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1Latham & Watkins operates as a limited liability partnership wor ldwide with an affiliate in the United Kingdom and Italy, where the practice is conducted through an affiliated multinational partnership ©Copyright 2003 Latham & Watkins. All Rights Reserved.
Everything You Always Wanted To Know About
Second Lien Financings
ALATHAM & WATKINS
PRESENTATION
May 19, 2004
2
Speakers
James Chesterman Peter M. GilhulyBanking and Leveraged Finance Group Insolvency Group Latham & Watkins, London Office Latham & Watkins, Los Angeles Office +44.20.7710.1004 212.891.8720 james.chesterman@lw.com peter.gilhuly@lw.com
David G. Crumbaugh Marc P. HanrahanBanking and Leveraged Finance Group Banking and Leveraged Finance Group Latham & Watkins LLP, Chicago Office Latham & Watkins LLP, New York Office312.876.7660 212.906.2976 david.crumbaugh@lw.com marc.hanrahan@lw.com
Kirk A. Davenport David S. HellerCorporate Finance Group Insolvency GroupLatham & Watkins LLP, New York Office Latham & Watkins LLP, Chicago Office212.906.1284 312.876.7670kirk.davenport@lw.com david.heller@lw.com
3
What Are We Going to Cover Today
• The Various Flavors of Second Lien Financings• The Pros and Cons From All Perspectives• “Debt” Subordination vs. “Lien” Subordination• What Makes Secured Creditors So Special?• What Makes a “Silent Second” Silent (and What are the
Practical Implications)?• Some Common Real World Scenarios• How Do We Document These Transactions?• Conclusions
4
The Various Flavors of Second Lien Financings
• We are here to talk about the two most common versions• Second Lien High Yield Bonds• Second Lien Term Loans
• We will not discuss some of the more esoteric flavors (seller paper, sponsor loans, distressed/rescue paper)
• We will not discuss secured mezzanine financings
5
The Various Flavors of Second Lien Financings
• Second Lien Bonds• Often called “Secured Senior Notes” or “Second Lien Secured
Notes,” these creatures are just like any other high yield bonds – except they are secured
• No “maintenance” covenants or cross default provisions• Key covenant differences from an unsecured high yield deal
include• Hard dollar cap on future first lien debt• Very tight ratio limiting future second lien debt• In other words, the liens covenant becomes the key limitation
on future debt incurrence, not the debt covenant- future unsecured debt may only be a hypothetical
possibility for some time
6
The Various Flavors of Second Lien Financings
• Second Lien Term Loans• Investors are usually typical Term Loan B purchasers (e.g.,
hedge funds)• Maturity longer and certain other economic terms are richer
than typical Term Loan B paper• Covenants are “lighter” than first lien debt:
• Sometimes very close to high yield covenants• Other times, it’s the 1st lien covenant package ratcheted back• There will always be a limit on the amount of 1st lien debt (may
include a “cushion”)• Financial covenants – fewer in number and less restrictive
than 1st lien debt
7
The Various Flavors of Second Lien Financings
• Second Lien Term Loans (cont’d)• Mandatory prepayments – same categories as 1st lien
mandatory prepayments, but no mandatory prepayments required on 2nd lien debt so long as 1st lien debt requires that such mandatory prepayment be applied to 1st lien debt
• Not cross-defaulted to 1st lien debt until passage of 45-90 day period; in some “bond like” deals, only cross-acceleration/cross payment default
• Change of control often cast as “put option” rather than event of default
• Prepayment premiums often apply (but better from the borrower’s perspective than typical high yield bonds)
8
Market Data
• There has been exponential growth in the second lien financing market in the last year
• Second lien loans raised over $5.23 billion in the first four months of 2004, compared with approximately $3.26 billion for all of 2003
• Volume of second lien loans for the first four months of 2004 was almost double the total deal volume for 2003, increasing from 26to 49 deals
• The increase in second lien bond deals has also been dramatic (although somewhat less astronomical)
