Drafting & Negotiating Financial Covenants

Introduction

This virtual classroom seminar will help to further develop and expand industry knowledge of banking and finance professionals working in drafting and negotiating financial covenants.

Practical examples from current UK, EU and other international commercial markets will be used and discussed. Current market trends and approaches on most relevant KPI’s, ‘covenant lite’ drafting for financial covenants in the finance sector, and their impact on documentation and standard practice will be covered.

What You Will Learn

This live broadcast will cover the following:

• Identify, analyse, negotiate and amend primary elements of current UK market standard financial covenants used in facility agreements
• Explore key negotiation and drafting strategies, responses, implications and successful approaches
• Properly consider and advise on various practical facility covenants (e.g. liquidity, leverage ratio, cash reserve (both affirmative and negative) conventions) and their management and negotiation issues by better planning and drafting at the facility implementation stage
• Examples of and discussion of positive Debt Covenants:
• Present financial statements annually within a specified time frame
• Maintain life insurance policies on key employees
• Keep all facilities in good working condition
• Pay all property and income taxes on time
• Maintain property insurance and a reasonable amount of liability insurance
• Examples of Negative Debt Covenants
• Incur additional debt
• Make a change in ownership
• Enter into certain types of lease agreements
• Sell key assets
• Make loans to insiders or affiliates
• Mergers and acquisitions
• Impact of breach of covenants - what happens next?
• Focusing on the ten most common metrics currently used
• Impact of noncompliance on credit ratings
• Review and working on major UK commercial credit ratings agencies
• Understand what is meant by ‘covenant lite’ drafting in the context of financial covenants - when is it relevant and desirable and to whom
• Consider some syndicated management issues, such as ‘yank the bank’ and ‘snooze you lose’ clauses and impact of 2022 LIBOR transition
• Current and new anticipated related UK, EU, and US Regulatory News; discussion of their potential marketplace implications for now and in the medium to long term
• Future potential areas of regulatory and other development
• Practical tips for the proper administration and enforcement of such financial covenants

Recording of live sessions: Soon after the Learn Live session has taken place you will be able to go back and access the recording - should you wish to revisit the material discussed.