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80-483: SearchOhio is a consortium of public libraries in the state of Ohio that provides borrowing access to more than 10 million library items, including books, movies and music, providing easy access to information and rapid delivery of library materials throughout the state. It was established in 2006. Cardholders at any participating library can request items online through the SearchOhio catalog (powered by INN-Reach,

160-421: A club deal . The European leveraged syndicated loan market almost exclusively consists of underwritten deals, whereas the U.S. market contains mostly best-efforts. An underwritten deal is one for which the arrangers guarantee the entire commitment, then syndicate the loan. If the arrangers cannot fully subscribe the loan, they are forced to absorb the difference, which they may later try to sell to investors. This

240-446: A trustee , as is common within Bond issuances on behalf of the lenders. This makes taking security easier, since there is a single chargee which is unlikely to change through the duration of the loan (through the secondary market). In jurisdictions where the trust is not recognised, it is often addressed by parallel debt provisions stating that the amount outstanding is deemed to be owing to

320-622: A bank account. Outside the United States, these savings clubs can be formal and have proper legislation. In some countries, like Brazil, consórcios are an integral part of the traditional banking system, where there are clubs for purchasing real estate and cars, and even for plastic surgery costs. Over seven million people have engaged in these formal savings associations over the past years, adding to over U$ 10 billion in credit. Since these clubs have up to thousands of members, products purchased are awarded through lottery and bidding processes and

400-404: A bank which may be transferred in this way are obligations to indemnify the agent and obligations under a pro rata sharing clause. In the case of assignments of rights, it may be a requirement that the assignee assumes these obligations to the existing banks. The contractual mechanics of the novation are that the agent bank is authorised by the borrower and the banks in the credit agreement to sign

480-467: A common fund. On every installment the common fund reaches the goal value and someone is awarded this sum and from this point forward this person own the association the remaining amount, just as in a loan. This process repeats until every member is awarded the entire sum. These informal associations are specially popular among immigrants since they are a cheaper alternative to traditional financing and usually require no formal papers, credit history or even

560-538: A confidential offering made only to qualified banks and accredited investors . If the issuer is speculative grade and seeking capital from nonbank investors, the arranger will often prepare a "public" version of the IM. This version will be stripped of all confidential material such as management financial projections so that it can be viewed by accounts that operate on the public side of the wall or that want to preserve their ability to buy bonds or stock or other public securities of

640-459: A consortium to cooperate on areas non-strategic for their core businesses. They prefer to reduce their costs on these non-strategic areas and compete on other areas where they can differentiate better. For example, the GENIVI Alliance, now called COVESA, is a not-for-profit consortium between different car makers in order to ease building an In-Vehicle Infotainment system. Another example is

720-411: A detailed model of the issuer's historical, pro forma , and projected financials including management's high, low, and base case for the issuer. Most new acquisition-related loans are kicked off at a bank meeting at which potential lenders hear management and the sponsor group (if there is one) describe what the terms of the loan are and what transaction it backs. Management will provide its vision for

800-473: A for-profit consortium is a group of banks that collaborate to make a loan—also known as a syndicate . This type of loan is more commonly known as a syndicated loan . In England it is common for a consortium to buy out financially struggling football clubs in order to keep them out of liquidation . Alyeska Pipeline Service Company , the company that built the Trans-Alaska Pipeline System in

880-613: A global note there is only one true creditor with sub participation through trusts. The solution to this problem is to develop inter-creditor agreements. To overcome the head-count test issues in bonds: bondholders can be given definite notes (although costly) or on the basis of this right be perceived as contingent-creditors. Hardin writes that Individual management and enforcement of the loans/bond increases individual monitoring costs, enforcement costs and facilities wealth destruction due to premature acceleration of loan/bond and enforcement of security. Collective issues can be addressed again by

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960-400: A list of prohibited assignees (a ‘black list’). The borrower's liabilities are not to be increased as a result of an assignment or change of lending office: under the tax grossing-up or increased cost clauses. Syndicated credits generally contain a provision whereby a bank may novate its rights and obligations to another bank. The object of the novation is to ensure a transfer of obligations of