Source: Standard & Poor’s / Leveraged Commentary & Data
9
Volume and Number of Second Lien Loans 1997-2004
Volume
195
690394
140 65
570
6122
3256
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
1997 1998 1999 2000 2001 2002 2003 2004
In M
illio
ns
1/1- 5/13 5/14-12/31
Number
2
912
53 3
26
57
0
30
60
1997 1998 1999 2000 2001 2002 2003 2004
1/1- 5/13 5/14-12/31
Source: Standard & Poor’s / Leveraged Commentary & Data
10
Average Deal Size of Second Lien Loans 1997 – 5/13/2004
$68
$104$90
$116
$28
$125
$190
$22
$98
$33
$0
$100
$200
$300
1997
1998
1999
2000
2001
2002
2003
4Q03
1Q04
4/1-5/
13/04
Source: Standard & Poor’s / Leveraged Commentary & Data
11
2.3 2.12.8 2.9
1.3 1.5
1.4 1.10.1 0.2
0.30.5 0.5
0.50.14.2 4.2
5.14.5
0.3
0.0x
2.0x
4.0x
6.0x
8.0x
2003 (26) 4Q03 (12) 1Q04 (30) 4/1-5/13/04(19)
First Lien Bank Debt Second Lien Bank Debt Other Senior Debt Sub Debt
Average Debt/EBITDA Ratio for Transactions with Second Lien Loans 2003
4/1/2004 to 5/13/2004
Source: Standard & Poor’s / Leveraged Commentary & Data
12
Recent Precedent
Company Transaction Date
Midwest Generation, LLC $1,000,000,000 8.75% Second Priority Senior Secured 2004Notes due 2034
U.S. Security Holdings, Inc. $146,000,000 First and Second Lien Credit Facilities 2004
Calpine Generating Company LLC $1,705,000,000 First Priority Secured Floating Rate Notes due 2009 2004Second Priority Secured Floating Rate Notes due 2010Third Priority Secured Floating Rate Notes due 201111.5% Third Priority Secured Notes due 2011
Transwestern Publishing Company, LLC $665,000,000 First and Second Lien Credit Facilities 2004
Cebridge Connections, Inc. $350,000,000 Senior Secured First and Second Lien Term Loan 2004
Plastech $50,000,000 Senior Secured Second Lien Term Loan 2004
Playtex Products, Inc. $460,000,000 8% Senior Secured Notes due 2011 2004
Carmike Cinemas, Inc. $150,000,000 Senior Secured First and Second Lien Credit 2004Facilities
American Casino & Entertainment $215,000,000 7.85% Senior Secured Notes due 2012 2004
NRG Energy, Inc. $475,000,000 8.00% Second Priority Senior Secured Notes due 2013 2004
Tri-State Outdoor Advertising $50,000,000 Senior Secured First and Second Lien Credit Facilities 2004
13
Recent Precedent
Company Transaction Date
Atlantic Express Transportation Corp. $115,000,000 12% Senior Secured Notes due 2008 and Senior 2004Secured Floating Rates Notes due 2008
Tensar $112,000,000 Secured First Lien Secured Second Lien Facilities 2004
Leedsworld $93,000,000 Secured First Lien Secured Second Lien Facilities 2004
Ranpak $140,000,000 Secured First Lien and Secured Second Lien Facilities 2004
Roller Bearing $220,000,000 Secured First Lien and Secured Second Lien Facilities 2004
Cognis Deutschland GmbH& Co. KG € 745,000,000 Floating Rate Second Lien Notes due 2013 2004and Senior Notes due 2014
Mueller Group, Inc. $100,000,000 Second Priority Senior Secured Floating Rates due 2011 2004
Nellson Neutraceuticals $360,000,000 First and Second Lien Term Loans 2004
Holland USA $92,500,000 Secured First Lien and Secured Second Lien Facilities 2003
NRG Energy, Inc. $1,250,000,000 8% Second Priority Senior Secured Notes due 2013 2003
14
Recent Precedent
Company Transaction Date
American Reprographics Company, LLC $355,000,000 First and Second Lien Credit Facilities 2003
Calpine Corporation $400,000,000 9.875% Second Priority Senior Secured Notes due 20032011
Dynegy Holdings Inc. $300,000,000 9.875% Second Priority Senior Secured Notes due 2010 200310.125% Second Priority Senior Secured Notes due 2013
Advanstar Communications, Inc. $70,000,000 10.75% Second Priority Senior Secured Notes due 2010 2003
Calpine Construction Finance Company, L.P. $365,000,000 Second Priority Senior Secured Floating Rate Notes 2003due 2011
Holland USA $66,500,000 Secured First Lien and $26,000,000 Secured Second Lien 2003Facilities
Venetian Macau, S.A. $120,000,000 Tranche A Floating Rate Senior Secured 2003Notes due 2008, Tranche B Floating Rate Senior SecuredNotes due 2008
Advanstar Communications, Inc. $360,000,000 Second Priority Senior Secured Floating Rate Notes 2003due 2008, 10.75% Second Priority Senior Secured Notes due 2010
15
