LMA leverage documents anticipate in a capital structure comprising various layers of funding with increasing subordination as follows:

  • Bridge financing advanced solely to complete cash payment for the acquisition in the form of “Certain Funds”;
  • Three senior and secured “Facilities” – “Facility A”, “Facility B” and “Facility C” – of increasing final maturity and interest margin and possibly different optional currencies provided to the acquiring company (“Company”) for acquisition of the target company (“Target”) and its subsidiaries (“Target Group”);
  • A revolving credit facility is provided to meet the general working capital needs of the operational companies of the acquisition group over an extended period of time, it also incorporates the ancillary facilities;
  • “Ancillary Facilities” in the form of an overdraft facility, letter of credit facility, guarantee facility, short-term loan facility, derivatives facility or foreign exchange facility, deducted from the revolving facility commitment of the respective “Ancillary Lender” provided to the acquiring company, including hedging arrangements entered into in relation to the senior and mezzanine debt (Facilities and Mezzanine Facility) by the Company with “Hedge Counterparties” as required under the “Hedging Agreement”;
  • “Mezzanine Facility” advanced to the Company, with “Warrant Documents” held by the “Security Agent” for the benefit of the “Mezzanine Lenders”;
  • “Loan Notes” issued to the “Investors” representing the a “Structural Intra-Group Loan” provided directly to the “Parent” and downstreamed to the Company; and
  • “Vendor Note” issued by the Parent to the Vendor equal to the portion of the purchase price to be paid to the Vendor only upon the maturity of the “Vendor Loan”, possibly on an earn-out

All other financing provided to the Parent, the Company, the Target and the rest of the Target Group is subordinated to the debt owed to the Senior and Mezzanine Lenders and the Hedge Counterparties.

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