1040-456: A mandate, an issuer might solicit bids from arrangers. The banks will outline their syndication strategy and qualifications, as well as their view on the way the loan will price in market. Once the mandate is awarded, the syndication process starts. In Europe, where mezzanine capital funding is a market standard, issuers may choose to pursue a dual track approach to syndication whereby the MLAs handle

1120-453: A new company, Airbus SAS. In return, they got 80% and 20% shares respectively. BAE would later sell its share to EADS. The Tornado was developed and built by Panavia Aircraft GmbH, a tri-national consortium consisting of British Aerospace (previously British Aircraft Corporation), MBB of West Germany, and Aeritalia of Italy. The aircraft first flew on 14 August 1974 and was introduced into service in 1979–1980. Due to its multi-role design, it

1200-459: A private equity sponsor. As prospective acquirers are evaluating target companies, they are also lining up debt financing. A staple financing package may be on offer as part of the sale process. By the time the auction winner is announced, that acquirer usually has funds linked up via a financing package funded by its designated arranger, or, in Europe, mandated lead arranger (MLA). Before awarding

1280-542: A product of Innovative Interfaces ) to be delivered to their library in 3–5 business days. Items are shipped back to the owning library on return. SearchOhio makes public library collections available to the communities served by the following libraries (as of September 2017). Consortium Consortium is a Latin word meaning " partnership ", "association", or "society", and derives from consors ("shared in property"), itself from con- ("together") and sors ("fate"). The Big Ten Academic Alliance in

1360-401: A segment of the regular activities of these entities, based on an unnamed contract and characterized by a temporary nature, minimization of institutionalization, and lack of separate property , the need to specify how the parties participate in the joint venture and the intention not to establish a "community" with partly own interests (the partnership as such). According to this concept, despite

1440-447: A structure simply referred to as the "consortium." In the Polish legal system, the legal nature of the consortium agreement is disputed. According to the prevailing approach, a consortium is a form of cooperation, different from a civil law partnership, undertaken between economically independent entities already operating on the market in order to implement a specific undertaking that is

1520-406: Is a purely contractual cooperative contract that does not entail the creation of a third party. The consortium has no legal personality or legal capacity . The contract is concluded between two or more natural or legal persons who undertake to carry out certain works in order to implement a joint project which consortium members would not be able to carry out themselves. The consortium agreement

1600-429: Is a smaller loan — usually $ 25‒100 million, but as high as $ 150 million — that is premarketed to a group of relationship lenders. The arranger is generally a first among equals, and each lender gets a full cut, or nearly a full cut, of the fees. As a syndicated loan is a collection of bilateral loans between a borrower and several banks, the structure of the transaction is to isolate each bank's interest whilst maximising

1680-579: Is blocked. A solution to this problem is restrictions on agreements based on majorities. Majority can bind a minority, with the exception of some ‘all lenders matters’. In case of loans, majority lenders typically defined as 50% or 75% of value based on commitments. Non-consenting banks can sometimes be forced to transfer. This was observed in the Yank-the-bank clause outlined above. Majority might oppress minority bond holders/lenders. Coordination problems lead to lenders to prefer sub-optimal options, because it

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1760-464: Is easy, of course, if market conditions, or the credit's fundamentals, improve. If not, the arranger may be forced to sell at a discount and, potentially, even take a loss on the paper. Or the arranger may just be left above its desired hold level of the credit. Arrangers underwrite loans for several reasons. First, offering an underwritten loan can be a competitive tool to win mandates. Second, underwritten loans usually require more lucrative fees because

1840-547: Is not explicitly regulated by the French legislator, but it is admissible in the light of the principle of freedom of contract interpreted from articles 6 and 1134 of the French Civil Code . Neither consortium nor joint venture have a legal definition in U.K. law . The second term is usually used to describe various types of agreements where two or more parties cooperate in conducting business activities. This manifests e.g. in