Recent Precedent
Company Transaction Date
Dynegy Holdings Inc $1,450,000,000 Second Priority Senior Secured Floating Rate Notes 20032008, 9.875% Second Priority Senior Secured Notes due 2010,10.125% Second Priority Senior Secured Notes due 2013
Calpine Corporation $2,550,000,000 Second Priority Senior Secured Floating Rate Notes 2003due 2007, 8.5% Second Priority Senior Secured Notes due 2010, 8.75% Second Priority Senior Secured Notes due 2013
Dayton Superior Corporation $165,000,000 10.75% Senior Second Secured Notes due 2008 2003
O’Sullivan Industries $100,000,000 10.63 % Senior Secured Notes due 2008 2003
Environmental System Products, Inc. $300,000,000 Senior Secured First and Second Lien Credit 2003Facilities
Wynn Las Vegas, LLC and Wynn $370,000,000 12% Second Mortgage Notes due 2010 2002Las Vegas Capital Corp.
Venetian $850,000,000 11% Mortgage Notes due 2010 2002
Transportation Technologies $265,000,000 Senior Secured First and Second Lien 2002Facilities
16
The Pros and Cons of Second Lien Financings(The Company’s Perspective)
• Why would a company ever want to give collateral to its junior creditors?
• Better interest rate • Better market access
• May be only way to get deal done• Why would a company not want to do a second lien deal?
• Limits future financing options• Cap on future first lien debt• Strict limit on future second lien debt • Practical limitation on future unsecured debt
• Incremental transaction costs
17
The Pros and Cons of Second Lien Financings(The Senior Bank’s Perspective)
• Historically, first lien creditors have enjoyed exclusive control of collateral
• First lien creditors are naturally inclined to object to sharing “their” collateral with junior creditors
• First lien creditors fear that second lien creditors may assert rights that will interfere with their ability to call theshots and realize value in the collateral
• They never want to wake up in a distress scenario and wish they didn’t have to deal with second lien creditors’ competing interests
18
The Pros and Cons of Second Lien Financings
(The Senior Bank’s Perspective)
• First Lien Creditors, given the choice, would prefer debt subordination (to be discussed) to lien subordination
• However, if their exposure is reduced, they can get to yes• They may be getting paid down with the proceeds of the second
lien deal• They may only get to yes if the second lien is a “silent second”
19
The Pros and Cons of Second Lien Financings (The Second Lien Creditor’s Perspective)
• Second Lien Creditors Will Accept a “Silent Second” Lien Because it is Better to be Secured than Unsecured
• Black letter bankruptcy law provides that you are entitled to the “value of your interest in”collateral in bankruptcy
• Secured creditors collect ahead of the trade and other unsecureds (to the extent there is value in their interest in the collateral)
• Secured creditors can get post-petition interest if they are oversecured
• Secured creditors have better rights in bankruptcy (even though some of those rights may be waived as part of making the lien a “silent” second)
• Bottom line: secured creditors recover more in bankruptcy than unsecured creditors
20
Debt Subordination vs. Lien Subordination
• What are the key differences?• Debt subordination involves an agreement to turn over to
holders of “senior debt” everything received from the borrower from any source
• Debt subordination also typically includes payment blockageprovisions
21
Debt Subordination vs. Lien Subordination
• What are the key differences?• Lien subordination only requires turnover to first lien creditors of
proceeds of shared collateral• There is no payment blockage in typical second lien deals
• Waiver of rights is generally confined to the special rights of secured creditors relating to collateral only
• Rights of unsecured creditors are specifically preserved (with a few narrow exceptions)
• Antilayering covenants in existing high yield debt may only restrict debt subordination and not lien subordination
• Depends on exact wording of covenant (subordinated “in right of payment” vs. “in any respect”)
22
What Makes Secured Creditors So Special?
