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Leveraged Finance Academy: Advanced Topics - 8 March 2023

Shearman & Sterling LLP

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A European Perspective – Keter's A&E Proposal Consumer goods group Keter originally launched an A&E request in early October 2022 in respect of its English law term loan B facility • 2 year maturity extension of €1.205 billion term loan B due October 2023, in return for a 100 bps uplift. • C.€250 million of the debt would be repaid at par, funded via €50 million sponsor equity and €200 million of new second lien debt. • Sponsor reportedly raised the threat of stripping key covenant protections in order to coerce lenders into participating in the A&E to avoid being left behind. A supermajority (over 80%) of lenders could strip covenants, security and guarantees. Majority Lenders (over 66 2/3%) could also make a number of amendments to the detriment of non-participating lenders. 37 • After receiving considerable pushback from its creditors, Keter is reported to be working on a revised A&E proposal, potentially to be implemented through a scheme of arrangement. To the extent the requisite consent threshold is not reached, the debtor may consider using a scheme to bind 100% of lenders to the proposal – would require majority in number representing 75% in value of creditors present and voting. • While English courts are likely to be less permissive than US courts in relation to the use of coercive tactics to implement restructurings/refinancings (including priming deals), a deal that leaves non-participating lenders in a weaker position is certainly a possibility. Liability Management and Refinancing Solutions in Europe

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