1920-616: Is not representative of a banking relationship. They are; The agent bank's express duty, is to provide information designed to enable lenders to consider how to exercise their right under various facility agreements in relation to accelerating the debt, not to assist with ‘exit’ or liability for misstatements. As set out in Torre, the agent is typically a conduit between borrowers and lenders. They are typically described as solely technical and owe no fiduciary. They hold no duty to advise and are not liable for negligence. Security will usually be held by

2000-437: Is one that is provided by a group of lenders and is structured, arranged, and administered by one or several commercial banks or investment banks known as lead arrangers . The syndicated loan market is the dominant way for large corporations in the U.S. and Europe to receive loans from banks and other institutional financial capital providers. Financial law often regulates the industry. The U.S. market originated with

2080-409: Is the safest option but not necessarily the best. Two forms of protections exist to prevent minority oppression. Several concepts have been outlined above and below, but it will be useful to be summarised here in order to appreciate the two primary methods of lenders within minority positions. Minority lenders who feel oppressed may choose to transfer their debts to other, although conflict might limit

2160-468: The London Approach . There are several common types of lending terms, including implied terms in syndicated lending that affect the operation and coordination of lending behaviour. Within the banking sector, the role of setting up syndicated loans differ from deal to deal but generally a handful of key actors are consistent. These were the aforementioned key actors of the arranging bank, the agent, and

2240-740: The University of Massachusetts Amherst . Another example of a successful consortium is the Five Colleges of Ohio of Ohio: Oberlin College , Ohio Wesleyan University , Kenyon College , College of Wooster and Denison University . The aforementioned Claremont Consortium (known as the Claremont Colleges) consists of Pomona College , Claremont Graduate University , Scripps College , Claremont McKenna College , Harvey Mudd College , Pitzer College , and Keck Graduate Institute . These consortia have pooled

2320-834: The World Wide Web Consortium (W3C) , which is a consortium that standardizes web technologies like HTML , XML and CSS . The Institute for Food Safety and Health is a consortium consisting of the Illinois Institute of Technology , the Food and Drug Administration 's Center for Food Safety and Applied Nutrition , and members of the food industry . Some of the work done at the institute includes, "assessment and validation of new and novel food safety and preservation technologies, processing and packaging systems, microbiological and chemical methods, health promoting food components, and risk management strategies." Commonly known in

2400-405: The 1970s, initially was a consortium of BP , ARCO , ConocoPhillips , Exxon , Mobil , Unocal , and Koch Alaska Pipeline Company. Airbus Industries was formed in 1970 as a consortium of aerospace manufacturers. The retention of production and engineering assets by the partner companies in effect made Airbus Industries a sales and marketing company. This arrangement led to inefficiencies due to

2480-856: The Midwest and Mid-Atlantic U.S., Claremont Colleges consortium in Southern California, Five College Consortium in Massachusetts, and Consórcio Nacional Honda are among the oldest and most successful higher education consortia in the world. The Big Ten Academic Alliance , formerly known as the Committee on Institutional Cooperation, includes the members of the Big Ten athletic conference. The participants in Five Colleges, Inc. are: Amherst College , Hampshire College , Mount Holyoke College , Smith College , and

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2560-408: The United States as a rotating savings and credit association (ROSCA) and also called Savings Clubs, Christmas clubs , sousou or even money circles, they are typically informal associations of people saving money together with a commonly shared goal: buying something with the same value. In this association its members contribute by paying equal amount installments (usually monthly or weekly) towards

2640-407: The agent is on the hook if potential lenders balk. Of course, with flex-language now common, underwriting a deal does not carry the same risk it once did when the pricing was set in stone prior to syndication. A best-efforts syndication is one for which the arranger group commits to underwrite less than or equal to the entire amount of the loan, leaving the credit to the vicissitudes of the market. If

2720-402: The bank to lend; without this transfer releasing the original bank, the original bank may have a continuing credit exposure to the transferee bank if the transferee bank fails to make a new loan to the borrower when required by the loan agreement and this exposure may attract a capital adequacy requirement. Novation may amount to a complete substitution of the new bank or rather as an assignment of