• Pre-bankruptcy• Right to foreclose and realize value
• This remedy is almost never consummated, but its existence creates negotiating power
• In bankruptcy• Priority vis-à-vis trade and other unsecured creditors• Post-petition interest• “Adequate protection” rights• Harder to be “crammed down”• Right to credit bid• More leverage in plan negotiations
23
What Makes Secured Creditors So Special?
• In Bankruptcy• “Adequate protection” rights entitle a secured creditor to
protection against diminution in the value of its collateral during a bankruptcy
• “Adequate protection” rights are very broad and crop up in a variety of circumstances
• Right to object to mischief relating to collateral• Right to object to uses of cash collateral• Right to object to sales of collateral• Leverage to prevent/modify DIP financing• Right to request current payment of post-petition interest
• “Adequate protection” is where much of the action is in these intercreditor discussions
24
What Makes a “Silent Second” Lien Silent?
• Second lien creditors must agree by contract to give up some of their rights
• General idea is to preserve whatever rights you would have had as an unsecured creditor but defer to the first lien creditors as to how to exercise the special rights of secured creditors
• First lien creditors want to “drive the bus”• Second lien creditors want to make sure that in allowing 1st lien
creditors to drive the bus the interests of 2nd lien creditors are not unfairly disregarded
• The collateral trust agreement or intercreditor agreement will spell out just how silent is “silent”
• This is where the flashpoints are in negotiations
25
What Makes a “Silent Second” Lien Silent?
• There is some consensus in both the bond and the term loan markets about the extent to which second lienholders should waive their secured creditor rights
• There are some areas that are still hotly contested• Adequate protection waivers• Scope and duration of enforcement standstills• Waiver of right to vote in bankruptcy
• The bond market conventions are more settled than the term loan market conventions
26
What Makes a “Silent Second” Lien Silent?
Waiver often expires after 90-180 days
Typically waived until 1st lien debt is paid in full
Waiver of right to exercise remedies against collateral
Term Loan MarketHigh Yield MarketIssue
Practical Implications:• First lien banks “drive the bus” (at least for a while)• Term loans may get into the mix after standstill expires• Company is more likely to be pushed into bankruptcy after
standstill expires
27
What Makes a “Silent Second” Lien Silent?
Waiver almost always given
Waiver almost always given
Waiver of right to challenge first liens
Term Loan MarketHigh Yield MarketIssue
Practical Implications:• Not a significant concession by the second lien holder since
challenging the first liens is probably a dangerous game• People in glass houses shouldn’t throw stones
28
What Makes a “Silent Second” Lien Silent?
Waiver almost always given
Waiver almost always given
Waiver of right to oppose adequate protection for 1st
lienholders
Term Loan MarketHigh Yield MarketIssue
Practical Implications:• Not a significant concession
• Second lienholders want to see first lien debt get paid• Second lienholders should have “tag along” rights if first lien
creditors obtain new collateral
29
What Makes a “Silent Second” Lien Silent?
Sometimes waived, but may be a fiercely negotiated point
Typically waived until 1st lien debt is paid in full (subject to “tag along” rights)
Waiver of right to seek adequate protection for 2nd lien holders
Term Loan MarketHigh Yield MarketIssue
Practical Implications:• Second lienholders should have “tag along” rights to protect liens on
“quick assets” and to reduce opportunities for mischief• This is a very broad waiver and can have real consequences• However, in many cases, if second lienholders have “tag along”
rights and virtually all of the company’s assets are already part of collateral package, this waiver may be acceptable
30
What Makes a “Silent Second” Lien Silent?
Advance consent usually given
Advance consent usually given
Advance consent to uses of cash collateral approved by 1st
lienholders
Term Loan MarketHigh Yield MarketIssue
Practical Implications:• Use of cash collateral is critical to the company in bankruptcy• First lien lenders will typically negotiate a strict operating
budget as part of their agreement to release cash collateral foruse in the business
• Second lien lenders will not participate in these budget negotiations
• First lien debt will “drive the bus”
31
What Makes a “Silent Second” Lien Silent?
Advance consent usually given (if 1st lien creditors “share the pain”) –possibly subject to a hard dollar cap
Advance consent usually given (if 1st lien creditors “share the pain”)
Advance consent to DIP financings approved by 1st lienholders
Term Loan MarketHigh Yield MarketIssue
Practical Implications:• Probably not much likelihood of a 2nd lien creditor
successfully objecting to a DIP loan that primes (or is pari passu with) the 1st lien debt if other constituents support it
• Is important to limit advance consent to “share the pain” scenarios
32
What Makes a “Silent Second” Lien Silent?
