Shearman & Sterling LLP
Issue link: https://digital.shearman.com/i/1494420
Uptiering Transactions – Step 3: Superpriority Debt Borrower enters into new credit facilities providing participating lenders (and potentially new lenders) with superpriority loans relative to the claims of non-participating lenders. In bond world, the Issuer would enter into a new indenture providing for new notes with better terms (e.g. better security, guarantees, etc.) • A new tranche within the existing credit agreement, with priority governed by a payment waterfall; or • New debt under a separate credit facility, with priority governed by an intercreditor agreement; • May be provided by a subset of existing lenders and/or new lenders; • May rank senior in claims over shared collateral or take the form of contractually senior "first out" loans. • The new notes will often include better terms and better protection than the old notes. • As part of the exit consent, the old notes will typically have their covenants stripped. Further, depending on the percentage level of consents, the holders of the old notes could also be stripped of their security protections (sometimes as low as 75% for security strips for Italian Issuers) and "money" terms (i.e. maturity, interest, principal) if 90% threshold is met. Regarding the new superpriority loans, these may take the form of: Regarding the new notes: 29 Liability Management and Refinancing Solutions in Europe