returns ■ Three ways to use networks ■ Identifying “exit signals” from various

sources ■ Why & how social media matters

Case Study: Calculating the entry and exit value, the funding sources, the basic approach to deriving the equity split between PE and management on entry and exit and introduction to estimating the correct capital structure

The Acquisition: adding value & reducing risk at entry

The acquisition - offer structure ■ Offer structure – cash free, debt free with

normalised working capital/net asset value etc

■ Risk matrix - analysis of the five key value drivers / areas for due diligence • Cash & trapped cash• Debt – what’s included?• Working capital (key to the deal?)• Capex• EBITDA (the good news & bad) • Establishing the run rate

■ Value matrix – techniques for mitigating the risks and identifying value

■ SPA structuring - Locked box vs Completion accounts• Pros & cons of each• How it can affect value• Risk in Locked box

Day 2

Case Study: Identifying problematic items in reconciling equity value to enterprise value and the correct approach to calculating the correct level of working capital

Adding value during the operational stage

Selecting the right investment - the 5 critical issues to sponsors ■ Portfolio fit

■ The business model ■ Management - what PEs approach ■ Approach to generating value/returns ■ Exits – hard vs. soft ■ How to avoid the value trap

Case Study: Calculate the exit value and discuss how structuring the PE equity can affect the returns of management

Adding value: operating partner models ■ The new value-creation model – 4 key areas ■ Operational improvements – 6 aspects ■ 7 Methods PE can add value via teaming up

with executives ■ The operating partner model (3 approaches) ■ The operating partner model in practice –

“typical” role

Liquidity events ■ Hard exits vs soft exits ■ Exit strategies – using dual or triple track to

enhance value ■ IPOs

• The key ingredients for IPO• What about the management – problem

areas ■ Sale of equity – partial vs complete sale

• Problem areas – trade vs secondary PE deals

■ Soft exits – a useful way of enhancing returns• Refinancings & recaps• Other ways of extracting value• Management and other fees

Case Study: Discuss the pros and cons of a dual/triple track exit strategy and the key issues to both the PE and management

Negotiating the deal with management team:

Key issues for Sponsors ■ Structuring the equity

• Structure - loans, preference shares• Typical returns

■ Structuring the payment waterfall• Isses for management• Differences in primary and secondary deals

■ Equity ratchets • Rationale, structure • Pros and cons of positive vs. negative,

stepped vs. linear

Key issues for Management ■ Multifaceted role and duties of management

• Issues vis-à-vis role as director, employee, shareholder, warrantor

■ Key documents & terms• Shareholders’ agreement vs articles/ stat-

ues (pros & cons) ■ Critical issues in the investment agreement

• Good vs. bad leaver• Management warranties• Equity – valuation issues pre exit (why “fair

value” is dangerous)




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Advanced Private Equity & Leveraged Buy-outsContinued

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• Transfer issues – drag, tag-along rights ■ Critical issues in the service agreement

• Restraints• Termination

Financing options for PEs

Introduction & overview of the funding spectrum ■ The spectrum of financing options for bor-

rowers ■ Review of typical debt structures in the mar-

ket for all deals sizes ■ Senior only ■ Senior/ junior structures ■ Pari loan bond structures ■ Loans vs Bonds – whats the difference

(maintenance vs incurrence covenants)

Senior loans: key facilities & issues ■ “Typical” terms ■ The main facilities ■ RCFs – why they matter & typical pitfalls ■ Capex facilities ■ Margin ratchets

Mezzanine key terms ■ Is there still a market for mezzanine ■ Pros and cons ■ Use an application ■ Rationale of warranted vs. warrant-less ■ “Typical” terms

Unitranche / direct lending financing ■ Review of the various market structures ■ “Typical” terms ■ Pros and cons ■ Use and application – where they work and

where they don’t

Second lien loans ■ “Typical” terms ■ Pros and cons ■ Use and application

PIK loans (making a comeback) ■ “Typical” terms ■ Why has the PIK market spring to life ■ Pros and cons for sponsors ■ Use and application

Day 3

High Yield Notes ■ Spectrum of instruments ■ Pros & cons of high yield and why they ap-

peal to borrowers ■ Use and application ■ Loans vs bonds compared

• Loans’ maintenance covenants vs Bonds’ Incurrence covenants

Case Study: Reviewing a capital structure and how different instruments can be used to optimise the capital structure, provide more head room and handle capex

Negotiating the optimum debt package - Lender’s vs Borrowers

Negoiating the debt package - The lender’s approach ■ The Lender’s approach to credit decision

• measuring debt capacity• security over assets• exit routes

■ Different types of lenders: Banks vs Alter-native lenders• Whats the difference• How and where it matters

■ Overview of loan documentation and impact on deal• Loan as a radar system• Typical structure• Key parties (obligors, borrowers and

guarantors)

Negoiating the debt package - The borrower’s approach ■ The four deal scenarios and the role of due

diligence ■ The key financial ratios / covenants

• Cash flow cover• Leverage• Interest cover• Capex

■ Selecting the appropriate covenant for the deal; borrowers v lenders• Do covenants really matter - if so how,

when & where ■ Step 1: How to identify the borrower’s ob-

jective ■ Step 2: Identifying the key requirements for

the borrower ■ Step 3: Deciding on which type of debt &

lender is most approriate• Loans v bonds

■ When and where to use junior debt ■ Step 4: Strategies for negotiating with lend-

ers ■ Step 5: Getting what you paid for ■ Inter-creditor issues – review of key issues





Course Content

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Course Overview


Advanced Private Equity & Leverage Buy-Outs: A 5-Day Master-ClassDate: 25-29 Jun 2018, 12-16 Nov 2018

Location: London Standard Price: £3,000 + VAT Membership Price:£2,400 + VAT

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Course Overview


This programme provides participants with a comprehensive view of private equity, particularly the various types of buy-outs (e.g. LBOs, MBOS). The programme takes participants through all the major stages of the deal; from entry, through the operational phase to exit (liquidity events). In doing this the course provides insight into how the PE firm can add value to the process at each of the three major stages. To do this it approaches PE from the respective perspective of all the main protagonists; Private equity professionals, lenders and other providers of debt financing; the various professional advisers (lawyers, accountants in due diligence or audit), corporate finance advisors and management teams looking to enter or exit the market. It will also appeal to investors who may wish to invest directly (co-invest) or indirectly (via funds) in different parts of the debt or equity capital structure, such as pension funds, insurance companies, private family offices and corporates who are trying to understand the radically different business model of their PE competitors

Whilst simple in theory private equity, the highly competitive nature of the PE market means that adding value can no longer be achieved by leverage and reliance on rising markets. The course covers the three key stages of PE value creation. Stage 1; the acquisition, where it is vital to structure the transaction in the optimal fashion in terms of both the Offer to minimize risk. Disastrous mistakes can be made ab initio by failing to understand the main risk areas of the equity bridge (i.e. the value traps from enterprise value to equity value) or in the completion method (e.g. locked box rather than completion accounts). Developing the optimal capital structure is a critical as it is essential to use both the correct level of debt for and the most appropriate type of debt that will allow the company to achieve its business plan (e.g. organic growth or buy and build).

The second stage requires the PE firm to add value during the operational phase and here there is much the PE firm can do in terms focusing on operation improvements. These do not occur in a vacuum and require the best management team. Top quartile PE firms have large in-house teams to assist them in the process but smaller firms can achieve the same results through different “operating partner” models. In the current seller friendly environment, deal origination is another key point of differentiation between top quartile teams and the course reviews various ways of approaching this issue.

The third and final stage relates to liquidity events however PEs have the luxury in the current market of opting for soft as well as hard exits to generate value for LPs.

The programme adopts a pan-European approach to the topic but the presenter has experience of PE in other jurisdictions including, USA, Asia Pacific and Africa. Reference will be made to current trends and data in the markets across Europe.

Participants will be provided with numerous case studies to reinforce the various aspects and will also be provided with an LBO model which will be used to structure a transaction. Post the course participants will receive a number of other PE related models (e.g. how to calculate warrants and ratchets) as well as current review of debt trends in the debt market.



Course Content

Course TitleDate:


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Course Overview


Advanced Private Equity & Leverage Buy-Outs: A 5-Day Master-Class

Continued BOOK NOW

Course Content

Day 1

Introduction to Private Equity: The PE value creation model; PE fund structuresIntroduction & background ■ Overview of the PE market

• Venture capital• PE / leveraged deals

■ The three stages of the deal• Entry, operations & exit

■ The traditional PE value creation model – the 3 key value drivers

■ Techniques for enhancing returns• Capital structure’s impact on value• Using soft exits recaps / refinancings • Equity bridges• Leveraging the fund

Structuring issues & structuring parameters ■ Structuring issues

• Taking security / collateral generally• Security contrasted: UK vs Europe vs

USA• Financial assistance • Ranking & priority of senior vs junior

debt & pari passu loan/bond structures• Tax issues - group tax relief & thin cap• Squeeze-outs

■ Spectrum of financing instruments in LBOs - overview

■ Structuring parameters - creating an ap-propriate financial structure (overview)• Percentage senior, junior and equity in

debt capital structure• EBITDA multiples• Target returns for Private Equity & mez-

zanine funds ■ Deriving the funding structure

• Funding uses • Funding sources

Structure and key terms and trends for Private Equity funds ■ Review of typical (Luxco) fund structure ■ Key terms & conditions ■ Investment period (how long) ■ Preferred return (rate, calculation) ■ Carry (European vs US approach) ■ How Private Equity fund structures optimise

value ■ Hot topics for LPs & GPs

Generating and originating deal flow ■ Why proprietary origination matters ■ Deal sourcing strategies ■ What makes a good originator ■ What motivates intermediaries ■ What motivates target’s / sellers ■ How the “right type” of specialisation

can boost returns ■ Three ways to use networks ■ Identifying “exit signals” from various

sources ■ Why & how social media matters

Case Study: Calculating the entry and exit value, the funding sources, the basic approach to deriving the equity split between PE and management on entry and exit and introduction to estimating the correct capital structure

The Acquisition: adding value & reducing risk at entry

The acquisition - offer structure ■ Offer structure – cash free, debt free with

normalised working capital/net asset value etc

■ Risk matrix - analysis of the five key value drivers / areas for due diligence • Cash & trapped cash• Debt – what’s included?• Working capital (key to the deal?)• Capex• EBITDA (the good news & bad) • Establishing the run rate

■ Value matrix – techniques for mitigating the risks and identifying value

■ SPA structuring - Locked box vs Comple-tion accounts• Pros & cons of each• How it can affect value• Risk in Locked box

Day 2

Case Study: Identifying problematic items in reconciling equity value to enterprise value and the correct approach to calculating the correct level of working capital