Generally not waivedOften not waived at all. If waived, usually limited to waiver of right to vote for a plan that 1st lien creditors vote down
Waiver of voting rights on a plan of reorganization
Term Loan MarketHigh Yield MarketIssue
Practical Implications:• This waiver is objectionable in that it can cause second lien
creditors to be in a worse position than unsecured creditors in plan negotiations
• Consequences could be very expensive
33
What Makes a “Silent Second” Lien Silent?
Automatic release for asset sales that satisfy second lien covenants only. Second lien term lenders want their own “on/off” switch
Automatic release for asset sales that satisfy bond covenants. “On/off” switch often in hands of 1st lienholders even where no asset sale involved (unless “all or substantially all” of collateral at stake). Note TIA issue
Release of second liens outside of bankruptcy
Term Loan MarketHigh Yield MarketIssue
Practical Implications:• Not a significant concession in most scenarios
• Second lienholders likely have an “asset sale” covenant that will limit opportunities for mischief
• Unlikely that first lienholders will release any collateral except where they are getting paid down with sale proceeds
• However, possibility for mischief is still present
34
What Makes a “Silent Second” Lien Silent?
Advance agreement not to object to collateral sales approved by 1st lien debt
Advance agreement not to object to collateral sales approved by 1st lien debt
Release of second liens during a bankruptcy
Term Loan MarketHigh Yield MarketIssue
Practical Implications:• Not a significant concession• 2nd lien creditors would not likely succeed in blocking a
Section 363 sale supported by other constituents• Bankruptcy process and fiduciary duties keep opportunities
for mischief to a minimum
35
What Makes a “Silent Second” Lien Silent?
Same as 1st lien debtLimited by Regulation S-X Section 3-16. Also usually includes generous “basket.” Also note Trust Indenture Act Section 314(d) issue
Scope of collateral package
Term Loan MarketHigh Yield MarketIssue
Practical Implications:• Failure to obtain subsidiary stock pledges could be
significant, depending on nature of “hard asset” collateral• TIA Section 314(d) is a headache
36
What Makes a “Silent Second” Lien Silent?
Sometimes included during limited window following acceleration
Almost never included Right of 2nd lien debt to buy out 1st
lien debt at par plus accrued
Term Loan MarketHigh Yield MarketIssue
Practical Implications:• Not a huge point for either side • If 2nd lien debt has both the will and the means to repay the
1st lien debt at par, a deal will likely be struck without regard to what the documents say
37
Some Real World Scenarios
Let’s assume the following fact pattern:• Widgets.com has borrowed $1.0 billion under its first lien bank credit
agreement and issued $1.0 billion of second lien high yield bonds/term loans
• The banks have a “blanket” first lien on all of Widget’s assets except real estate
• The bonds/term loan have a “blanket” second lien on all of Widget’s assets including real estate
• At the time Widgets files for bankruptcy, the collateral is worth $1.5 billion and the real estate is worth $500 million
• In two years, when a plan of liquidation is confirmed, the collateral is sold for $1.2 billion and the real estate is sold for $300 million
38
Real World Scenarios – Variation #1
• Covenant default occurs on first lien debt• What rights do second lien creditors have?
39
Real World Scenarios – Variation #2
• First lien debt holders negotiate with Widgets.com to consensually sell collateral to pay down first lien debt• Can second lien holder object?• What if the assets sold were not part of the
collateral?
40
Real World Scenarios – Variation #3
• Payment default occurs under first lien debt• Second lien debt can accelerate (probably)• Unsecured (or undersecured) creditors can put
company into bankruptcy
41
Real World Scenarios – Variation #4
• Payment default occurs plus 180 days pass• Standstill period expires if second lien debt is term
loan flavor
42
Real World Scenarios – Variation #5
• Company files for bankruptcy• First day motions are proposed for:
• Use of cash collateral• First lien defensive DIP financing
• What rights do second lien creditors have?
43
Real World Scenarios – Variation #6
• Company files for bankruptcy and seeks permission to sell inventory in ordinary course of business• First lien debt seeks adequate protection (e.g., asks
court for replacement lien in real estate)• What rights do second lien holders have here?
• To challenge first liens’ adequate protection motion• To assert their own adequate protection rights (“Hey –
what about me?”)
