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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

    Tuesday, January 21, 2020

  • 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 examine the impact of tax reform on leveraged financing transactions. The panel discussion will include how the new law might affect credit support between affiliates in multinational enterprises, structuring and placement of debt, interest deductibility, and provisions regarding prepayment and permitted tax distributions.

Faculty

Mark Dundon
Partner
Kirkland & Ellis LLP

Mr. Dundon's practice focuses on the tax aspects of complex mergers, acquisitions, divestitures, joint ventures, restructurings and financing transactions, primarily in the energy industry. He has represented large and mid-cap private equity funds and their portfolio companies, as well as large public and private corporations.

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Anne Kim
Partner
Kirkland & Ellis LLP

Ms. Kim has a broad-based practice and handles a wide range of complex transactions, advising private equity funds, public and private companies and publicly traded partnerships on the tax aspects of mergers and acquisitions, divestitures, spin-offs, cross-border transactions, formation of joint ventures and capital markets and debt financings.

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Description

Tax reform and other recently implemented regulations have made significant changes to the tax rules that impact leveraged finance transactions. Counsel to both borrowers and lenders need a working knowledge of these changes concerning both existing and future loans.

New limitations on the deductibility of interest may force leveraged companies to reconsider their global capital structure and pursue measures such as paying off debt held by U.S. entities and moving debt offshore to foreign affiliates. With the reduction in the corporate tax rate and the application of a new special passthrough tax rate, lenders and borrowers will likely revisit how tax distribution provisions are negotiated and drafted.

Various rules impacting multinationals may affect collateral packages and mandatory prepayment provisions. Lenders may ask borrowers to repatriate foreign proceeds to make prepayments, although the parties will still need to consider state or non-U.S. withholding taxes that could be triggered.

Tax reform and subsequent changes to the rules relating to controlled foreign corporations (CFCs) will cause some entities to become CFCs that weren't before. For some multinational groups, this may result in additional subpart F income to U.S. shareholders and may also lead to shrinking the base of credit support available in a leveraged loan.

Listen as our authoritative panel examines these and other leveraged loan structuring issues after tax reform. The panel will also discuss adjustments that should be made to loan documentation to minimize tax exposure for the borrower while protecting the lender.

Outline

  1. Tax reform: an overview of new provisions, new tax rates
  2. New limitations on the deductibility of interest
  3. Impact on multinational groups
  4. Impact of participation exemption and proposed 956 regulation on credit support
  5. More foreign entities deemed CFCs: effect on credit support to noncorporate U.S. shareholders
  6. Tax distribution and prepayment provisions

Benefits

The panel will review these and other key issues:

  • What are some of the implications of tax reform and other recently proposed regulations for multinational enterprises seeking leveraged financing?
  • To what extent do the new 956 regulations allow foreign affiliates more flexibility in providing credit support to U.S. borrowers without triggering adverse tax consequences? Will lenders begin to require such credit support?
  • How might the reduced corporate and special passthrough tax rates affect tax distribution provisions for borrowers that are taxed as corporations and borrowers that are taxed as partnerships?
  • Why might lenders now require borrowers to make prepayments with foreign proceeds?
  • How will new rules defining CFCs impact the ability of multinational borrowers that use specific sources of credit support?