Shearman & Sterling LLP
Issue link: https://digital.shearman.com/i/1494420
Uptiering Transactions – Step 1: Amendments Borrower and participating lenders under the existing credit agreement that constitute "Required Lenders" or the required majority of consenting noteholders clear contractual barriers to the transaction by amending or waiving provisions that only require such consent. Credit Agreement or Indenture Provisions Amended (as applicable) Uptiering Strategy Debt and lien covenants • Surgically remove non-subordination restrictions or increase priority debt basket sizes (Serta Simmons). • Broadly strip away all affirmative and negative covenants (Boardriders; TriMark). Pro rata sharing and waterfall provisions • Permit non-pro rata prepayment to allow debt exchange and facilitate debt roll-up or incurrence of new debt. Debt exchange/repurchase provisions (open market purchases or Dutch auctions) • Expressly permit the type of non-pro rata debt exchange entailed in the uptiering transaction. Restrictions on entry into intercreditor agreements • Permit intercreditor agreements to subordinate non-participating lenders' claims on collateral. • Replace the administrative agent. Litigation/dispute resolution provisions • Require lenders to post bond equal to the sum of expected expenses or award. • Require lenders to bring claims only through the administrative agent at the direction of the Required Lenders. • Prohibit any lender from litigating the uptiering transaction. • Change the venue or forum of litigation. 27 Liability Management and Refinancing Solutions in Europe