Adding value during the operational stage

Selecting the right investment - the 5 critical issues to sponsors ■ Portfolio fit ■ The business model ■ Management - what PEs approach ■ Approach to generating value/returns ■ Exits – hard vs. soft ■ How to avoid the value trap


Adding value: operating partner models



Course Content

Course TitleDate:


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Course Overview


Advanced Private Equity & Leverage Buy-Outs: A 5-Day Master-Class

Continued BOOK NOW

Course Content

■ The new value-creation model – 4 key areas ■ Operational improvements – 6 aspects ■ 7 Methods PE can add value via teaming up

with executives ■ The operating partner model (3 approaches) ■ The operating partner model in practice –

“typical” role

Liquidity events ■ Hard exits vs soft exits ■ Exit strategies – using dual or triple track to

enhance value ■ IPOs

• The key ingredients for IPO• What about the management – problem

areas ■ Sale of equity – partial vs complete sale

• Problem areas – trade vs secondary PE deals

■ Soft exits – a useful way of enhancing re-turns• Refinancings & recaps• Other ways of extracting value• Management and other fees

Case Study: Discuss the pros and cons of a dual/triple track exit strategy and the key issues to both the PE and management

Negotiating the deal with management team:

Key issues for Sponsors ■ Structuring the equity

• Structure - loans, preference shares• Typical returns

■ Structuring the payment waterfall• Isses for management• Differences in primary and secondary

deals ■ Equity ratchets

• Rationale, structure • Pros and cons of positive vs. negative,

stepped vs. linear

Key issues for Management ■ Multifaceted role and duties of management

• Issues vis-à-vis role as director, employ-ee, shareholder, warrantor

■ Key documents & terms• Shareholders’ agreement vs articles/ stat-

ues (pros & cons) ■ Critical issues in the investment agreement

• Good vs. bad leaver• Management warranties• Equity – valuation issues pre exit (why

“fair value” is dangerous)• Transfer issues – drag, tag-along rights

■ Critical issues in the service agreement• Restraints• Termination

Financing options for PEs

Introduction & overview of the funding spectrum ■ The spectrum of financing options for borrow-

ers ■ Review of typical debt structures in the mar-

ket for all deals sizes ■ Senior only ■ Senior/ junior structures ■ Pari loan bond structures ■ Loans vs Bonds – whats the difference (main-

tenance vs incurrence covenants)

Senior loans: key facilities & issues ■ “Typical” terms ■ The main facilities ■ RCFs – why they matter & typical pitfalls ■ Capex facilities ■ Margin ratchets

Mezzanine key terms ■ Is there still a market for mezzanine ■ Pros and cons ■ Use an application ■ Rationale of warranted vs. warrant-less ■ “Typical” terms

Unitranche / direct lending financing ■ Review of the various market structures ■ “Typical” terms ■ Pros and cons ■ Use and application – where they work and

where they don’t

Second lien loans ■ “Typical” terms ■ Pros and cons ■ Use and application

PIK loans (making a comeback) ■ “Typical” terms ■ Why has the PIK market spring to life ■ Pros and cons for sponsors ■ Use and application

Day 3

High Yield Notes ■ Spectrum of instruments ■ Pros & cons of high yield and why they appeal

to borrowers ■ Use and application ■ Loans vs bonds compared

• Loans’ maintenance covenants vs Bonds’ Incurrence covenants

Case Study: Reviewing a capital structure and how different instruments can be used to optimise the capital structure, provide more head room and handle capex



Course Content

Course TitleDate:


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Course Overview



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Course Content


Advanced Private Equity & Leverage Buy-


Course Content

Outs: A 5 day Masterclass

Negotiating the optimum debt package - Lender’s vs Borrowers

Negoiating the debt package - The lender’s approach ■ The Lender’s approach to credit decision

• measuring debt capacity• security over assets• exit routes

■ Different types of lenders: Banks vs Alter-native lenders• Whats the difference• How and where it matters

■ Overview of loan documentation and im-pact on deal• Loan as a radar system• Typical structure• Key parties (obligors, borrowers and

guarantors)

Negoiating the debt package - The borrower’s approach ■ The four deal scenarios and the role of due

diligence ■ The key financial ratios / covenants

• Cash flow cover• Leverage• Interest cover• Capex

■ Selecting the appropriate covenant for the deal; borrowers v lenders• Do covenants really matter - if so how,

when & where ■ Step 1: How to identify the borrower’s

objective ■ Step 2: Identifying the key requirements

for the borrower ■ Step 3: Deciding on which type of debt &

lender is most approriate• Loans v bonds• When and where to use junior debt

■ Step 4: Strategies for negotiating with lenders

■ Step 5: Getting what you paid for ■ Inter-creditor issues – review of key issues






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Course Content

Leveraged Loans in Private Equity and Corporate Transactions

Date: 04 Oct 2018

Location: London Standard Price: £695 +VAT Membership : £556 +VAT

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Course Overview

This programme focuses on club and syndicated leveraged loans provided to both corporate and PE borrowers (i.e. typically this covers loans > 2.0x Debt/EBITDA for most sectors). Loan markets have experienced significant changes over the last few years on a number of fronts; first, larger, syndicated and club deals have seen the importation of terms from the bond markets (e.g. grower baskets and cov-lite, cov-loose packages). Many of these larger deals have also imported N.Y. style language, which is more familiar to U.S. borrowers and lenders. At the same time direct/alternative lending had made significant inroads into the lending market bringing with them a more eclectic approach to lending (e.g. a preference for bullet, as opposed to amortising facilities).

Whilst there are subtle differences between the objectives of corporate and PE borrowers, both share a common objective of seeking to obtain the optimum terms, pricing and flexibility which will allow them to execute their strategic objectives. Clearly the larger deals, where borrowers have the option of accessing the high yield bond market, offer borrowers greater flexibility however smaller facilities have also benefitted from stiff competition from direct lenders (which reaches well below that threshold - in some cases 15 million) which has forced banks and other lenders to offer borrowers better terms and pricing (e.g. grower baskets have been seen in facilities below 30 million).

The topics aim to provide participants with an understanding of the trends and key issues affecting loan facilities in both club deals syndicated deals and also provides borrowers and lenders with a template of how to approach the negotiations. The programme is aimed at borrowers and lenders as well as lawyers, accountants, debt and corporate advisory and other professionals involved in these transactions. Whilst there are subtle differences between objectives of corporate borrowers on the one hand and PE borrowers on the other; there is a high degree of overlap across.

Overview of the market trends affecting corporates and PE borrowers ■ Bifurcation of the leverage loan market ■ Trends larger syndicated deals ■ Trends in club loans ■ Influence of high yield bond market

trends ■ Impact of New York style documentation ■ Corporates vs PE – what’s the difference

Key negotiating strategies – the Borrower’s view ■ Criteria for selecting the most appropriate

lender - Banks vs Direct lenders ■ Key differences in approach between

banks and direct lenders ■ Pros and cons of Banks vs Direct lenders ■ Some banks (and branches) are different ■ Can direct lending applicable for corpo-

rate borrowers? ■ Strategies for negotiating the key com-

mercial terms

■ How to approach the term sheet• Hard or soft terms?• Focus on everything or only a few “criti-

cal” issues ■ Do debt advisors offer value for money -

Getting the best from your advisors ■ What about the fees ■ A Checklist for borrowers

The Lender’s perspective ■ Beware Commitment letters – reflections

post Novus Aviation ■ The role of the information covenants – do

they really matter ■ If financial covenants don’t matter, what

does? ■ What to focus on in the collateral package ■ Problems with non-guarantor restricted sub-

sidiaries


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Course Content



Scope of the Loan ■ Concept and composition of the “Cove-

nant (Restricted) Group” ■ Matters affecting Material subsidiaries ■ Matters affecting Immaterial subsidiaries ■ Dormant subsidiaries – why they matter ■ Issues re Joint Ventures & Equity

Changes to the Lenders ■ Transferring a loan – methods, pros and

cons• Novation• Assignment – legal and equitable• Sub-participation

■ Ability to transfer - Consent vs Consulta-tion• Trends in the leveraged market• Why transferability is important for

lenders• Potential problems for borrowers

■ Restrictions on Transferability ■ White / approved lists vs disqualified

lenders

Voting thresholds ■ Key voting thresholds & why they matter ■ Different problems for PE and corporate

lenders ■ Different approaches in syndicated vs

club loans• Majority lenders• Unanimous consent• Super-Majority lenders – “typical”

scope & thresholds ■ Potential pitfalls for lenders ■ Impact of Yank the Bank ■ Role of Snooze & Lose ■ Treatment of Hedge counter-parties

A word about baskets – how and why they matter ■ Role and application of baskets in the

loan market ■ Types of baskets, structure use and ap-

plication• Grower baskets• Builder baskets• Scalable baskets

■ Reclassification and splitting between baskets

“Permitted” definitions – how & why they matter ■ Role and relevance of the “Permitted”

definitions ■ Synchronising the “Permitted” baskets ■ Permitted Acquisitions

• Typical carve-outs- hard vs soft bas-kets

• Additional restrictions

■ Permitted Financial Indebtedness / Security / Guarantees• Scope – Financial Indebtedness defined

(typical exclusions)• Incremental debt- scope and coverage• Accordion facilities

ӹTypical terms & conditions ӹPricing - MFN & sunset periods – what’s market

• General & other debt-related baskets ■ Permitted Payments - typical carve-outs

• What payments are permitted• Basket carve outs – amounts, caps, carry

forward/back• Subordinated debt, equity & equity substi-

tutes• Management/monitoring fees

■ Permitted Disposals• Scope & typical conditions

Debt Service ■ Differences between banks and direct lenders

to amortisation ■ Interest and default interest periods ■ Libor/Euribor floors ■ Original issue discount (OID) – use in the

deal, market trends ■ Margin and margin ratchets ■ Increased costs & gross up clauses

Specific issues for Revolving Credit Facilities (“RCFs”) ■ Clean-downs re RCFs ■ Cashless rollovers – why they matter ■ Problems with Headroom

Mandatory prepayments (Cash sweeps) ■ Excess Cashflow defined ■ Excess Cashflow – typical deductions ■ De minimis basket ■ Cash sweep – step downs (PE vs Corporate) ■ Use and Application of Retained Excess Cash

flow

Mandatory prepayments (Disposal proceeds) ■ What is a “Disposal” ■ Baskets to sale proceeds ■ Annual – individual deal amount ■ Annual basket carve-out ■ Excluded Disposal proceeds / Reinvested

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Other mandatory prepayments - overview ■ Acquisition Proceeds - overview

• What are “Acquisition Proceeds”• Excluded Acquisition proceeds

■ Insurance Proceeds• Excluded Insurance Proceeds• Basket – annual or per deal• Retention periods

■ Listing Proceeds & change of control

Covenants & Undertakings generally ■ Covenants generally – three categories ■ Information covenants

• Why and how they matters• Issues for lenders issues for borrowers• LMA v Market approach

■ General undertakings• Guarantor coverage – scope and issues

for borrowers• Core carve-outs for sponsors• Carve-outs for corporate borrowers

Financial covenants and Equity cures ■ The main covenants per the LMA & market

• Cash flow cover• Leverage• Interest cover• Capex limits• EBITDA limits (not LMA)• Springing covenants – use, application

and triggers• Other matters – starting headroom

■ Market trends• Number of covenants• Headroom

■ Equity cures• What do they apply to EBITDA, leverage,

cash flow?• Terms - How many, consecutive, over-

cures, application of the funds• Cures in practice

■ Covenant Suspension/ Loosening• Use and application• Typical triggers• Scope of covenants affected

Default and Events of Default ■ Default vs Event of Default ■ What are the key EoDs ■ Grace periods ■ Borrower-friendly exclusions ■ What about cross-default ■ MAC / MAE clause

• Do they still matter posy recent cases?• Different formulations – LMA vs market

(what is reasonable) ■ Problems with “Sanctions” clauses

• How to mitigate conflict between U.S. and EU regulations




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Debt FinanceIn-House or via Live Webinar

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With over 30 years’ experience in both the training field and in finance, the trainer is regarded as a leading edge trainer in numerous areas. He specializes in Derivatives, Capital Markets, Risk Management, Structured Finance and Treasury Products. He has delivered programs in every major financial center to both buy-side and sell-side firms at all levels.

