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Refinancing your bank debt Marieke Driessen James Bresslaw DACT Treasury Fair Noordwijk 8 November 2013

Introduction State of the loan markets; issues faced by corporates Other funding sources Capital markets Purpose of this presentation: how to proceed with a refinancing

Issues faced by corporates when refinancing Pressure on banks: regulatory capital requirements Banks move away from capital intensive activities Banks reduce exposure on corporates Banks retreat to domestic markets; reduces available capacity CLOs reaching end of revolving periods; reduces available capacity Demand for debt increasing as maturities approach just as capacity is shrinking Harder to find funds, takes longer to find them: need to plan ahead “Amend and extend” may not be available due to lender majority requirements Forward-start facilities may not be available (full renegotiation, new security…)

Other funding sources “Hollow tranches” Mezzanine or junior debt to cover shortfall in senior lending Capital markets: bonds, high yield bonds, convertible bonds Contribution of equity

The players The House Bank The Syndicate / Club Other: Works Council (OR); Group companies, shareholders Advisors

Preparation Review existing loan documentation Collect feedback from within organisation Mandate letter Confidentiality letter Structuring the loan: Identifying Obligors (borrowers, guarantors,…) Identifying non-Obligor restricted group Consider hiring external advisors: financial and legal Devise strategy: bilateral, club or syndicate

Term sheet Guiding document Who does the drafting? The time to raise issues Take realistic negotiating position into account Specific or general? Advantages and disadvantages of each

Documentation Precedent based or clean slate LMA standard or bank documentation Process

Various topics Libor/Euribor Material Adverse Effect Accordions Waiver requests Mandatory Costs Hollow tranches Basel III and Increased Costs

Libor/Euribor Rate setting Non-availability Benchmarking proposal EU

Material Adverse Change "Material Adverse Effect" means [in the reasonable opinion of the Majority Lenders] a material adverse effect on: [the business, operations, property, condition (financial or otherwise) or prospects of the Group taken as a whole; or [the ability of an Obligor to perform [its obligations under the Finance Documents]/[its payment obligations under the Finance Documents and/or its obligations under Clause ‎[•] (Financial condition)]]/[the ability of the Obligors (taken as a whole) to perform [their obligations under the Finance Documents]/[their payment obligations under the Finance Documents and/or their obligations under Clause ‎[•] (Financial condition)]]; or the validity or enforceability of, or the effectiveness or ranking of any Security granted or purporting to be granted pursuant to any of, the Finance Documents or the rights or remedies of any Finance Party under any of the Finance Documents.]

Days of old – the soft MAC Occurs in representations and warranties events of default Seldom if ever invoked as EoD Subjective v Objective

Accordions What is an Accordion? Who provides it? existing or new Lenders? pro rata or Borrower’s choice? What amount will be provided? What conditions will it be subject to? cps agreed now or when requested? fees agreed now or when requested? Other similar structures

Structured waivers and amendments Certain waiver requests are becoming less “specific” and more “generic” – e.g. to allow a staged Group restructuring that may happen in a variety of different ways Do we give specific waivers for each stage, or a general overarching waiver? How can this be structured? Waiver given in stages Each stage dependent on last stage being completed Local law advice backed up by opinions Conditions precedent to each stage Retain recourse to assets at all times Agreement amended at completion of each stage On a staged waiver/amendment, remember changes already made ….. !

Mandatory Costs Are they still relevant? Is anyone looking to charge them? How can this be documented?

Hollow tranches What are they? How do they work? Why bother? Issues to consider

Basel III and Increased Costs The existing position on Increased Costs What is CRD IV? What effect will it have? How should loan agreements change? Other considerations

Contacts Marieke Driessen Of Counsel T +31 20 722 2308 E marieke.driessen@simmons-simmons.com James Bresslaw Partner, Amsterdam/London T +31 20 722 2574 E James.Bresslaw@simmons-simmons.com

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