Loan Market Association’s ‘super senior/senior ICA’—a new standard?

Loan Market Association’s ‘super senior/senior ICA’—a new standard?

Paul Mullen, partner in the leveraged and acquisition finance team at Hogan Lovells in London, predicts that the new form of leveraged intercreditor agreement (ICA) for a super senior revolving facility and senior term facility structure will prove a good starting point, not only for those deals adopting this type of structure, but also for the increasing number of first in/ last out deals seen in the market.

Original news

The Loan Market Association (LMA) has launched a new recommended form of ICA for leveraged acquisition finance transactions that includes a super senior revolving facility structure.

Why has the LMA decided to publish a new form of leveraged ICA?

Since the financial crisis, the European leveraged finance market has seen a steady rise in the number of private debt funds lending directly to private equity sponsors and others. The structure of choice for the funds is a ‘unitranche’ term loan which combines the traditional senior and mezzanine tranches into a single instrument with a blended margin.

However, it’s worth noting that the European form of unitranche differs from the approach taken in the US, where there would often be a separate ‘agreement among lenders’ whereby the participants in the term loan would agree priorities between them, are set out in a document which the borrower is not party to.

In Europe, all intercreditor provisions are typically set out in a single ICA which the borrower and all lend

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About the author:

Miranda is a solicitor specialising in leveraged and acquisition finance. She trained at Hogan Lovells International LLP and qualified into the international banking and finance team. During her time at Hogan Lovells she worked on a variety of domestic and cross-border transactions, acting for both borrowers and lenders. She also experienced secondments to Barclays Bank PLC and Kaupthing Bank hf.