For more than three decades, the trainer has held various positions in several commercial and international investment banks. Key roles have included positions as Head of Institutional & Corporate Sales as well as being the Head of the Private Client Investment Desk.

He is The Chief Examiner for The Chartered Institute for Securities and Investments Bond and Fixed Income Examination.

This programme has been designed to provide a thorough review of debt financing principles, markets and products. We will use real life case study examples to illustrate the financing techniques and products throughout the programme.

Participants will require laptops with MS Excel for the exercises and case studies.

The broad objectives of the programme are: ■ To provide a complete review of debt financing theory and debt products ■ To identify funding requirements both short and long term ■ To explain asset based financing ■ To explain the real world use of debt financing techniques using current examples ■ To explain yield curves, debt pricing in the primary and secondary markets ■ To explain measures for risk management in debt instruments including interest rate and credit

spread sensitivity (duration and convexity) ■ To demonstrate how interest rate and foreign exchange risk can be managed using derivatives ■ To explain the world of securitisation post 2009

Course Content

Day One:The objective of Day-1 is to ensure that participants understand why and how companies borrow money, the effect that borrowing money has on the financial statement of the company and the role that the bank plays in the process. It also covers sources of finance, products used and investors together with their objectives and expectations.

This module introduces participants to customer funding needs, why they arise and their nature. ■ Principles of debt finance

• Linking finance and corporate strategy• Cost of capital and risk• Theory of optimal capital structure

■ Start-up capital• How to calculate the amount

• Where to get it ■ Working capital

• Banks• Peer to peer lenders

■ Debt versus equity• Advantages and disadvantages• Relative costs

■ Cash flow forecasting ■ Long and short term financing

Case study: Writing the first year’s business plan and cash flow statement.

Module 2 explores the instruments that are available to raise finance and will provide recent examples of products. The following products will be explained: ■ Fixed and Floating Rate Bonds

• How to choose between fixed and floating

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rate• The bond and swap concept• Raising finance in a third currency and

swapping into a desired currency ■ Convertible Bonds

• Types of convertible ӹConventional ӹMandatory

• Advantages for issuers and investors• Pricing a convertible bond• How convertible bonds exist after issue• Asset swaps• The call component

■ Commercial Paper• Commercial paper programmes• The dealer panel• Pricing, investing and liquidity

■ Project Finance• an overview of project financing. • a typical project finance structure • the parties and their objectives • the key issues for lenders

■ Bank Loans• The typical bank loan• Security and covenants• Maturity and spreads

■ Syndicated Loans• What are syndicated loans?• How are they structured and sold?• Who invests in syndicated loans?• The advantages of syndication versus

self-negotiated loans ■ Private Placements

• What are private placements?• Who invests in private placements and

why?• How are private placements structured

and sold? ■ The Repo Market

• The government bond repo market• The corporate bond repo market• Classic repo• Central clearing, collateral, haircuts and

mark to market• Why use repo and reverse repo?

Case study: Issuing a corporate bond

■ In this exercise delegates will undertake the roles of the participants in a corporate bond syndication and will:• Liaise with investors to obtain orders• Place orders into the selling syndicate• Create and manage the “book of inter-

est”• Calculate the allocation and pricing for

book building

• Allocate the bonds and calculate the cost of funds for the issuer

Day Two:The objective of Day-2 is to ensure that participants understand yield curves and how to interpret them. Once participants are familiar with yield curves they will learn how to manage currency and interest rate risk. Finally, participants will learn about securitised products.

■ Yield curve construction• The government bench mark curve• The forward curve and the likely path of

rates in future ■ The likely cost of money for the borrower for

new bond issues ■ How credit spreads are set

• Loss given default• Expected default probability• Implied default probability

■ How to decide whether to issue a fixed cou-pon bond or an FRN• Your view of expected future interest rates

compared to the forward curve ■ Pricing a bond in the secondary market

• Which interest rate to use• Which credit spread to use• Building a discount factor• Cash flow mapping and discounting future

cash flows

Case study: Understanding yield curves, forward rates and credit spreads and pricing a corporate bond

■ Government bond risk management ■ Macaulay and Modified duration

• Definition and understanding• Applications• DV01 the key to trading, hedging and risk

management ■ Maturity ladders and portfolio management ■ How banks and portfolio managers run their

portfolios ■ Convexity

• Calculating• Applications

■ The complete view of risk• Maturity ladders• Duration and convexity• DV01

Exercise – Budgeting interest rate risk in a company

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Debt FinanceContinued...

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■ Basic hedging tools for currency and inter-est rate risk management• Interest rate swaps• 90 day LIBOR Futures• Swaptions• FX Outright Forwards• FX Options• Currency Swaps

■ Types of exposure• Interest rate risk • Currency risk

ӹTransaction ӹTranslation ӹEconomic

Examples of how to hedge each type of risk using derivatives

Case study: hedging interest rate and FX transaction exposure using derivatives

Asset Securitisation ■ Structure of a typical securitisation deal

• The Asset pool

• The Special purpose vehicle• The Capital Structure

■ Types of securitisation• Residential mortgage backed securities• Auto loans• Credit card receivables• Collateralised loan obligations• Covered bonds

■ Structure properties• Weighted average ratings factors (WARF)• Historical default probabilities and receiv-

able arears• Credit enhancements and subordination

pre and post crisis• Portfolio returns

■ Funded and synthetic structures• Advantages and disadvantages

Case study: Building a collateralised loan obligation.

Participants will be provided with a pool of available assets and will be asked to build a CLO, calculate the WARF, build the capital structure, price the notes and calculate the expected return on first loss piece

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Real Estate Finance for Commercial Lenders – Investment Lending

In-House or via Live Webinar

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Course Overview

This course is a thorough review of the key factors which need to be considered by lenders when funding residential and commercial investments. It considers the key issues using a variety of relevant examples and case studies to bring the session to life and ensure it is firmly rooted in real World issues.

It covers a variety of technical considerations designed to boost the knowledge of existing practitioners and sets out the key cashflow and capital value risks. It also sets out the appropriate mitigants lenders need to consider. It is appropriate for anyone working with SME and mid-corporate residential or commercial investment customers/risk.

Learning Objectives: ■ Participants will explore the key issues facing investors and how they impact on the lender. ■ They will consider the technical issues which can impact investment performance and value -

with specific reference to key commercial investment issues and terms. The programme will also consider the role of due diligence and specifically the drivers of commercial investment valuation methodologies

■ Delegates will also learn about the key areas of risk for the Bank and consider how they can be mitigated by effective lending policies and practices.

Course Methodology:Classroom style delivery with maximum use made of relevant mid-market UK based case studies and exercises. Highly interactive programme with delegate participation and questioning strongly encouraged and featuring throughout. The classroom session will also be boosted by a short amount of pre-course reading to provide background information and ensure all delegates have a consistent minimum level of awareness and knowledge prior to the session.

Target Audience:This course is aimed at real estate finance lenders working with UK SME and mid-market real estate customers. The course is suitable for both Credit and relationship management staff. Some existing knowledge of the sector is desirable but not necessary, as the pre-course reading element will ensure a minimum common platform of core knowledge.

The course will initially consider a series of introductory issues which are relevant to the investor and so impact Bank support for investment deals:

■ Why do people invest in property:• Alternative investment classes and op-

tions. How does property stack up rela-tive to the other options?

• Classes of investors – Corporates, profes-sional investors and amateur / buy to let landlords

• Why is gearing so important to investor returns?

■ What factors need to be considered:• Tenure• Lease terms (including term, breaks, rent

reviews, insurance, Tenant Act, forfei-

ture, sub-letting and alteration)• Costs:

ӹGross to Net income ӹCapital expenditure ӹVoid holding costs ӹPurchaser costs including Stamp Duty Land Tax

■ What makes a good investment Asset (by asset class):• Offices:

ӹLocation and physical prominence ӹFloorplate and specification ӹTransport and occupier demand ӹFlexibility

• Industrial: ӹTransport, local access and location ӹYard and building specifications ӹSecurity


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ӹLocal labour and population pool• High Street and Shopping Centre Retail:

ӹFoot flow and prime location ӹAnchor tenants ӹFrontage and building shape ӹ Importance of leisure and food and beverage offering

• Retail Warehouses and Out of Town Retail: ӹTransport, parking and congestion management ӹFlexible units with appropriate planning use consents ӹCatchment area and competition ӹScale

• Residential: ӹAddress prominence and kerb appeal ӹDiffering needs of different occupier groups – transport links, retail and leisure access or local schools ӹParking and services provided ӹWhat other factors do investors need to consider:

• Growth prospects – impact of economic performance and market trends (e.g. trend to greater on-line retailing or rise in young professionals renting)

• Capex spend and EPCs• Opportunities to add value• Occupier demand characteristics• Investor demand characteristics

■ Property Returns:• Income and cashflow:

ӹ Income and costs ӹDemand ӹVoids ӹSustainability ӹCapex/maintenance requirements ӹLease terms

• Capital growth: ӹNet income ӹ Investor demand

Valuation Methodologies – we will then examine the importance of valuations to investment assets and the key approaches valuers use. We will consider how they can impact on investment performance and Bank risk

■ RICS Valuation Standards – the Red Book • Definition of “market value” and “mar-

ket rent”• Measurement rules• Special Assumptions• Valuation approaches and the level of

due diligence undertaken ■ Valuation Methods:

• Direct Capital Comparison: ӹRelevance ӹselection

• Investment Method:

ӹAll risk yield ӹFactors to be considered

• Discounted Cashflow method: ӹPrinciple of time value of money ӹWhen used and the selection of a discount factor

• Residual Appraisal: ӹWhen used to value development opportu-nities ӹMethodology and selection of developer profit

• Vacant Possession values: ӹWhen they are used ӹWhat assumptions need to be made

■ Impact of specific events on valuations:• Valuation of a rack rented property• Impact of over-renting (eg due to the im-

pact of an RPI leases)• Approaching lease breaks and short leases• Tenant defaults

Exercises: This session is facilitated using a series of short exercises and discussions to draw out the key issues. Working in small teams and presenting and discussing issues features throughout

The Lending Banker’s Perspective - we will explore the key Bank response and strategy to both residential and commercial investment lending, using a three step approach:

The Customer: ■ Strategy and Skills:

• What is their motivation and are they com-mitted full time?

