Solvency Rep Credit Agreement

As a general rule, contractual consents are not included in a letter of commitment as a condition of closure. Where an essential contract requires agreement in order to conclude the acquisition, the buyer should insist on including a condition of conclusion requiring the seller to obtain such consent in the contract of sale. If this condition of conclusion is included in the contract of sale, lenders may benefit indirectly by arguing that waiving such a condition is a modification of the contract of sale that requires their consent. Any consents that may be required solely because of the financing and not the actual acquisition, such as for example. B an access agreement for landlords or a subsequent, non-disturbance or deposit agreement, are usually the obligations of the borrower after the conclusion and not the financing conditions. In recent years, the negotiation of a repurchase agreement and the associated acquisition financing obligation, involving several parties, has become more complex. Of course, the buyer is always closely involved in both negotiations, with one of its main objectives to make conditionality in its financing commitments as consistent as possible with the conditionality of the sales contract. But increasingly, the seller will check (and comment) on the buyer`s financing commitment titles, and conversely, lenders will check (and comment) on the sales contract. All this is usually done quickly and in real time, especially in the case of transactions with multiple offers for a target company. One of the usual conditions for the conclusion of the contract of sale, which must be fulfilled before the buyer is obliged to conclude the acquisition, is that the seller has not undergone any significant adverse changes or MACs since an agreed date. This date is often the date of the seller`s last verified conclusion, although sometimes there is a separate condition that does not require MAC since the date of the agreement. Since in the event of an acquisition, the parties endeavour to adapt as precisely as possible the conditions for concluding the contract of sale to the conditions of conclusion contained in the letter of commitment, the letter of commitment should also be conditional on the seller not having undergone a substantial adverse modification since an agreed date, the definition of substantial adverse modification being essentially linked to the definition of the pre-modification.

Substantial judiciable in the The contract of sale is identical. The most important thing is that this financial cooperation agreement usually includes an obligation for the seller to provide all the information necessary to start the marketing period defined in the sales contract and the letter of commitment. See conditionality in Acquisition Financing Commitment Papers – Timing Condition and Marketing Period Condition. With respect to acquisitions of businesses by private equity firms, adapting the MAC in the financing commitment securities to the MAC in the sales contract is generally relatively straighteward. In both cases, the MAC is tested against the acquired business, since the private equity firm usually uses a new holding company for the acquisition. However, in the case of strategic acquisitions, a MAC condition that applies only to the target business may offer limited protection to lenders. This is because a MAC condition of the target entity does not result in a significant negative change in the business of the strategic buyer between signature and conclusion or in the prospects of the combined transaction. As a result, a sales contract usually contains a number of insurances and guarantees of the seller and its related companies, and the precision (or, in some cases, accuracy on essential points) of these insurances is a prerequisite for the obligation for the seller to conclude.

Similarly, commitments to finance a cancelled acquisition will include customary insurance and guarantees. . . .