Acquisition finance—intercreditor agreement—parties and structures

The following Banking & Finance practice note provides comprehensive and up to date legal information covering:

  • Acquisition finance—intercreditor agreement—parties and structures
  • Senior creditors
  • Senior lenders and senior debt
  • Issuing banks and ancillary lenders
  • Hedge counterparties
  • Agents
  • Junior secured creditors
  • Mezzanine lenders
  • Second lien lenders
  • PIK facilities
  • More...

Acquisition finance—intercreditor agreement—parties and structures

Any transaction that involves more than one class of creditor will typically need an intercreditor agreement to be put in place. The arrival of different kinds of financing structures and types of debt, including bank/bond structures and unitranche facilities, has given rise to a greater variety of intercreditor arrangements. This Practice Note:

  1. gives a basic introduction to the common creditor classes in leveraged finance transactions

  2. explains their key rights and controls under a typical leveraged intercreditor agreement, and

  3. sets out some common structures and creditor combinations

The Loan Market Association (LMA) intercreditor agreements are often used as a starting point for documenting intercreditor arrangements in leveraged finance transactions. The LMA had developed intercreditor agreements for:

  1. leveraged finance transactions involving senior and mezzanine debt

  2. leveraged finance transactions involving a super senior revolving facility and senior secured notes

  3. leveraged finance transactions involving a super senior revolving facility and both senior secured and high yield notes, and

  4. leveraged finance transactions involving a super senior revolving facility and term debt (ie for use on unitranche transactions)

For an overview of the purpose of the intercreditor agreement, a more general explanation of the parties involved and for a detailed discussion of key provisions, see Practice Note: Intercreditor agreement—key provisions.

For a detailed introductory guide to acquisition finance transactions, see Practice Note: Acquisition finance—introductory guide.

This Practice Note explains common

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