2800-514: The borrower AND to the lenders. In TORRE ASSET FUNDING v RBS (2013) the mezzanine lenders alleged it was the Agent's duty to inform them of when an event of default occurred. The relationship of the agent tends not to be a fiduciary one. The essence of a fiduciary relationship is that they may be reasonably expected to subordinate their own commercial interests to that of their beneficiary, in English law, this

2880-488: The collective efficiency of monitoring and enforcement of a single lender. The essence is to make loans on similar terms to make a bundle of loans into a single agreement. This draws upon Loan Market Association documents. Correspondingly, three key actors operate within a syndicated lending: These actors utilise two core legal concepts to overcome the difficulty of large-cap lending, those being Agency and Trusts. A single bank may not on its own be willing or able to advance

2960-505: The common fund administrators charge a fixed fee in order to take responsibility and guarantee the integrity of the process. In France , the consortium, considered a sub-type of joint venture , has important theoretical and practical significance. The French legal system does not provide a definition and does not explicitly use the concept of a joint venture or consortium ( groupements momentanés d’entreprises ). The consortium agreement in France

3040-413: The company is first put up for auction. With sponsored transactions, a company that is for the first time up for sale to private equity sponsors is a primary LBO; a secondary LBO is one that is going from one sponsor to another sponsor, and a tertiary is one that is going for the second time from sponsor to sponsor. A public-to-private transaction (P2P) occurs when a company is going from the public domain to

3120-406: The consortium and the pool. Cooperation agreements concluded under German law are not of a uniform legal nature. There is a great wealth of legal forms of cooperation that could be cautiously qualified as consortium agreements. This is in particular a civil law partnership in its internal and occasional variants ( Gelegenheitsgesellschaft ), as well as a partnership of building contractors ( ARGE ) and

3200-407: The core of leveraged lending comes from buyouts resulting from corporate activity, while, in Europe, private equity funds drive buyouts. In the U.S., all private equity related activities, including refinancings and recapitalizations, are called sponsored transactions; in Europe, they are referred to as LBOs. A buyout transaction originates well before lenders see the transaction's terms. In a buyout,

3280-503: The creation of a loan market that crosses the Atlantic. The European market has taken advantage of many of the lessons from the U.S. market, while maintaining its regional diversity. In Europe, the regional diversity allows banks to maintain a significant lending influence and fosters private equity's dominance in the market. Globally, there are three types of underwriting for syndications: an underwritten deal, best-efforts syndication, and

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3360-465: The deal at a spread and fee that it thinks will clear the market. Once the pricing, or the initial spread over a base rate (usually LIBOR), was set, it was largely fixed, except in the most extreme cases. If the loans were undersubscribed, the arrangers could very well be left above their desired hold level. Since the 1998 Russian financial crisis roiled the market, however, arrangers have adopted market-flex contractual language, which allows them to change

3440-413: The deal will be and at what price they are willing to invest. Once this intelligence has been gathered, the agent will formally market the deal to potential investors. The executive summary will include a description of the issuer, an overview of the transaction and rationale, sources and uses, and key statistics on the financials. Investment considerations will be, basically, management's sales "pitch" for

3520-422: The deal. The list of terms and conditions will be a preliminary term sheet describing the pricing, structure, collateral , covenants, and other terms of the credit (covenants are usually negotiated in detail after the arranger receives investor feedback). The industry overview will be a description of the company's industry and competitive position relative to its industry peers. The financial model will be

3600-484: The euro has helped to bridge currency gaps. As a result, in Europe, more and more leveraged buyouts have occurred over the past decade and, more significantly, they have grown in size as arrangers have been able to raise bigger pools of capital to support larger, multi-national transactions. To fuel this growing market, a broader array of banks from multiple regions now fund these deals, along with European institutional investors and U.S. institutional investors, resulting in

3680-888: The general law of contract, similar to an ordinary partnership agreement , does not create a separate entity. In Germany the view prevails that the consortium is a type of internal civil law partnership (§ 705–740 of the BGB ). In external relations, consortium members may decide on joint and several liability regulated by § 421 BGB, while internally there is sometimes a release from this liability. Joint ventures often include credit syndicates (Kreditkonsortien), securities issuing consortia, including mainly shares ( Emissionskonsortien ), construction consortia ( Baukonsortien ) also referred to as investment ( Investitionskonsortien ) and profit pools ( Ergebnispools ). Sometimes, special purpose partnerships established to jointly use construction facilities ( Planungsgesellschaften ) are listed in one category with