44
Real World Scenarios – Variation #7
• Company files for bankruptcy• First lien creditors ask for cash payment of post-
petition interest as “adequate protection”• Can second lien creditors object?• Can second lien creditors ask for cash payment of post-
petition interest for themselves during the bankruptcy?
45
Real World Scenarios – Variation #8
Company files for bankruptcy• First day motion to approve DIP financing by third
party potential acquiror• Motion includes credit bid rights and rights to convert
DIP to equity• What rights to second lien creditors have?
46
Real World Scenarios – Variation #9
Company files for bankruptcy• Company files first day motion for Kmart-like
mass liquidation• Can second lien creditors object?
47
Real World Scenarios – Variation #10
Company files for bankruptcy and elects to sell crown jewel assets under Section 363• First lien creditors can object on Section 363
grounds• What right do second lienholders have?
48
How Do We Document These Transactions?
• Collateral Trust Agreement vs. Intercreditor Agreement• Second lien bond deals tend to use collateral trust agreement
because of perceived independence associated with this arrangement
• Second lien term loans tend to use intercreditor agreements because of perceived “control” benefits to first lien holders
• No important substance to this distinction
49
How Do We Document These Transactions?
• Special Disclosure Issues in Bond Deals• Risk Factors must explain collateral package• Section 3-16 of Regulation S-X
50
Second Liens In Europe: A Different Ball Game
• Banking and capital markets developed differently in Europe, with stronger lead bank relationships, with mezzanine being sole subordinated debt source
• Restructurings generally take place out of court due to different bankruptcy regimes, therefore consensual, leading to greater “hold out” issues
• Second lien loans are predominantly mezzanine in LBOs with relatively standard intercreditor provisions
• Second lien bond market intercreditor positions are still evolving
51
Second Lien Loans / Mezzanine
• Originally provided by commercial banks with very few independent mezzanine investors, leading to less negotiation
• Well established market• Guarantee and security package follows senior• Usually includes debt subordination as well as lien
subordination• Identical covenant and default package to senior (backed off
approximately 10%)• Independent waiver and consent rights are typical• Standstill customarily 90-150 days
52
Second Lien Bonds – European Style
• Evolution towards US model from historic structurally subordinated deals in telecom sector
• Very few deals (Focus Wickes; Baxi; Cognis); all unregistered
• Intercreditor position still moving around• Guarantee and security package follows senior debt• Payment blockage similar to US high yield market• Standstills vary; mezz style on Cognis; Focus Wickes a
hybrid with permanent standstill on collateral• Unanimity provisions reduced to 90% in Focus Wickes/
Baxi
53
SUMMARY - CONCLUSIONS
• If you are the first lien debt:
Must Haves Like to Haves•Control over enforcement actions for •Control over enforcement actionssome period of time forever•Ability to force asset sale free and clear of all liens •Ability to release both first and •Agreement not to object to asset sales second liens outside of bankruptcyin bankruptcy •Agreement not to object to•Ability to put DIP in place any action taken by 1st lien creditors•Ability to obtain adequate protection without •Ability to vote claims of 2nd lien creditorsobjection from 2nd lien debt •Ability to put DIP in place ahead•Agreement not to challenge first liens of 2nd lien debt but behind first lien
debt
54
SUMMARY - CONCLUSIONS
Must Haves•Ability to assert rights of an unsecured
creditor•Ability to vote your claims in a
bankruptcy•”Tag along” rights whenever 1st lien
creditors get new collateral
Like to Haves• Limitation on duration of enforcement
standstill• Unfettered adequate protection rights• Right to buy out 1st lien debt at par plus
accrued
• If you are the 2nd lien creditor:
55
SUMMARY - CONCLUSIONS
• If you are the company:
Must Haves Like to Haves• Some room for future • Lots of room for borrowing capacity on a future securedsecured basis borrowings (both first and(first or second lien) second lien)
• Lots of roomfor future unsecuredborrowings
56
SUMMARY - CONCLUSIONS
• The second lien market is here to stay• Most of the critical intercreditor issues are the subject of a
market consensus (particularly in bond land)• In the term loan market, a number of key issues are not yet
resolved• Duration of enforcement standstill• Extent of waiver of adequate protection rights
• As long as the market continues to reward companies who are willing to provide collateral to their junior creditors, these products will have a place on the corporate finance menu
Recommended