• What experience do they have? How rele-vant is it – location, asset class. Have they had “through the cycle” experience?

• What is the range of skills for larger teams – are they complimentary?

• Is there any previous experience on the same scale and level of complexity?

• What if any professional qualifications/expe-rience do they have

• What professional support do they have available?

• How strong are their rent collection and as-set management skills – especially for large resi investment portfolios?

■ Cashflow:• How strong is their cashflow – can they

cover any voids, undertake any capex which may be required?

• Whose cash is it – the management or ex-ternal/3rd party investors and why does this make a difference

• What other assets do they have available – if there were to be a problem could they inject more cash. Are assets easily liquidat-ed to create cash if needed?

• Are there any living expenses/management





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charges to be deducted from the cash-flow?

The Asset: ■ Cashflow and Rental Issues:

• Location and suitability for target market• Demand in local market and forecast

changes to demand and demographics• Lease terms and Re-let risks for commer-

cial investment assets: ӹLease length ӹWAULT ӹTenant strength ӹLease breaks ӹRent Reviews ӹLease Terms

■ Costs for both residential and commercial assets – why the “real” costs should be as-certained wherever possible

The Structure: ■ Borrower Issues:

• Who is the borrower – is it a sole trader, partnership, Corporate entity or simple SPV and what are the implications for the Bank?

• Is a guarantee appropriate? ■ Structure of Bank Support:

• Should we lend against capital values or cashflows?

• Differences between residential and com-mercial investment loans

• Suitable support levels and the key con-siderations

■ Due Diligence:• Valuation due diligence • Legal due diligence including the report

on title ■ Capital Values

• Impact of yield movements• Impact of cashflow changes

■ Documentation and Security:• Key clauses included within bank facility

agreements and mortgage documentation• The key investment covenants and difficul-

ty in setting a traditional net rent covenant in a low interest rate environment

• Mortgages, debentures and guarantees• Actions available (and sensible) on default

or breach ■ Structure and Repayment:

• Tenor• Cashflow and structuring assumptions

– use of an appropriate Excel model to monitor cash

• Interest rate protection – fixed rate or hedge

• What constitutes a viable Plan B?

Case Study: This course is closed using two real-life case studies. One is a residential investment scheme and the other a multi-let commercial investment scheme.

Delegates are invited to consider the key risks and their response to them. They are asked to consider the appropriate basis of Bank support and the structure which should be used to manage and control the Bank’s risk. They should provide a clear recommendation and basis of support





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Real Estate Finance for Commercial Lenders – Residential Development


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Course Overview

This course is a thorough review of the key factors which need to be considered by lenders when funding residential development. It covers all phases from initial design and grant of planning permission, through pre-drawdown controls and due diligence, the construction and monitoring phase, through to practical completion and sale.

It covers a variety of technical considerations designed to boost the knowledge of existing practitioners and sets out the key risks and appropriate mitigants lenders need to consider. It is appropriate for anyone working with SME and mid-corporate residential development customers/risk

Learning Objectives: ■ Participants will explore the key issues facing residential developers and how they impact on the

lender. ■ They will consider the technical issues which can arise during the construction phase, and the

due diligence the Bank would undertake to help mitigate them ■ Delegates will also learn about the key areas of risk for the Bank: - construction risk, sales risk,

customer risk, cashflow risk and documentation risk and explore how they can all be mitigated by effective lending policies and procedures.

Course Methodology:Classroom style delivery with maximum use made of relevant mid-market UK based case studies and exercises. Highly interactive programme with delegate participation and questioning strongly encouraged and featuring throughout. The classroom session will also be boosted by a short amount of pre-course reading to provide background information and ensure all delegates have a consistent minimum level of awareness and knowledge prior to the session.

Target Audience:This course is aimed at real estate finance lenders working with UK SME and mid-market real estate customers. The course is suitable for both Credit and relationship management staff. Some existing knowledge of the sector is desirable but not necessary, as the pre-course reading element will ensure a minimum common platform of core knowledge.

The pre-Construction Phase ■ Planning and design

• The difference between outline and full planning permission

• Planning conditions and reserved matters• Bats, newts and Romans• Judicial review process• S106 and the Community Infrastructure

Levy ■ Site issues:

• Flood risk• Environmental Contamination• Rights of Light• Party Walls• Access issues and ransom strips

■ Procurement and Construction:• The development appraisal• Costings and contingencies – why fixed

cost contracts are desirable but hard to really achieve

• Procurement methodology – self-build or third party construction management (in-cluding project manager, traditional build, or design and build)

• Construction tendering and contractor selection

The Construction and Monitoring Phase ■ Time and cost overruns

• How they typically arise• Borrower or contractor responsibility:

ӹChanges in specification ӹWeather delays ӹSite problems

• Build cashflows• Contractor failure• Liquidated damages clauses• Practical completion

The Sales Phase ■ Pre-sales or sales off-plan ■ Identification of the end buyer/market in the

early design phases


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Real Estate Finance for Commercial Lenders – Residential Development

■ Effective marketing strategies ■ What happens if sales are delayed? ■ What contingency options are normally ap-

propriate?

Case Study: The above sessions will be facilitated using a real-life UK case study. It will take the delegates through each of the key stages of a scheme and allow them to explore the issues in each phase and consider the impact on the borrower (and the Bank). It will consider what options and remedies may be available in each circumstance and discuss the customer options and the Bank’s stance.

The Lending Banker’s Perspective:Drawing on the first case study exercise we will explore the key Bank approach to residential development lending, using a three step approach:

The Customer: ■ Strategy and Skills:

• What is their motivation and are they committed full time?

• What experience do they have? How rel-evant is it – location, asset class. Have they had “through the cycle” experience?

• What is the range of skills for larger teams – are they complimentary?

• Is any previous experience on the same scale and level of complexity?

• What if any professional qualifications/experience do they have

• What professional support do they have available?

■ Cashflow:• How strong is their cashflow – is all cash

invested up-front ahead of the Bank?• Whose cash is it – the management or

external/3rd party investors and why does this make a difference

• What assets do they have available – if there were to be a problem could they inject more cash. Are assets easily liqui-dated to create cash if needed

• Is some of their contribution really just “quasi” contribution eg from a planning gain uplift in land values?

• Are there any living expenses/project charges to be deducted from the cash-flow?

The Asset: ■ Demand and Sales Issues:

• Location and suitability for target market• Size of units and liquidity / demand in

local market• Scale of development and absorbability• Marketing

■ Construction Issues:• Summary of Bank responses to the risks

identified in the first session, specifically:• The role of the Independent Monitoring

Surveyor (IMS)• The initial IMS report• Drawdown monitoring and WIP valuation

issues• The role of the RM site visit• Managing cost overruns

The Structure: ■ Borrower Issues:

• Who is the borrower – is it a sole trader, partnership, Corporate entity or simple SPV and what are the implications for the Bank?

• Is a guarantee (either for cost overruns or to tie in the management) appropriate?

■ Due Diligence:• Valuation due diligence including residual

land valuation methodologies and use of relevant comparables

• Legal due diligence including the report on title

• Monthly IMS reporting ■ Documentation:

• Key clauses included within bank facility agreements and mortgage documentation

• The key development covenants• Actions available (and sensible) on default

or breach ■ Security:

• Legal mortgages (and/or debenture)• Use and purpose of collateral warranties

■ Structure and Repayment:• Tenor• Cashflow and monitoring controls• Land loans and why they are much more

risky• Overdrafts and why they should not feature• Handling time extensions

■ Formulating a “Plan B” ■ What happens if things go wrong ■ What should the Bank response be? ■ What sensitivities are appropriate ■ What is the normal contingency option for the

Bank

Exercises: This session is facilitated using a series of short exercises and discussions to draw out the key issues and identify why they impose a risk on the Bank and what can be done to help mitigate them

Case Study: This course is closed using a real-life case study of a residential development deal of the type regularly seen by UK banks. Delegates are invited to consider the key risks and their response to them. They are asked to consider the appropriate basis of Bank support and the structure which should be used to manage and control the Bank’s risk. They should provide a clear recommendation and basis of support



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Aircraft Financing: Leasing & Financial Evaluation


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Course Overview

The course is designed to support middle and senior-level employees dealing with financial models from different sources, to enable them to assess risk, profile debt and sensitise modelled data for use in aircraft finance evaluations.

Aims

The principal aim of the course is enable participants to assess the cash flow profile, returns and risks in a financing proposal, and use these skills to support credit approvals and reviews. This will be done by reviewing the principles behind the buy vs lease decision, and using tools to highlight areas of risk and to perform sensitivity analysis.

Methodology

The learning methods used are a combination of the didactic and practical; the principles will be discussed with the aid of examples and new learning cemented effectively through practical exercises. Suggested solutions to each exercise will be provided and discussed, and participants will be encouraged to review their work independently. As the time available is very limited, each section will not be covered in depth, but supporting materials will be available for further in-depth learning and post-training refreshing. Participants will require a laptop with a USB port.