3760-421: The grant of a mandate by the borrower to the arranging bank(s) or ‘lead managers’ setting out the financial terms of the proposed loan. The financial terms are set out in a “term sheet” which states the amount, term of the loan, repayment schedule, interest margin, fees any special terms, and a general statement that the loan will contain representations and warranties. This might include terms which relate to when

3840-635: The inherent conflicts of interest that the four partner companies faced; they were both shareholders of, and subcontractors to, the consortium. The companies collaborated on development of the Airbus range, but guarded the financial details of their own production activities and sought to maximize the transfer prices of their sub-assemblies. In 2001, EADS (created by the merger of French, German and Spanish Airbus partner companies) and BAE Systems (the British partner company) transferred their Airbus production assets to

3920-410: The inter-creditor agreements. Management and enforcement is in principle vested in a single individual in order to reduce monitoring costs and value distraction. This is a crucial concept within insolvency, which is primarily concerned with As we have outlined above, veto-rights of individual bond holders/lenders can lead to sub-optimal outcomes. For example, a proper restructuring benefitting everyone

4000-433: The joint distribution of profit, sharing cash, assets, knowledge or abilities. As there are no legal provisions regulating in detail the consortium or joint venture, the relations between the parties participating in this type of agreement—when choosing a joint venture as a collaboration agreement or a special partnership —are subject to common law or the provisions of the partnership law . A consortium agreement governed by

4080-563: The large leveraged buyout loans of the mid-1980s, and Europe's market blossomed with the launch of the euro in 1999. At the most basic level, arrangers serve the investment-banking role of raising investor funding for an issuer in need of capital. The issuer pays the arranger a fee for this service, and this fee increases with the complexity and risk factors of the loan. As a result, the most profitable loans are those to leveraged borrowers — issuers whose credit ratings are speculative grade and who are paying spreads (premiums or margins above

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4160-480: The lender does not consent to a waiver or amendment. Lenders are traditionally limited in their decision-making by overlapping clauses requiring voting and collective decision-making. This acts as a disincentive for individual lenders to act in their own interests over the collective group. It has been suggested that the historical cooperation within the London loan market helped produce efficiency insolvency work-outs through

4240-510: The loan is to finance a company acquisition or a large infrastructure project, conferring interests in the lenders. Often term sheets are made to be expressly non-binding. However, in Maple Leaf Macro Volatility Master Fund v Rouvroy (2009) a loan term sheet was held to create a contract. The core function of the Agent is to act as a conduit between the borrowers and the lenders. The agent owes contractual duties both to

4320-417: The loan is undersubscribed, the credit may not close — or may need significant adjustments to its interest rate or credit rating to clear the market. Traditionally, best-efforts syndications were used for risky borrowers or for complex transactions. However, since the late 1990s, the rapid acceptance of market-flex language has made best-efforts loans the rule even for investment-grade transactions. A club deal

4400-532: The local currency. Since the Eurozone was formed in 1998, the growth of the European leveraged loan market has been fuelled by the efficiency provided by this single currency as well as an overall growth in merger & acquisition (M&A) activity, particularly leveraged buyouts due to private equity activity. Regional barriers (and sensitivities toward consolidation across borders) have fallen, economies have grown and

4480-415: The number of buyers willing to reduce price of the loan/bonds. It is an implied term in loan and bond agreements that the majority must act in good faith and for the purpose of benefiting the class as a whole. Subject to the express terms of contract. Where there are different classes, there is no need to vote in interests of the creditor as a whole. Therefore, in last year's exam, the subordinated nature of

4560-535: The paper. Following the example above, if the paper is vastly oversubscribed at LIBOR+250, the arranger may slice the spread further. Conversely, if it is undersubscribed even at LIBOR+275, then the arranger will be forced to raise the spread to bring more money to the table. In Europe, banks have historically dominated the debt markets because of the intrinsically regional nature of the arena. Regional banks have traditionally funded local and regional enterprises because they are familiar with regional issuers and can fund

4640-472: The particular issuer (see the Public Versus Private section below). Naturally, investors that view materially nonpublic information of a company are disqualified from buying the company's public securities for some period of time. As the IM (or "bank book", in traditional market lingo) is being prepared, the syndicate desk will solicit informal feedback from potential investors on what their appetite for

4720-442: The parties to the loan agreement agree that if a lender and a transferee (i) agree upon a transfer of all or part of the lender’s interest (ii) record the agreement but not the price or other ancillary matters which are to be dealt with separately and (iii) deliver this to the agent bank, the transfer will take effect. The effect of the transfer is that the transferee becomes a party to the agreement with rights and obligations which are

4800-419: The past decade, banks remain a key part of the market. Consequently, pricing is not fully driven by capital market forces. In the U.S., market flex language drives initial pricing levels. Before formally launching a loan to these retail accounts, arrangers will often get a market read by informally polling select investors to gauge their appetite for the credit. After this market read, the arrangers will launch

4880-408: The payment of a dividend to the equity holders. They provide funding to corporations undergoing restructurings, including bankruptcy, in the form of super senior loans also known as debtor in possession (DIP) loans. Their primary purpose, however, is to fund M&A activity, specifically leveraged buyouts, where the buyer uses the debt markets to acquire the acquisition target's equity. In the U.S.,

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4960-405: The pricing of the loan based on investor demand — in some cases within a predetermined range — and to shift amounts between various tranches of a loan. This is now a standard feature of syndicated loan commitment letters. As a result of market flex, loan syndication functions as a book-building exercise, in bond-market parlance. A loan is originally launched to market at a target spread or, as

5040-403: The purposes of UCTA 1977. The distinction in the lending agreements, and use of the three aforementioned actors is primarily to avoid the creation of a partnership, avoid lenders from inadvertently acting as guarantors to one another — or to prevent Set-off . The borrower is sometimes given a “Yank the bank” power to force a transfer of a lenders interest in repayment (a chose in action) if

5120-467: The reference rate SOFR in the U.S., Euribor in Europe or another base rate) sufficient to attract the interest of non-bank term loan investors. Though, this threshold moves up and down depending on market conditions. In the U.S., corporate borrowers and private equity sponsors fairly even-handedly drive debt issuance. Europe , however, has far less corporate activity and its issuance is dominated by private equity sponsors, who, in turn, determine many of

5200-485: The region ( University of Kentucky , University of North Carolina , University of Tennessee , West Virginia University , University of Virginia , and Virginia Tech ) are affiliated with the ACA. These institutions assist the ACA in reviewing grant and fellowship applications, conducting workshops, and providing technical assistance. The ACA works to serve higher education in the rural regions of these five states. An example of

5280-580: The requirement for consent if there has been an event of default to enable the bank to sell a defaulted loan without consent from the borrower. Similarly the requirement for consent is often excluded if the assignment is to an affiliate of an existing lender. Bank which has been a loan and not been repaid holds an asset comprising the debt of the borrower. Lead bank to engage in such asset sales relate inter alia to over exposure, regulatory capital requirements, liquidity, and arbitrage. Transfer provisions in syndicated loan agreement set up procedures under which all

5360-766: The resources of their member colleges and the universities to share human and material assets as well as to link academic and administrative resources. An example of a non-profit consortium is the Appalachian College Association (ACA) located in Richmond, Kentucky . The association consists of 35 private liberal arts colleges and universities spread across the central Appalachian mountains in Kentucky , North Carolina , Tennessee , Virginia , and West Virginia . Collectively these higher education institutions serve approximately 42,500 students. Six research universities in

5440-419: The rights of the old bank and the assumption by the new bank of obligations under the loan agreement plus the release of the old bank. The difference between the two is that a novation cancels old loans completely (which might have adverse effects on any security for the loan unless held by a trustee for the banks) whereas an assignment and assumption preserves the old loans and their security. Other obligations of

