Accordion Accession Agreement

A borrower must have sufficient debt capacity and this capacity must be acceptable to lenders (due consideration of any form of debt relief). The LMA credit document allows users to include their own hard digital cap. However, we generally do not see credit contracts for stronger sponsors as a severe ceiling for accordion debt and the appearance of unlimited accordion debt, provided pro forma compliance is done with a leveraged test. As a general rule, it is only in the first place that debt-related debts are older or, on the whole, taken into account for junior debts. The credit contract may also allow security officers to make any necessary changes to the transaction security documents necessary to ensure (i) that accordion facilities coincide with existing debt facilities; and (ii) that the transaction guarantee be shared by the financial parties on a pari passu basis. Lenders of accordion facilities will also be required to provide a precondition for the introduction of the accordion facility to accede to the inter-credicator agreement, so that they are subject to the provisions of this agreement (e.B, restrictions on enforcement measures and revenue enforcement). Another important feature of the accordion that benefits the business is the optional credit increase. Thus, if the company can grow without making additional debts, it can make that decision. It is a matter of negotiation. Existing lenders that agree to authorize accordion capacity have two reasons: first, they want to ensure (as usual) that existing lenders are not required to participate in accordion debt; the unsyed nature of the facility is clearly important from the point of view of credit capital and regulatory capital. Second, they will want to have a right of participation (either as an initial offer or as a prerogative over the penultimate mouth time) to a proposed increase in commitments.

An accordion is a way to increase the credit commitment rather than buy on the secondary market (in cases where the debt is liquid). It also avoids the impact of dilution on voting procedures in the context of financial documents. This last point is particularly important when it comes to illiquidating credits (. B, for example, many transactions with debt funds), for which the exclusive ability to control implementation in a top-down scenario is of the utmost importance. An accordion function is an option that a company can purchase that gives it the right to increase its line of credit (or a similar type of liability) with a lender. Companies generally purchase an accordion feature pending the need for more labor capital for possible expansion opportunities. If such opportunities are realized, the option may expire without penalty. In addition to the leverage test, a “freebie” (either a fixed amount or an amount calculated according to DemKO) can be added to the accordion debt ceiling. Often, smaller or unscredited credits do not include accordion facilities. However, we consider that all parties have a great deal of merit in at least integrating the settlement mechanism from the outset, even though lenders have discretion over key terms, which can be relaxed if necessary by a simplified approval mechanism.

The advantage of this approach is that it avoids changes and (perhaps) flexible mental security, as well as necessary business authorizations and legal advice that would otherwise be necessary if such a facility or increase in obligations were desirable in the future, for example to support an acquisition or liquidity event. A borrower can also obtain more favourable terms, whereas he has more leverage at the beginning of a transaction. Transfer, transfer and accordion fees to membership Unless the Facility Agent agrees otherwise, a new lender or a member lender must pay a $3,500 fee to the Facility agent (on their own behalf) on or on the date or before the dat

April 7, 2021

More to Love: