The Law of Corporate Finance: General Principles and EU Law: Volume III: Funding, Exit, Takeovers

20.4 Financial Assistance 561 that the company must take into account the credit standing of the third party, interest rate, and ...

562 20 Acquisition Finance According to the wording of the Second Directive, the main restrictions apply only where the company ...

20.4 Financial Assistance 563 Furthermore, the transaction must not “conflict with the company’s best interests”, where at least ...

564 20 Acquisition Finance 20.5 Debt 20.5.1 General Remarks Leveraged buyouts bring many benefits to the acquirer. A high levera ...

20.5 Debt 565 These new debt investors are looking for a higher margin for a longer term than that sought by traditional bank de ...

566 20 Acquisition Finance Table 20.5 LBO Structure (Deutsche Bundesbank 2007)^64 Acquisition Funding (with an increasing senior ...

20.5 Debt 567 The acquirer should ensure that it does not promise to buy the target before it is certain that banks will provid ...

568 20 Acquisition Finance For such reasons, the lenders might not be willing to give any binding promise to provide the necessa ...

20.5 Debt 569 documentation” increases the probability that the commintment letter leads to an enforceable promise to provide fu ...

570 20 Acquisition Finance tion” (General Principle 5). Under the rules of the City Code, an offeror should make an announcement ...

20.5 Debt 571 Credit Enhancements Under the Acquisition Loan Facility Agreement Because of the highly leveraged nature of acquis ...

572 20 Acquisition Finance Restructuring of the target’s debt. One solution is to mitigate the effects of the structural subordi ...

20.5 Debt 573 sistance.^84 In addition, the management board would breach its general duty of care and be- come liable for any d ...

574 20 Acquisition Finance Restructuring and Refinancing After Change of Control After the acquirer has obtained control over th ...

20.5 Debt 575 needs in mind when negotiationg the acquisition loan facility agreement, because the normal terms of loan agreemen ...

576 20 Acquisition Finance 20.5.4 Internal Coherence of Contracts The terms of the acquisition agreement and the loan facility a ...

20.5 Debt 577 agreement is not within the control of the acquirer/borrower, the ac- quirer/borrower can try to ensure that repre ...

578 20 Acquisition Finance Third, the loan facility agreement ordinarily contains a material adverse change clause and a change ...

20.6 Shareholders’ Capital 579 20.6 Shareholders’ Capital There are many ways to finance an acquisition by issuing shares. (a) S ...

580 20 Acquisition Finance The issuing of shares may take the form of an IPO, a private placement, or a joint venture. 20.7 Mezz ...