5520-400: The same — the identity of the parties expected — as those the ‘transferor’ had before the transfer. […] can be structured to give the borrower total or partial control over the type or identity of specific transferees or classes. Assignments may be permitted to assignees who satisfy stipulated criteria or who are included on a list of permitted assignees (a so-called ‘white list’) or are not on

5600-463: The scheduled novation certificates on behalf of the borrower and the banks so that all parties are bound. There are four potential causes of conflicts between lenders: Decision making requires coordination. Bonds are widely dispersed and the holder's identity is often unknown to the issuer or other bond holders due to the intermediate holding of securities. Scheme of arrangement require majority in number (head-count test) whereas if bonds are issued on

5680-433: The second lender meant that there was a different class and the first group could call the debt without consequence of the second group being hesitant. Leveraged transactions fund a number of purposes. They provide support for general corporate purposes, including capital expenditures, working capital, and expansion. They refinance the existing capital structure or support a full recapitalization including, not infrequently,

5760-403: The security trustee but will be reduced by any amounts actually received by the syndicate members. Trustee duties cannot be fully excluded, core of that is fiduciary. Some discretion and good faith is sufficient. Statutory regulation is not desired, as doing so will likely limit the number willing trustees. There are normally no express restrictions on sub-participations. Banks usually exclude

5840-415: The senior debt and a specialist mezzanine fund oversees placement of the subordinated mezzanine position. The arranger will prepare an information memo (IM) describing the terms of the transactions. The IM typically will include an executive summary, investment considerations, a list of terms and conditions, an industry overview, and a financial model . Because loans are unregistered securities, this will be

5920-500: The standards and practices of loan syndication. The retail market for a syndicated loan consists of banks and in the case of leveraged transactions, finance companies and institutional investors . The balance of power among these different investor groups is different in the U.S. than in Europe. The U.S. has a capital market where pricing is linked to credit quality and institutional investor appetite. In Europe, although institutional investors have increased their market presence over

6000-448: The transaction and, most importantly, tell why and how the lenders will be repaid on or ahead of schedule. In addition, investors will be briefed regarding the multiple exit strategies, including second ways out via asset sales. (If it is a small deal or a refinancing instead of a formal meeting, there may be a series of calls or one-on-one meetings with potential investors.) In Europe, the syndication process has multiple steps reflecting

6080-424: The trustee. The arranging bank acts as a salesman, and may be cannot exclude liability in its role of representing the agreement; either through misrepresentation, negligence, or breach of fiduciary duty. It may also be liable if it fails to do its best endeavours to acquire lending parties, these vary depending on the law of representation and fiduciary duty within national law. Syndication is generally initiated by

6160-402: The very broad formula of a civil partnership provided for entities that undertake to cooperate in a designated way to achieve a common economic goal (which is a common element for both types of contracts), the partnership contract do not exhaust all forms of cooperation and automatic qualification of consortium contracts as partnerships is not allowed. Syndicated loan A syndicated loan

6240-457: The whole amount. The essence of syndication is that two or more banks agree to make loans to a borrower on common terms governed by a single agreement. This agreement not only regulates the relationship between the lenders and the borrower but importantly between lenders. Most loans are documented using LMA precedents, in England, this will not be on the lenders' 'written standard terms of business' for

6320-466: Was able to replace several different fleets of aircraft in the adopting air forces. The Royal Saudi Air Force (RSAF) became the only export operator of the Tornado in addition to the three original partner nations. Including all variants, 992 aircraft were built. Coopetition , deriving from a portmanteau of cooperation and competition, is the word used when companies otherwise competitors collaborate in

6400-422: Was increasingly common by 2008 with a range of spreads referred to as price talk (i.e., a target spread of, say, LIBOR+250 to LIBOR+275). Investors then will make commitments that in many cases are tiered by the spread. For example, an account may put in for $ 25 million at LIBOR+275 or $ 15 million at LIBOR+250. At the end of the process, the arranger will total up the commitments and then make a call on where to price

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