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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

  • work Practice Area

    Banking and Finance

Date & Time
  • event Date

    Thursday, May 6, 2021

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$347.00
CLE
ALL

This CLE course will analyze the terms and characteristics of direct loans and how they vary from syndicated loans. The panel discussion will include financial covenants, collateral and credit support typically required for direct loans, and how private equity lenders can tailor loan terms to each borrower.

Faculty

Alon M. Goldberger
Miscellaneous

Mr. Goldberger focuses his practice on a variety of complex finance transactions. He represents agents, lenders, public and private borrowers, private equity sponsors and their portfolio companies, business development companies and other providers (bank and non-bank) of senior and subordinated debt financing. Mr. Goldberger also advises clients on a broad range of financing transactions, including first and second lien revolving and term loan credit facilities, asset-based and cash-flow based lending, acquisition financing, unitranche credit facilities, refinancings, recapitalizations and both in-court and out-of-court restructurings.

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Alex Cota
Partner
Paul Hastings, LLP

Mr. Cota is a partner in the Financial Restructuring practice at Paul Hastings and is based in the firm’s New York office. He advises and represents banks, private equity and hedge funds, business development companies, alternative capital providers, other financial institutions and private companies on a variety of complex financing transactions across a broad variety of industries and in all levels of the capital structure, both lender-side and borrower-side (including administrative agent and arranger representations).

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Milap Patel
Counsel
Ropes & Gray

Mr. Patel advises lenders, private equity sponsors and their portfolio companies on leveraged finance transactions, including syndicated credit facilities, mezzanine and subordinated financings, high yield offerings, and debt restructurings. He has also represented companies in public and private securities offerings and general corporate advisory matters.

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Description

Direct lending funds have evolved and expanded in recent years and are increasingly able to offer loan facilities that compete with more traditional lenders. Since direct loans are not typically syndicated, direct lenders have more flexibility to provide financing to companies with complex or atypical assets or liabilities. But there are distinct structuring and documentation features of direct loans which finance counsel must consider.

Direct loans may have more customized amortization terms--perhaps an interest-only period followed by accelerated amortization or a payment-in-kind feature where deferred interest payments are added to the principal. Financial covenants are more tailored to the borrower. They will usually include a leverage ratio-based financial maintenance covenant throughout the loan term (instead of the "covenant-lite" approach in syndicated term loans).

Depending on the borrower's future funding needs, a direct lender may offer a delayed-draw term loan commitment as part of the loan package. While syndicated lenders have generally excluded foreign entities as guarantors, direct lenders might include foreign subsidiary guaranties. Both features require enhanced underwriting of the borrower and guarantors and additional documentation not found in syndicated loans.

Listen as our authoritative panel discusses direct lending's nuances and how it can differ from syndicated lending.

Outline

  1. Private equity funds as lenders
  2. Features of direct lending and effect on documentation
    1. Flexibility to lend to unusual or complex borrowers
    2. Customized amortization
    3. Enhanced financial maintenance covenants
    4. Delayed draws post-closing
    5. Foreign guarantors

Benefits

The panel will review these and other key issues:

  • What types of borrowers might prefer a direct loan to a loan which is to be syndicated?
  • How do amortization terms and financial covenants vary between direct loans and syndicated loans?
  • How are future funding commitments documented in a direct loan?
  • To what extent does the collateral package vary between a direct loan and a syndicated loan?