Lending
Increasingly in the financial markets, investment banks, hedge funds and other non-bank investors are providing funding and market liquidity that was once the preserve of large commercial banks. Indeed, the majority of finance in the non-investment grade loan sector is now provided by private equity funds, hedge funds and non-bank financial institutions. RK&O is a regular advisor to these market participants both in respect of the legal loan documentation and on the innovative and complex financing techniques increasingly used to promote liquidity through tradable, tax efficient structures.
In addition to representing clients in the loan origination and syndication process, RK&O represents both lenders and borrowers, particularly in connection with mid-cap companies, advising on cash flow-based lending, asset-based lending, leveraged buyout financing, acquisition financing, recaps, debtor-in-possession (DIP) financing, exit financing for Chapter 11 and other reorganizations, and other secured (including multi-lien) and unsecured financings.
Our lawyers routinely advise lenders on the structure, documentation and negotiation of all aspects of the financing transaction, from the initial commitment or engagement to the closing of the transaction and perfection of security interests.
Our clients regularly engage us to negotiate the primary loan documents, together with the ancillary agreements and any intercreditor arrangements. Our many years of experience give us a deep understanding of the complex business issues involved in negotiating loan documentation. In addition to any legal issues that may arise, we frequently assist our clients in analyzing the commercial and credit risks involved in senior secured, first lien, second lien, mezzanine, PIK and DIP loan transactions. In syndications, we often represent syndicate members in the review, analysis and revision of the draft credit facilities being syndicated by identifying the material covenant exceptions and other core issues that may exist in the documentation. We also represent investors in second lien and other subordinated loans and have strong experience in negotiating and seeking to improve the secured creditor rights available to a second lien position.
We understand that time is often of the essence and our lending lawyers regularly provide a quick, high level, “red flag” analysis of the underlying credit documentation or, dependent upon our client’s requirements and market circumstances, an in-depth, full scale credit review and written report.
In addition to its established European and U.S. presence, RK&O routinely advises clients in connection with cross-border and emerging market transactions. Having advised on financings across Eastern Europe, Africa and the Middle East, our lawyers are experienced in working with local counsel to help our clients apply proven investment techniques in a variety of different jurisdictions. This experience also allows us to assist our clients in understanding and addressing the increased political, legal and complex commercial risks often faced when undertaking transactions in emerging market jurisdictions.
Our lawyers routinely advise lenders on the structure, documentation and negotiation of all aspects of the financing transaction. Recent representations include:
• Represented a major investment bank’s middle-market lending division in connection with $48 million of senior secured credit facilities to fund a leveraged buy-out of a media/publishing company.
• Represented a major investment bank’s middle-market lending division in connection with $60 million of first lien financing provided to a publishing company.
• Represented a prominent hedge fund in connection with a $45 million second credit facility provided to an office imaging distributor.
• Represented a prominent hedge fund in connection with a $20 million second lien credit facility provided to an on-line shoe distribution company.
• Represented a major investment bank in connection with a $30 million debtor-in-possession financing provided to a power generating facility.
• Represented a major investment bank in connection with a $25 million syndicated second lien credit facility provided to a manufacturer of vacuums and small appliances.
• Represented a major investment bank in connection with $82 million of senior secured syndicated credit facilities provided to the investment bank in connection with the investment bank’s leveraged buy-out of a Mexican cinema company.
• Represented a newly formed investment manager as a borrower in connection with a $45 million term loan to diversity investment holdings.
