Shearman & Sterling LLP
Issue link: https://digital.shearman.com/i/1494420
Drop-Down Transactions – Step 1: Formation/Designation Company tactically designates or forms certain subsidiaries that may or may not be subject to existing reps and warranties and/or covenants within the existing debt documents. 13 Borrower & Guarantor Restricted Subs (Least Flexible) • Subject to the representations, covenants and events of default in the credit agreement and the indenture. • Required to provide guarantees and grant liens on their assets in secured financings. Less Restrictive Non-Guarantor Restricted Subs (Partially Flexible) • Not required to become Guarantors or to grant liens on their assets. • Subject to the representations, covenants and events of default in the credit agreement and the indenture. NOTE: Debt incurred by any such non-guarantor restricted subsidiaries is structurally senior to the credit agreement and the notes obligations with respect to the assets of the obligors of such new debt, but still limited by the debt and lien covenants of the credit agreement and the indenture. Less Restrictive Unrestricted Subs (Most Flexible) • Not subject to the representations, covenants and events of default in the credit agreement and the indenture. • Not required to provide guarantees or to grant liens on their assets in secured financings. Liability Management and Refinancing Solutions in Europe