Session 1 - Introduction & Course Objectives ■ Brief review of finance models and their

objectives

Session 2 – Brief Revision of Financial Mathematics ■ Principles of time value of money ■ Opportunity cost ■ NPV & IRR ■ Use of residual values ■ Tax effects

Exercise – from a given set of cash flows, calculate NPV, IRR; then add the effect of a residual value and a given tax rate

Session 3– The Lease vs Buy Decision ■ Building up the cost of finance ■ Calculating cash flows ■ Tax–deductibility of payments ■ Capital allowances for taxation ■ Modelling applying financial maths to ob-

tain comparable results

Exercise – from a given set of criteria, perform a lease vs buy analysis

Session 4 – Maintenance Reserve

Accounts ■ Principle underlying concept of MRAs ■ Modeling MRAs ■ Timing of payments

Exercise – from the previous calculations, add an MRA into the calculation and re-calculate the results

Session 5 – Advantages of Lease vs Buy ■ Cash flow ■ Tax issues ■ Certainty of cost ■ Weak vs strong balance sheets ■ Alternative investments ■ Strategic reasons

Session 6 – Evaluation of Proposals ■ Sensitivity analysis ■ Structuring of model & tools to enable easier

analysis ■ Cash available for debt service and free cash

flow ■ Debt service coverage reserve ratios

(“DSCR”) ■ Interest cover ratios ■ Exposure vs value calculations

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Exercise – from a pair of given cash flows and debt profiles, calculate the above and contrast the two deals Session 7 – Leveraged Leasing ■ Use of debt and 3rd-party participation ■ Transfer of capital allowances to 3rd parties

Example

Session 8 – Risk Profiling ■ Identifying critical risks ■ Using probabilities ■ Quantifying risk ■ Calculating weighted average risk values ■ Example of risk model ■ Statistical techniques – eg Monte Carlo

analysis

Exercise – from previous exercises, perform a risk analysis using the above format

Session 9 - Wrap-Up ■ Overall review ■ Key points to re-iterate ■ Final questions and issues to discuss

Objective


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Debt Finance for SMEs


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Course Overview

SME’s are a challenging sector for banks especially in the present climate and usually fall outside the radar of most corporate finance specialists.

These businesses are usually undercapitalised, lack security, have a limited track record and are normally heavily reliant on external providers for working capital. A major criticism of the banking sector globally is that banks have all but closed their lending books to this sector despite protestations to the contrary.

This course considers the risks, challenges and difficulties encountered in dealing with the SME’s and tries to persuade delegates that it is not quite the terrifyingly risky sector that at first glance it seems to be.

Learning Objectives

Explain the importance, structure and composition of this sector to corporate finance professionals by: ■ Defining the basic rules and how to communicate and deal effectively in lending to small and

medium enterprises ■ Listing the different principles for financing small and medium enterprise ■ Assessing SME creditworthiness ■ Applying funding mechanisms for small and medium enterprises ■ Identifying risks associated with lending small and medium enterprises ■ The use of non-financial analysis to consider the future prospects of an SME business ■ The identification of factors which will be critical to success.

Knowledge Pre-requisites

This course assumes at least a basic understanding of banking lending, including financial and non-financial analysis.

Introduction – What is an SME and What are the Challenges? ■ Definition ■ Shortage of capital and liquidity ■ Shortage of skilled manpower ■ Quality control problems ■ Lack of entrepreneurial expertise ■ Shortage / irregular availability of financing

facilities and/or equity sources ■ Inability to meet credit criteria / credit con-

ditions ■ Inadequate bargaining skills / options ■ Lengthy documentation procedure ■ Helping the SME to succeed

Case Study/Exercise

Why Do Banks Lend to SME’s ■ Diversification of the loan portfolio ■ Boosting the industrialization process ■ Reducing unemployment ■ Growth of the export sector ■ Improving the balance of payment situation ■ Low loan loss ratio on SME bank deposits /

banking servicesCase Study/Exercise

How Do They Lend ■ Overdrafts, loans and term loans ■ Asset Finance ■ Leasing ■ Trade finance ■ Guarantees & Indemnities ■ Sole Traders ■ Partnerships

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■ Limited Companies ■ Stakeholder guarantees almost mandatory ■ Risk Appetite in practice

Case Study/Exercise

Preferred Sectors for SME Financing ■ Export oriented goods and services estab-

lishments. ■ Largely using indigenous technology and

resources. ■ Choices of sub-sectors within each industry. ■ Up stream/ down stream ■ Serving to medium / larger ■ Cottage / heritage industry.

Case Study/Exercise

Financial Evaluation of the SME ■ Is there a plan ■ Importance of financial Statements ■ Balance Sheets ■ Profit and Loss Accounts ■ Cash flow Forecasts-Assumptions and Sen-

sitivities ■ Off balance Sheet Assets ■ Risk and Mitigants ■ Project Appraisal – NPV, Payback

Case Study/Exercise

Financing Considerations ■ Assessing the quality of SME financing pro-

posals ■ Quality of ownership of prospective borrow-

ing entities ■ Key financial ratios, market competition,

size, scope & potential of product line ■ Security collateral coverage, importance of

personal guarantees ■ Lending guidelines, prudential regulations

Case Study/Exercise

Ratio Analysis For SME’s ■ Minimum requirements ■ Importance of Financial Analysis ■ Trend Analysis ■ Key Performance Indicators ■ Financial Strength ■ Liquidity ■ Serviceability ■ Working Capital Management & Asset Per-

formanceCase Study/Exercise

Non-Financial Analysis of the SME

Business Plan ■ The need for both Financial and non-finan-

cial analysis ■ Real Business issues for SME’s ■ Value Stream for SME’s ■ Identification of critical success Factors ■ Identification of Key Performance Indica-

tors ■ Credibility of Business Plans ■ Credibility of Management

Case Study/Exercise

SME – Lending Challenges ■ Relatively informal structure and organiza-

tion of SMEs ■ General lack of financial and managerial

expertise ■ Poor record keeping and planning on the

part of their owners ■ Danger / problem signs / signals, ■ Problem solving / trouble shooting ■ Cautions & protections

Case Study/Exercise

The Role of Specialised Institutions ■ Government Agencies ■ International Agencies ■ Provincial And/or Regional development

agencies ■ Subsidies ■ Support programmes including guarantees ■ NGO’s

Case Study/Exercise

Why Bother? ■ The importance of SMES ■ SME numbers ■ The Future ■ Picking today’s winners ■ Economic & Strategic Considerations

Case Study/Exercise


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Course Content

Debt Restructuring: For Lawyers


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Course Overview

In an increasingly volatile and uncertain business climate, the need for successful debt restructuring has become a recurring issue for financiers, during the second decade of the 21st Century. Protecting the ongoing financial exposure of bankers and financiers, is itself a central theme of the successful restructuring of problem loans and the help that lawyers bring to bankers in structuring and drafting the correct legal documentation for the restructuring process, is therefore a key element of the success of debt restructuring programme.

This course has been designed for legal experts who provide legal advisory services to bankers and other financiers with a specific emphasis on the restructuring of problem loans. During the day’s programme the delegates will review the various different types of restructuring that are currently used in the UK, European and International markets.

The attendees will be separated into project teams and through a series of interactive workshops will apply the theory of debt restructuring covered over the day’s training, to solve case study problems. The programme will culminate in the preparation and presentation of the key legal aspects of a restructured case study. As the course will only last one day the delegates will be required to review and prepare pre course work which will be applied during the course, particularly during the last session.

The course will be delivered by a debt restructuring banking expert and will provide the attendees an overview of problem loan resolution from the prospective of the financier. This will allow the attendees to improve their understanding of the aims of their banking clients in debt restructuring and therefore to improve their ability to properly satisfy their clients’ needs.

By the end of this course participants will understand: ■ The principal aims and challenges faced in financing problem loans ■ Understand the key methods that can be applied to successfully restructured debt facili-

ties ■ Review international methods of debt restructuring ■ Understand the different key legal drivers that can be applied to debt restructuring and

debt recovery in the UK and the EU. ■ Alternative debt restructuring methods currently applied in business ■ An organised framework for effective debt restructuring ■ The application of different contracts and agreements between parties participating in the

restructuring process. ■ The role and requirement of an independent business review as part of the restructuring

process. ■ Key aspects of the loan documentation including the role and importance of security and

guarantees.

Session 1Overview of Debt Restructuring – principal drivers for a successful restructuring process ■ Non-performing loans and the challenges

faced by bankers ■ Review of common reasons for company

default and the creation of non performing loans

■ The aims of the banker in corporate recov-

ery and restructuring ■ Differences in corporate recovery and debt

restructuring ■ Debt restructuring versus debt rescheduling ■ Understanding the personal behaviour of

defaulting clients ■ International guidance on dealing with dif-

ferent types of problem loan. ■ Different types of restructuring methods

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Case study – Analysis of different cases of problem loans and restructuring case studies – Ineos, Pizza Inn

Session 2Insolvency and Restructuring regulation ■ Administration ■ Receivership ■ Liquidation ■ Automatic stay in administration ■ Different rescue procedures ■ Cram down of creditors ■ Position and rights of management ■ Personal liability of directors ■ Ranking and claims of creditors ■ Time limits of filing claims ■ Comparison of Insolvency regulation in the

United Kingdom, the European Union and the USA.

Case study – The participants will analyse the case study of an international problem loan and its resolution through international courts.

Session 3The applied debt restructuring process – how to avoid extend and pretend ■ International advice on developing the

required restructuring process ■ Deciding whether to leave the borrower in

collateral possession ■ Application of the Butler Matrix ■ The IFC framework for problem loan reso-

lution ■ Introduction to Standstill Agreements ■ The need for and negotiating the Standstill

Agreement ■ Fairness and equality ■ The position of directors under Standstill

Agreements ■ Cooperation between creditors ■ Majority decision making under the Stand-

still ■ Use and application of Steering Commit-

tees

Case study – Application of the Butler and IFC frameworks. and the negotiation of Standstill Agreements referring to an international case study.

Session 4Security and negotiation - the restructuring process ■ The independent business review and its

importance in debt restructuring

■ Company Voluntary Agreements ■ Pre-packs and White Knights ■ Mediation and the London Approach ■ Restructuring documentation checklist ■ Frequently found problems with legal docu-

mentation ■ Structuring the restructured loan security ■ Security checklist ■ Other liabilities checklist ■ Notice letters and use ■ Guarantees, completion agreements and

comfort letters ■ Loan document issues checklist ■ Insurance policies checklist ■ Waivers checklist ■ Covenants checklist ■ Absolute priority rule

Final Case study – The delegates will use a UK based corporate case study that was provided for pre course reading to prepare the principal terms and conditions of the restructuring loan documentation. Delegates in their project teams will present their recommendations to the rest of the group.

What our clients are saying about the course

“A very clear and ongoing explanation provided by the presenter”

“A lot of practical information, details and interesting cases”

“The presentation and explanation are very good, the subject matter is covered

as hoped and very good”


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Course Content

Emerging Market Debt Analysis


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Course Overview

Sales of emerging market debt in hard currencies such as US dollars and euros are expected to reach more than $125 billion in 2016.

The demand for these bonds has been driven by the search for yield by asset managers in an environment of low interest rates. Emerging markets have been historically volatile in terms of performance and the market could change rapidly. The essential ingredients for understanding the risk of these investments concerns country risk analysis, interest rate risk and currency risk.

This programme will equip you with the tools to understand the risks of investing in emerging market debt and the consequences when problems arise and the debt is restructured. We will use examples of various emerging market countries to illustrate the risks and bring the topic to life.

