We have a significant practice advising investors who provide private financing and other capital solutions to corporates that are unable to access the mainstream capital markets, whether as a result of market dislocation, the need to finance a complex or difficult to value asset or business, being caught in a challenging process (e.g. restructuring or turnaround) or a number of other “special situations”.
We appreciate that investors in this sector of the market have specific drivers and concerns. We, their legal advisers, are required to have a sophisticated understanding of a range of debt and equity investment products, but also to have real world experience of downside scenarios, which enables us to deliver pragmatic advice on how to balance achieving adequate downside protection with finding a solution that works for all parties, frequently within very challenging timeframes. Equally, we are regularly called upon to develop innovative and bespoke solutions in order to achieve the requisite risk-return profile of the new investor whilst accommodating the requirements of other stakeholders.
Accordingly, our team that operates within this space are comprised of finance and corporate attorneys with expertise spanning loans, derivatives, capital markets and private and public equity, but all unified in having a deep practical experience in Financial Restructuring – in how financing structures operate in practice.
Themes that regularly emerge from our work in this area include:
- finding creative ways of layering of debt into existing structures whilst minimizing the need for consent from other creditors;
- creating quasi-equity instruments with downside protection, including secured convertible instruments;
- allowing investors to share in equity upside whilst avoiding the consequences of disturbing the existing corporate structure – total return instruments, cash settled warrants;
- providing second lien, mezzanine or holdco PIK debt financings whilst understanding intercreditor “hot-spots” to safeguard their position against other creditor classes in a downside;
- new money financing provided as part of a restructuring package for a distressed debtor, with the need to understand and manage the restructuring process and balance competing interests of investors with existing positions in the credit;
- ‘last in’ money to complete a cost over-run project, where there is often the need to stabilize the project, adjust the position of existing stakeholders and manage significant non-complete risk