History of emerging market debt and what we can learn ■ Current state of the market; issuance and

yields ■ Attraction of the market for fixed income

investors• Relative yield strategies

■ Macro-economic slowdown effects ■ Financial and other shocks to the system ■ Balance of payment problems ■ Rising government debt problems ■ The role of the IMF and other agencies ■ Examples from history; Mexican peso cri-

sis, Thai baht, Argentina before and now ■ China slowdown and impact

Macro-economics – back to basics to understand the risks ■ Circular flow of income ■ Public and private sector debt ■ Government policy impact ■ Monetary policy and the role of the central

bank ■ Role of the commercial banking sector ■ Different foreign exchange regimes ■ Purchasing power parity theory and current

evidence ■ Effect of globalisation of financial markets ■ Key credit risk indicators in emerging econ-

omies

Government policy ■ Fiscal policy and budgetary flexibility ■ Sustainable debt and debt service level ■ Contingent risks: pension and health care,

infrastructure ■ Balance of payments ■ Export and import composition and trends ■ Net external debt burden to GDP and cur-

rent account receipts ■ Central bank reserves and liquidity ratio ■ Savings and investment, capital flows ■ Business environment, trade and economic

diversity and stability ■ Political risk ■ International trade and political links ■ Governance and legal system

• Creditor rights

The rating agency approach to emerging market debt risk assessment ■ Rating distribution of emerging market

debt ■ Rating agency model approach ■ Capacity and willingness to service debt ■ FX convertibility risk

• US dollar risk versus local currency issu-ance

■ Maturity risk ■ Country rating ceilings ■ CDS, bond and equity indicators

Sovereign default and restructuring solutions ■ What constitutes a default? ■ Default and restructuring events, dis-

tressed debt exchanges ■ Paris club approach, IMF sponsored solu-

tions ■ Export credit agency buyer and supplier

credit ■ Transfer risk and country risk insurance ■ A framework for setting country limits

Short case study examples from emerging market countries will be used to illustrate the concepts

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Course Content

Leveraged Buyouts - The LBO Course for Lawyers


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Course Overview

The private equity model operates on a different paradigm from traditional corporate investors in terms of its aim and objectives, the structures it employs, the manner in which it approaches an investment and its sophisticated approach to capital structuring, the management incentives and last, the use of laminated (senior and junior debt) or bifurcated (pari loan / bond) debt financing.

This is an intensive one day programme designed to cover all the major areas relevant to the deal so as to provide attendees with a toolkit to understand the LBO process, the key issues from the perspective of all the major players’ PE, management and the various providers of finance.

The PE market is dynamic so the course will provide an historical perspective together with the current trends and issues relevant in the market.

The course is relevant those in PE or professionals involved either directly or indirectly in private equity. Matters are approached from a pan-European perspective.

LBOs: Value creation model, structuring issues & structuring parameters ■ The traditional PE value creation model ■ New value creation model ■ Structuring issues

• Ranking• Collateral / Security • Tax issues

■ Structuring parameters - creating an ap-propriate financial structure (overview)• Percentage senior, junior and equity in

debt capital structure• EBITDA multiples• Target returns for PE & Mezz Funds

■ The 3 main stages of a PE deal & relevant agreements: overview, scope & purpose• The Sale & Purchase Agreement• Loan Agreements• Security documents• Management’s Service agreements• The Shareholder’s / investment agree-

ment

Case Study: Deriving the source and uses of funds; target equity returns of the PE fund and Management

Financing: summary of application, key terms, conditions and pricing ■ Spectrum of financing instruments in LBOs ■ Senior loans

• Alphabet notes• RCF• Capex facilities

■ Mezzanine debt

• Warranted & warrantless ■ High Yield Notes (FRNs and Fixed)

• Senior Secured Notes• Senior Notes• Second Lien Notes• PIK Notes

■ Equity financing – typical structures and coupons

■ Vendor NotesCase Study: Deriving the target equity returns of the PE fund and Management

The Lender’s perspective ■ Lender’s approach to credit decision ■ Overview of loan documentation and im-

pact on deal/restructuring ■ The four deal scenarios ■ Key financial and other covenants

• Negative pledge• Summary of main financial covenants /

ratiosCase Study: Analysing & “right-sizing” the capital structure to identify the optimum funding instruments and funding structure

The Private Equity firm’s perspective ■ Typical objectives & required market re-

turns ■ Typical fund structures ■ Assessing the investment – the 5 key crite-

ria ■ Division of the spoils – typical terms

(what’s market?)• Hurdle / preferred return

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• Carried interest (European vs US ap-proach)

■ Equity ratchets

Management issues ■ Multifaceted role and duties of manage-

ment• Issues vis-à-vis role as Director, Em-

ployee, Shareholder, Warrantor ■ Critical issues in the Investment agree-

ment• Good vs. Bad leaver• Management warranties

■ Critical issues in the Service agreement• Restraints• Termination

Pulling it all together ■ Structuring the deal – the first take ■ How much debt can or should be used ■ Equity second

• Who goes first – PE or Management• Deciding who gets what• Ratchets

■ Evaluating the structure – does it work?


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Course Content

Modelling for Debt Restructuring Course


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Course Overview

This two-day workshop explores:

■ Spreadsheet best practice ■ Building a flexible model in stages ■ Forecasts and financial analysis ■ Restructuring debt ■ Adding management reporting

The programme is taught using a mixture of instruction, demonstrations and practical exercises. The workshop emphasis concentrates on the application of financial theory to Excel to produce a flexible and informative model.

Each session consists of theory, demonstrations and a practical exercise as participants develop the model in stages. The template for each session acts shows the solution to the previous session.

Comprehensive product notes will be provided to all participants. Participants receive a full pack of Excel software and templates for future reference as part of the course materials.

What participants will gain:

■ Principles of spreadsheet best practice ■ Application of best practice principles to a restructuring model ■ How to understand the financial reports ■ Methods to forecast and restructure debt ■ How to report and use the model

Each participant will be required to bring a laptop with an available USB running Microsoft Office to the seminar.

Day One

Case Study Outline ■ Analysis framework ■ Reasons for financial distress ■ Current data ■ Case study outline ■ Model objectives ■ Systematic Design Method ■ Basics of spreadsheet design ■ Modelling ‘rules’ ■ Common spreadsheet errors

Exercise: starting a model template

Historic Statements ■ Modelling initial accounts ■ Income and balance sheet ■ Generating cash flow

Exercise: adding and checking accounting statements

Historic Analysis ■ Identifying existing debt ■ Calculating forward debt repayments and

current balance ■ Calculating debt and other ratios ■ Bankruptcy ratios and scores

Exercise: adding loan sheets and calculating ratios

Forecast Accounts ■ Forecast accounts ■ Time lines and flags ■ Sales growth ■ Cost base ■ CAPEX requirements ■ Working capital – stock, receivables, paya-

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bles ■ Integrity checks ■ Circular references

Exercise: completing initial forecast statements

Day Two

New Loans ■ Excel functions ■ Calculating new loans ■ Rate, profile and timing ■ Amortisation profiles ■ Incorporating scenarios

Exercise: calculating new loans and repayment profiles

Completing Forecast Accounts ■ Incorporating new loans ■ Balancing the accounts ■ Checking on requirements for further cap-

ital ■ Recalculating forward ratios ■ Computing forward default scores ■ Integrity checks on results

Exercise: adding loans to forecast statements and checking cash position

Model Stress Testing ■ Constructing forward scenarios ■ What-if and downside analysis ■ Optimising the model results ■ Assessing the importance of individual

factors

Exercise: layering stress testing on the initial model

Model Completion ■ Version control ■ Documentation ■ Chart output ■ Dynamic dashboards ■ Management summaries

Exercise: model completion and final checks


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Course Content

Practical Understanding of Current Debt Markets


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Course Overview

This course is aimed at professionals with an existing knowledge of financial markets and financial products, either with knowledge through theory, studies or direct practice.

The aim of this course is to enable participants to understand and analyse the characteristics and inherent risks of capital and debt instruments in the context of global financial markets and of its main participants

MethodologyClassroom lecture style supplemented by workshops, practical exercises and up-to-date and relevant case studies.

Level of PreparednessIntermediate working knowledge of financial services industry would be helpful.

Financial markets and financial products: How they operate ■ Corporate

• Type of issuers• Type of products

■ Banks: Sell side• Major actors type of products• Role in structuring a deal

■ Institutionals and Asset Manager: Buy side• Asset allocation• Performance and risk considerations

Theory of Pricing ■ Bond pricing basics and market theory ■ Yield curve analysis ■ Spread analysis and pricing of bonds ■ Rating analysis ■ Benchmarks and Govies ■ Swap curve ■ Coupon ■ Reoffer ■ Fees

Government Securities ■ Gilts ■ Short, Medium and long term government

debt ■ The yield curve ■ Redemption and running yields ■ Duration ■ Inverse yield curves ■ The impact of quantitative easing

Hedging Interest Rates

■ Asset swapped bond transactions ■ Default swaps and total return swaps ■ Baskets and Indices ■ Basket Default Swaps ■ Index tranche transactions ■ Credit/Default linked notes

Securitisation and credit derivatives products ■ History and current market ■ Types of products: ABS, MBS, CDO, CDS ■ Motivation of securitisation deals and credit

derivatives products ■ Major actors and various markets

Securitisation products explained ■ ABS – credit card, car loans, consumer

loans, student loans, non performing loans (NPL), Refinancing (plane leasing, Energy, Royalties, Industrials,…), ABCP…

■ CDO-CBO, CLO, CDO^2, CDO (private equi-ty, Hedge funds), emerging CDO, High Yield CDO

■ MBS, CMBS. RMBS, REIT ■ CDS, synthetic securitisations ■ Specific risk products (weather derivatives,

CAT Bonds) ■ Esoteric securitisation –Wholesale securiti-

sation, principal finance

High Yield Bonds ■ Overview of the market ■ Current Uses ■ How issued, pricing, maturity etc ■ Who can access the market

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■ A versatile asset class ■ A driver of liquidity ■ A replacement for bank debt

Convertible Bonds ■ What are they ■ Who can issue them ■ How are the y priced ■ Maturity and call options ■ Use as a financing tool ■ Cost of capital considerations

Bank Capital and Debt instruments ■ Basel III definitions ■ Tier 1 & tier 2 ■ Co Co’s, the new hybrid ■ Debt issuance by bank ■ Criteria for tier 2 inclusion ■ Maturity ladder

The impact of current market conditions ■ Bank deleveraging ■ Inflation ■ Yield curve ■ Quantitative easing ■ Fixed versus floating

Currency Considerations ■ The big five ■ PIGS & BRICS ■ Impact on bond prices ■ Relationship between interest rates &

bonds ■ Hedging ■ OTC versus exchange traded


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Course Content

Senior Syndicated Leveraged Loans; Negotiating Issues & Trends


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Course Overview

This programme is aimed at professionals involved in syndicated high-yield (leveraged) loans used by both Sponsored and Corporate borrowers.

Historically, bonds were structured mainly as junior debt in the European high yield market whereas the recent trend has seen them used increasingly used as senior debt together with senior loans and/or super-senior RCFs in bifurcated pari Loan / Bond structures.

These developments have intensified pressure on syndicated lenders to adopt a more borrower-friendly approach than is advocated by the relevant Loan Market Association precedents. Borrowers have become increasingly frustrated by the conflicts between the flexibility offered by incurrence-based bond covenants and the more restrictive maintenance-based loan covenants. This conflict is driving convergence between these products and has accelerated the migration of terms from bonds to loans and vice versa.

Well known examples of the former include cov-lite loans and debt buy backs but more recent areas include covenant release/loosening on I-Grade rating and greater flexibility in the use of the various permitted baskets (including reclassification and splitting).

The recent Orange deal introduced a more alarming (and little noticed) innovation which, if adopted in loans, could allow Midco permitted payments to service debt.

This programme will look at the current trends and developments in syndicated loans and will draw on data and analysis from DebtXplained's Representative Loan Terms Database (www.debtxplained.com).

The database is a unique tool that has already changed the way that sell-side practitioners pitch for mandates and keep abreast of market trends. It tracks over 400 terms of loan documentation on a non-confidential basis allowing the users to precisely understand what is "market" for all significant negotiating points of a deal at any given time.

This information has never been available to the market before and gives borrowers, bankers, lawyers and advisors unprecedented knowledge of the current trends and practices in the Loans Market and Loan Terms.

Part 1: Deal & Loan structure, changes to the Parties & Buybacks

Scope of the Loan ■ Concept and composition of the “Covenant

(Restricted) Group” ■ Issues re Dormant subsidiaries – why they

matter ■ Issues re Joint Ventures ■ Dealing with Acquired firms

Debt buy-backs ■ Buybacks provisions – present or silent,

permitted? ■ Conditions permitting debt buybacks ■ Affiliate debt buyback methods ■ Investor buyback - restrictive conditions

The Lenders, changes to the Lenders & relevant thresholds ■ Key voting thresholds & why they matter ■ Super-Majority lenders – typical thresholds ■ Matters requiring Unanimous consent ■ Facility Change/Structural Adjustment ■ Treatment of Hedge parties ■ Ability to transfer - Consent vs Consultation

Methods ■ Carve-outs from Restricted transfer ■ Minimum transfer sizes

Part 2: Key “Permitted” definitions & Additional facilities

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Permitted Acquisitions ■ What is “Permitted” ■ Aspects re the Baskets ■ Additional restrictions: ■ Impact on financial covenants – pro forma

synergies?

Permitted Disposals ■ What types of transactions are affected /

carved-out ■ Which Group companies affected ■ Aspects re the Baskets ■ Carve-out for non-obligors

Permitted Financial Indebtedness ■ Scope - Financial Indebtedness defined (typi-

cal exclusions) ■ Issues re the Baskets – General & other bas-

kets • Size and availability• Automatic increase in Basket• Carry forward and Carry back (rare)

Accordion Facilities ■ Availability ■ Which Facilities are affected (RCF, New, M&A) ■ Committed at signing ■ Existing lenders right of 1st refusal ■ Lender consent requirements ■ Specified purpose (Capex, Restructuring, JVs) ■ Cap on Additional facilities

Basket erosion ■ Reclassification of baskets ■ Splitting of deals over baskets

Part 3: Interest & Yield Protection & Availability

Debt Service ■ Interest and default interest periods ■ Libor floors ■ Margin and margin ratchets

• Increased costs - Basel 2 and 3 (silent, included, carver-out, one/both)

■ Interaction with Financial covenants ■ Specific issues for Revolving Credit Facilities

(“RCFs”) ■ Clean-downs re RCFs, Ancillary Outstandings,

LCs ■ Clean-down amount ■ Periods fixed – Annual, Borrower’s election ■ Periods - timing, one or more ■ Cashless rollovers – why they matter ■ Problems with Headroom

Part 4: Exit, Acceleration and Prepayments (Sweeps)

Change of Control ■ Pre and Post IPO ■ Change in ownership chain ■ Various thresholds that apply – voting con-

trol ■ Sale of all or substantially all of the assets of

the Group – single or series

Mandatory Repayments (Cash Sweeps) ■ Disposal proceeds

• What is a “Disposal”• Baskets to sale proceeds• Annual - individual deal amount• Annual basket carve-out• Excluded Disposal proceeds

■ Acquisition Proceeds• What are “Acquisition Proceeds”• Excluded Acquisition proceeds• Basket annual and individual

■ Insurance Proceeds• Excluded Insurance Proceeds• Basket – annual or per deal• Retention periods

■ Listing Proceeds• Does Listing trigger full repayment• Does covenant grid cover repayment• Application of IPO proceeds – leverage

grid?• Application of retained funds• Potential tests that can be used • Relevant period

Excess Cash ■ Excess Cashflow defined ■ Excess Cashflow – typical deductions ■ De minimis basket ■ Use of Retained Excess Cash flow

Voluntary Prepayment, Trapped Cash & illegality ■ Can Borrower prepay voluntarily ■ Are there minimum / max. amounts ■ Circumstances when Borrower can avoid

mandatory prepayment• Tax - Trapped Cash (amounts)

■ Impact of illegality lender’s commitment ■ Prepayment Fees and Order

• Prepayment fees• Does Borrower have option to vary pre-

payment order• Can borrower prepay next four TLA amor-

tisations• Designated prepayment order




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Part 5: Dividends, Share Redemption and Subordinated Debt Payments

Limitation on Dividends and Share Redemption ■ What types of distributions / redemptions

are covered• Investor equity related payments e.g.

dividends / distribution • Management or advisory fee • Retirement of share capital• Redemption, repurchase or similar pay-

ment in respect of any of share capital• Share premium reserves

■ Exceptions• Permitted Payments • Permitted Transactions

Permitted Payments ■ What payments are permitted

• Basket carve outs – amounts, caps, car-ry forward/back

• Payments in re Equity & equity substi-tutes , Management/monitoring fees

• Subordinated debt ■ Basket carve outs – conditions precedent ■ Basket Carve-out categories ■ Restrictions on source of cash to fund

sponsor distributions ■ The “Orange” issue – permitted payments

to service debt from Midco

Part 6: Covenants & Undertakings & Events of Default

Covenant Overview ■ Covenants generally

• Function• Covenants in Loans vs Covenants in

Bonds ■ Covenant Suspension/Loosening

• Triggers - Qualified Listing and/or I- Grade Rating

• Available to Borrower• Scope of covenants affected

■ Material event reporting - scope ■ Access Rights for Lenders

• Triggers for Access rights – EoD, Agent “suspects” EoD

Financial covenants and Equity cures ■ The main covenants per the LMA

• Cash flow cover• Leverage• Interest cover

• Capex restrictions ■ Equity cures

• Current market practice• Cures in practice• Recent case law

General Undertakings ■ Permitted Security Basket

• Amount• Availability• Automatic increase in basket

■ Permitted Guarantees & carve-outs ■ The Guarantor Coverage Test

• Core carve-outs sought by Sponsors• Other exceptions sought by Sponsors

Default and Events of Default ■ Default vs Event of Default ■ Grace periods ■ Sensitive EoDs ■ Cross default to financial Indebtedness

• Cross-default defined• Sponsor friendly exclusions

MAC / MAE clause ■ Arguments for and against inclusion ■ Objective or subjective test ■ Impact of “Reasonably Likely” ■ Scope of MAE clause

• Security / Security Documents• Finance documents• Business, operations or financial condition

of the Group




Course Content

Syndicated (Leveraged) TLB & Yankee Loans


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Course Overview

The syndicated loan market and high yield bond markets continue their “race to the bottom”. The continued inflows of liquidity from existing and new sources, coupled with the resurrection of the CLO market, continues to create intense competition between these two, historically different forms of finance. The main upshot has been the continuing, if not accelerating, convergence between the terms for loans and high yield bonds.

The convergence is being driven both on the buy and the sell-side; first, U.S. based Private Equity funds in Europe have been keen synchronise their (pari loan/bond) capital structures, by aligning the terms of their loans more closely with their bonds particular in the larger deals which include both term loans and bonds (e.g. Kirk Beauty /Douglas where the bonds were flexed down to accommodate larger TLBs).

The more borrower-friendly-incurrence covenants in bonds are also not unimportant for these borrowers; second, an increasing number of U.S. credit funds who have tapped into the European market and they too are keen to synchronise their documentation. The more liquid secondary loan market in the U.S. means these lenders are more relaxed about the absence of financial-maintenance covenants since their protection comes from the ability to trade when borrowers are in or near distress.

One further source of impetus has been the opening of high yield bond markets in Europe to mid-cap issuers with bonds now in the 200 million mark (and lower q.v. Wagamama £150m) increasingly common. In this context, the markets have seen smaller deals, of this size, increasingly arranged on a syndicated basis.

These developments also explain the increasing incidence of documentation being drafted according to NY State law which, through no co-incidence also tend to mirror the terminology used in high yield bond indentures. The trend towards using NY law is supported by data from DebtXplained which indicates that, in 2014, nearly half of all TLB Yankee loans were subject to New York state law and this trend seems to be accelerating in 2015.

This seminar examines the typical terms of syndicated loans in the current market and compares the key differences between LMA-based senior facilities and NY style documentation

Background & basics ■ Review of the funding landscape ■ Impact on loan documentation ■ Increasing use of NY-style loans vs tradi-

tional LMA – where, who and why? ■ How and why do they differ ■ Incurrence covenants vs maintenance cove-

nants – does it matter?

Key concepts ■ The Restricted Group

• Inclusions and exclusions• Approach used in high yield bonds & why

it matters• Re-designation of subsidiaries to and

from the Restricted Group• Typical requirements

■ Material subsidiaries• What constitutes at material subsidiary –

market approach to the threshold %• The various tests: EBITDA and other ap-

proaches• Relevance and application in the SFA• Date and manner of determination- Cer-

tificate (LMA vs market approach) ■ Permitted baskets generally

• Hard & soft caps• Soft caps – EBITDA, Total Assets, Total

Revenues, mix n’match • Review of data from DebtXplained• Other restrictions


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Permitted Acquisitions ■ Permitted Acquisitions – LMA approach vs

Yankee loans ■ Hard capped baskets – lifetime or annual

limit ■ Approved acquisition ratio – incidence

• Typical tests & thresholds ■ Treatment of pro-forma synergies

• Can management add synergies to the test

• What synergies qualify, time limits? ■ Third party / Independent certification

• Due diligence requirement

Debt incurrence / Incremental facilities ■ Main sources of additional debt incurrence ■ Typical exclusions; Refinancing debt etc ■ Purposes & limitations for incurring addi-

tional debt; M&A, Capex ■ Prohibition & Ratio Debt Basket

• Ratio based approach ■ Permitted debt / carve-out baskets – typi-

cal examples, and controls• General debt basket• Acquired debt basket (no obligation to

discharge)• Acquisition finance debt basket• Attributable debt / Finance leases / PMO

debt basket• Other baskets • Availability to non-guarantor restricted

subsidiaries (capped vs uncapped?) ■ Reclassification of debt between baskets

and the Ratio Debt basket• Debt reclassification among permitted

debt baskets (excluding/including credit facility) and ratio debt basket

• Ability to split an amount or transaction between different baskets or exceptions

• Other aggressive approaches (e.g. au-tomatic reclassification between bas-kets)

■ Incremental Facilities• Incidence in deals• Hard vs soft caps• Controls on soft caps• Other restrictions – yields, tenor etc

Restricted Payments / Distributions (to Shareholders) ■ LMA vs TLB approach compared ■ Application – dividends, subordinated debt ■ Restricted Payment General baskets

• Basis of calculation – hard vs soft caps• Hard caps – lifetime vs annual limits• Soft caps approach – CNI etc

• Source of payments – Available Amount, Cumulative Credit, other

• Other requirements ■ Leverage basket

• Typical leverage ratios (q.v. Debtxplained)• Additions/Source of proceeds available

■ Other conditions

Collateral & Liens ■ LMA approach vs TLB approach to “Permit-

ted” lien baskets ■ Availability of general and other baskets ■ Hard vs soft “grower” permitted lien baskets ■ Carve-outs for Non-Guarantor Restricted

subsidiaries ■ Guarantor Coverage Test – LMA vs. Yankee

loans compared

Mandatory prepayments (Cash sweeps) ■ Borrower friendly post Excess Cashflow

Sweep deductions ■ No mandatory prepayment waiver right ■ Borrower friendly post Excess Cashflow

Sweep deductions ■ Carve-out baskets from disposal proceeds

not required for making mandatory prepay-ments if ratings conditions met

■ All or some of mandatory prepayment cat-egories can be applied pro rata to prepay other pari passu debt

■ Absence of mandatory prepayment using insurance proceeds

■ Lender prepayment waiver right only if Bor-rower elects

■ Mandatory prepayment de minimis and thresholds include a great of hard cap and EBITDA soft cap

Margins, MFN & sunset provisions ■ Trends in LIBOR/Euribor floors ■ Matters affecting the floor ■ MFN provisions – scope

• Margins – yield vs all-in yield; pricing differentials

• Other terms and conditions ■ Sunset provisions

• Incidence and typical periods – US vs Eu-ropean approach

• Governing law ■ Absence of margin ratchets

• Rationale and incidence (funds!) ■ Fixed rate deals

Financial maintenance covenants ■ Review of current market approach: Tradi-




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Syndicated (Leveraged) TLB & Yankee LoansContinued...

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tional vs Cov-lose vs Cov-lite ■ “Springing” leverage covenants

• What are they• Typical terms

■ Aggressive add-backs to EBITDA• Synergies and other add-backs• Additional requirements and time limits

■ Equity cures • Current market approach – what can be

cured; how often, over-cures?• Deemed cures – what are they and are

they widely used ■ Deal outliers

• Introduction of minimum EBITDA cove-nant

• Maintenance covenants tested at greater intervals

• Transfer provisions & Portability/ Change of control

■ What type of transactions qualify• Consent vs Consultation • Carve-outs• Other restrictions e.g. minimum transfer

sizes ■ Portability

• Ratings test• Ratio - Leverage or Enterprise value ratio

■ Timing periods/limits & Frequency ■ Additional requirements

Voting thresholds & Amendments (LMA vs US approach specific thresholds; how and why they matter) ■ Majority lenders - thresholds & typical mat-

ters ■ Super-majority - thresholds & typical mat-

ters ■ Unanimous consent - Typical matters ■ Snooze you lose – timing ■ Yank the bank ■ Structural adjustments

• Major vs minor vs payables• Requirements - each Lender directly

and/or adversely affected

Sanction & anti-corruption provisions ■ US OFAC vs EU Blocking Statute [Reg

2271/96]– reconciling the irreconcilable?• Summary of provisions

■ Use of proceeds ■ The range of options

• Due diligence• Limitations on the scope • Side letters – when to use them• Consequences of a breach

■ Solutions in practice

Summary of deal outliers ■ Incremental Facility yield cap applies only

for the first 12 months of signing / closing (“sunset” provision)

■ Option for each Lender to cancel and accel-erate upon a Change of Control and/or sale of substantially all assets

■ Permitted Payment basket based on Annual-ised EBITDA

■ HYB-style “Designated Non-Cash Considera-tion” concept in Asset Disposals (English law SFA)

■ All Permitted Disposals subject to a pro for-ma total leverage test




Course Content

Yankee Loans Course


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Course Overview

Yankee loans (or TLBs as they are also known) refer to senior syndicated facilities provided to European borrowers which, initially, were sold to mainly U.S. based investors or were governed by New York law and drafted in line with U.S.style credit documentation.

Yankee loans have experience strong growth in Europe over the last 18 months for a variety of reasons. First, an increasing number of European borrowers (most recently Altice) have sought to take advantage of the more borrower-friendly terms offered by these loans; second, the globalisation of the debt markets (particularly in leveraged finance) has seen an increasing number of U.S. credit funds tap into the higher yields available from European borrowers (although this spread has narrowed); third, U.S. based Private Equity funds in Europe have been keen synchronise their pari loan/bond capital structures, by aligning the terms of their loans more closely with their bonds.

This latter trend has been particularly influential in terms of driving convergence of loan documentation towards incurrence-base high yield covenants and finally, both the U.S based PE firms and U.S. investors understandably prefer more familiar U.S. style credit documentation since this affords them better understanding of the key terms and conditions in the loan both at the time of investment and in terms on on-going monitoring. The trend towards using NY law is supported by data from DebtXplained which indicates that, in 2014, nearly half of all Yankee loans were subject to New York state law and this trend seems to be accelerating in 2015.

The greater willingness on the part of U.S. investors to accept bond-style covenants (and thus lower lender protection) has been motivated by two drivers; first, their aversion to reinvestment risk (which explains their preference for bullet structures and antipathy to cash sweeps) and second, their greater focus on liquidity. The depth of the U.S. loan market means these lenders are willing to trade less investor protection in exchange for the liquidity, specifically the ability to trade out prior to distress. The approach of U.S. Investors means that Yankee loans mimic many of the features found in high yield bonds with the same advantages even if these loans are drafted under English law. Specific examples include; reduced financial-maintenance covenants (e.g. either cov-loose or cov-lite seen in Ceva Sante Animale and more recent deals) together with greater flexibility across a wide range of corporate actions particularly the ability to incur and secure additional debt (via bond-style ratio debt baskets and carve-outs baskets for debt incurrence), the ability to sell assets together with flexibility in dealing with the proceeds, bond-style approach to permitted payments (using restricted payment baskets with carve-outs) and, more recently, greater flexibility on exceptions to mandatory prepayments.

This seminar examines the typical terms of Yankee loans in the current market and how they differ from traditional European LMA-based senior facilities together with the trends driving these developments.

Background & basics ■ Key market drivers and players ■ The different approach of U.S. to European

investors ■ The role and influence of High Yield Bonds

on loans ■ Incurrence covenants vs maintenance cov-

enants – does it matter? ■ Documentation: LMA vs LSTA

The Restricted Group ■ Approach used in high yield bonds & why it

matters ■ Application to Yankee loans ■ Re-designation of subsidiaries to and from

the restricted Group ■ Typical requirements

“Permitted” Acquisitions ■ Permitted Acquisitions – LMA approach vs

Yankee loans

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Yankee Loans CourseContinued...

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Course Content

■ Typical requirements for Permitted Acquisi-tions

■ Compliance with financial ratios • Hard and soft (grower basket) caps• Typical ratios used• Treatment of pro-forma synergies

■ Other requirements• Third party / Independent certification• Due diligence

Debt incurrence & margins ■ Main sources of additional debt incurrence ■ Prohibition & Ratio Debt Basket

• Ratio based approach ■ Potential carve-out baskets – typical exam-

ples & terms• Credit Facility basket - hard vs soft caps• General basket -- hard vs. soft caps• Acquired debt - hard vs. soft caps & oth-

er limitations• Other baskets (PMOs etc.) –

■ Reclassification of debt between baskets and the Ratio Debt basket• Specific inclusions and exclusions

■ Incremental facilities ■ Absence of margin ratchets

Restricted Payments ■ Prohibition - coverage ■ Proviso – main conditions

• Ability to incur debt• Aggregate Caps

■ Calculating the Restricted Payments basket• Ratio based approach• Additions to the basket

■ Carve-out baskets to the Restricted pay-ments

Collateral & Liens ■ LMA approach ■ TLB approach to “Permitted” lien baskets ■ Availability of general and other baskets ■ Ratio based lien baskets ■ Carve-outs for Non-Guarantor Restricted

subsidiaries ■ Use of “grower” permitted lien baskets ■ Ability to secure additional ratio-based debt

on a pari passu or junior basis ■ Distinction between securing debt on Col-

lateral or on non-Collateral ■ Guarantor Coverage Test – LMA vs. Yankee

loans compared

Mandatory prepayments (Cash sweeps) ■ Borrower friendly post Excess Cashflow

Sweep deductions

■ No mandatory prepayment waiver right ■ Borrower friendly post Excess Cashflow

Sweep deductions ■ Carve-out baskets from disposal proceeds not

required for making mandatory prepayments if ratings conditions met

■ All or some of mandatory prepayment cate-gories can be applied pro rata to prepay other pari passu debt

■ Absence of mandatory prepayment using insurance proceeds

Financial maintenance covenants ■ Review of current market approach: Tradi-

tional vs Cov-lose vs Cov-lite ■ Cov-loose – what does it mean and which

ratio are used ■ Cov-lite – does it really mean no covenants? ■ “Springing” leverage covenants

• What are they• Typical terms

■ Aggressive add-backs to EBITDA• Synergies and other add-backs• Additional requirements and time limits

■ Equity cures • Current market approach – what can be

cured; how often, over-cures?• Deemed cures – what are they and are

they widely used ■ Deal outliers

• Introduction of minimum EBITDA covenant• Maintenance covenants tested at greater

intervals

Portability & Change of control and Transfer provisions ■ What type of transactions qualify ■ Typical exemptions

• Leverage ratio • Enterprise value ratio

■ Timing periods/limits & Frequency ■ Additional requirements

Voting thresholds ■ LMA vs US approach specific thresholds; how

and why they matter• Majority lenders• Super-majority• Unanimous consent• Snooze you lose


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